HM Treasury—Annual Report and Accounts
19XX-XX
NOTES TO THE DEPARTMENTAL RESOURCE ACCOUNTS
1. Statement of Accounting Policies
The financial statements are illustrative. They
have been prepared in accordance with the Resource Accounting
Manual, but for some items the information necessary to comply
fully was not available in the required format in respect of the
accounting year 19XX-XX. In some cases estimates or forecasts
have been used in the statements and in the notes to the accounts.
Subject to the above proviso, the financial
statements and notes to the accounts reflect the accounting policies
upon which the department currently expects to base its resource
accounts, and are as far as possible consistent with the accounting
framework set out in the Manual. However, their final form and
content are subject to the approval of the department's Management
Board, and may also be revised as a result of discussion with
the National Audit Office.
1.1 Accounting Convention
These accounts have been prepared under the
historical cost convention modified to account for the revaluation
of fixed assets at their value to the business by reference to
their current costs.
1.2 Basis of Consolidation
The accounts comprise the activities of the
core department, including transactions arising in connection
with the purchase of UK coins manufactured by the Royal Mint for
issue to the general public, and payments to the Bank of England
to cover the cost of banknote production, debt management and
the Exchange Equalisation Account.
The accounts of the Royal Mint (a Trading Fund)
and the Bank of England (incorporated by Royal Charter) are not
included by way of consolidation. Financial information about
them may be obtained from the separate published annual report
and accounts.
1.3 Tangible Fixed Assets
Title to the freehold land and buildings used
by the Department is held by the Department of Environment in
the name of the Secretary of State.
Computer and Communications Equipment, Software,
Furniture and Office Equipment, are based on their current valuation.
Antiques in use (operational) are included at
modern equivalent replacement cost.
Investments are quoted at historical cost.
The minimum level for capitalisation of a tangible
fixed asset is £500.
1.4 Depreciation
Depreciation is provided at rates calculated
to write off the valuation of tangible fixed assets by equal instalments
over their estimated useful lives. Lives are normally in the following
ranges:
| Computers and Communications Equipment
| 3 to 5 years |
| Furniture and Office Equipment | 5 to 20 years
|
| Computer Software | 5 years |
1.5 Stocks
Stocks of library books and journals are valued at the lower
of cost and net realisable value.
1.6 Operating Income
Operating income comprises mainly income relating to the
sale of melted down coins.
1.7 Administration and Programme Expenditure.
The Operating Cost Statement is analysed between administration
costs and programme costs. Administration costs reflect the costs
of running the department as defined under the Administration
Cost Control Regime, together with associated administration income.
Programme costs, together with associated programme income,
relate to payments to and receipts from the wider public and private
sectors that are recognised as part of operating costs in the
period to which they relate.
1.8 Capital Charge
A non-cash charge, reflecting the cost of capital utilised
by the department, is included in operating costs. The charge
is calculated at the Government's standard rate of 6 per cent
in real terms on all assets less liabilities, except for the department's
investment in the Bank of England and the Royal Mint, where the
return is agreed individually.
1.9 Foreign Exchange
Revenue and expenditure incurred in foreign currencies are
translated at the rate of exchange ruling on the date of the transaction.
1.10 Pensions
Present and past employees are covered by the provisions
of the Principal Civil Service Pension Scheme (PCSPS) which is
non-contributory and unfunded. Although the Scheme is a defined
benefit scheme, liability for payment of future benefits is a
charge on the PCSPS.
1.11 Early departure costs
The department is required to meet the additional cost of
benefits beyond the normal PCSPS benefits in respect of employees
who retire early. The department provides in full for this cost
when the early retirement programme has been announced and is
binding on the department. The department may, in certain circumstances,
settle some or all of its liability in advance by making a payment
to the Paymaster General's account at the Bank of England for
the credit of the Civil Superannuation Vote. The amount provided
is shown net of any such payments.
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