MINISTRY OF AGRICULTURE, FISHERIES AND FOOD
Annual Report and Accounts 1998-99
NOTES TO
THE ACCOUNTS
1. Statement of Accounting Policies
The financial statements have been prepared
in accordance with the Resource Accounting Manual issued by HM
Treasury. The particular accounting policies adopted by the Ministry
are described below. They have been applied consistently in dealing
with items which are considered material in relation to the accounts.
1.1 Accounting Convention
These accounts have been prepared under the
historical cost convention, modified to include the revaluation
of fixed assets at their value to the Ministry by reference to
their current costs.
1.2 Basis of Consolidation
The Ministry Accounts comprise a consolidation
of the core-Department and its on-vote Agencies; Farming and Rural
Conservation Agency (FRCA), Central Science Laboratory (CSL),
Veterinary Laboratory Agency (VLA), Veterinary Medicines Directorate
(VMD), Pesticides Safety Directorate (PSD), Meat Hygiene Service
(MHS) and the Centre for Environment, Fisheries and Aquaculture
Science (CEFAS). The Department produces annual accounts and the
Agencies also each produce and publish their own annual report
and accounts.
1.3 Tangible Fixed Assets
(a) Title to the freehold land and buildings
shown in the accounts is held as follows:
(i) Property on the Ministerial Estate
title to which is held by the Department and its agencies and
shown in the Balance Sheet.
(ii) Property held by the Department
of Environment for which the Ministry assumed responsibility on
1 April 1996 as major occupier and is therefore capitalised and
shown in the balance sheet.
(b) Freehold land and buildings have been
included on the basis of professional valuations. Plant, equipment,
fixtures, fittings, IT equipment, vehicles, and vessels have been
restated using the appropriate indices. The minimum level for
capitalisation in the core-department accounts and agencies is
as follows:
| £ |
| Core Department | 2,000 |
| CSL | 1,000 |
| CEFAS | 2,000 |
| FRCA | 3,000 |
| PSD | 500 |
| MHS | 2,000 |
| VLA | 3,000 |
| VMD | 500 |
1.4 Intangible Fixed Assets
The Ministry does not have any intangible assets; however
the Ministry holds a number of licences and copyrights but the
income from these is of a minor nature and they have not been
capitalised. Should the income from these licences and copyrights
increase to be of a material amount then capitalisation will be
reconsidered.
1.5 Depreciation
Freehold land is not depreciated. Depreciation is provided
at rates calculated to write-off the valuation of freehold buildings
and other tangible fixed assets by the straight line method over
the estimated useful life of the asset. Lives are normally in
the following ranges.
| Freehold Buildings | 15 to 50 years
|
| Plant, equipment, computers | 4 to 10 years
|
| Fixtures and Fittings | 5 to 10 years
|
| Vehicles | 4 to 10 years |
| Vessels | 20 years |
1.6 Donated Assets
The Department does not have any donated assets.
1.7 Investments
The Department holds the following assets, the values of
which is included in the Balance Sheet.
| Genus Limited | 44,272 Ordinary 10p Shares
|
| Milk Marque Limited | 47,361 Certificates
|
| Dairy Crest Plc | 12,983 shares
|
The Department also has rights to Grain Storage and Milk
and Sugar Beet Quotas the values of which are included in the
Balance Sheet.
1.8 Stocks and Work-in-Progress
(a) The core-department along with PSD and VMD carries
small working stocks of consumable stores which are written off
on purchase. FRCA, CSL, CVL and CEFAS hold stock levels material
to their business and are brought into the consolidated accounts
at the lower of cost or where materially different at current
replacement cost and at net realisable value only when they cannot
or will not be used.
(b) Work-in-progress is valued at the lower of cost and
net realisable value.
1.9 Research and Development
Expenditure on Research and Development is treated as an
operating (programme) cost in the year in which it is incurred.
Fixed assets acquired for use in R&D are depreciated over
their useful life and in accordance with the asset category to
which they belong.
1.10 Operating Income
Operating Income is shown net of value added tax and comprises
fees and charges for services provided to external customers,
agencies and Public Sector repayment work receipts from the European
Union.
1.11 Administration and Programme Expenditure
The Operating Cost Statement is analysed between Administration
and Programme costs. Administration costs reflect the costs of
running the department as defined under the Administration Cost
Control Regime, together with associated operating income. Income
is analysed in the notes between that which, under the Regime,
is allowed to be offset against gross administration costs in
determining the outturn against the Administration Cost limit,
and that operating income which is not. Programme costs reflect
non-administration costs, including payments of grants, subsidies
and other disbursements by the department.
1.12 Capital Charge
A charge, reflecting the cost of capital utilised by the
Ministry, is included in the operating costs. The charge is calculated
at the Government's standard rate of 6 per cent on all assets
less liabilities.
1.14 Taxation
VAT is accounted for in accordance with SSAP 5.
1.15 Foreign Exchange
Revenue and expenditure incurred in foreign currencies are
translated at the rate of exchange ruling at the date of the transaction.
Balances held in foreign currencies are translated at the rate
of exchange ruling at the balance sheet date.
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