The Learning and Skills Councils Annual Report and Accounts for ...

Notes to the Accounts
Accounting policies
1 Statement of
accounting policies
This is the first year that the financial
statements have been presented on
an International Financial Reporting
Standards (IFRS) basis (see note 2).
These financial statements have been
prepared in accordance with the
2009–10 Government Financial
Reporting Manual (FReM) issued by
HM Treasury. The accounting policies
contained in the FReM apply IFRS
as adapted or interpreted for the
public sector context. Where the
FReM permits a choice of accounting
policy, the accounting policy which is
judged to be most appropriate to the
particular circumstances of the LSC for
the purpose of giving a true and fair
view has been selected. The particular
accounting policies adopted by the LSC
are described below. They have been
applied consistently in dealing with
items that are considered material to
the accounts.
1.1 Going concern
The Apprenticeships, Skills, Children
and Learning Act 2009 provides for the
dissolution of the LSC and the transfer
of functions, staff and property to
the Young People’s Learning Agency
(YPLA), the Skills Funding Agency and
local authorities. The accounts have
been prepared on the assumption that,
under the conventions of Machinery
of Government changes, the LSC’s
functions will continue in operational
existence for the foreseeable future
albeit through different delivery bodies.
The sponsoring departments’ estimates
and forward plans include provision
for the continuation of the LSC’s
activities in other bodies. Note 16
shows the transfer of the LSC’s assets
and liabilities at closure. Therefore,
these accounts have been prepared on
a going-concern basis.
1.2 Accounting convention
These accounts are prepared under the
modified historical cost accounting
convention, so Property, Plant and
Equipment, Intangible Fixed Assets and
inventories are reflected at current
values where the impact of doing so
is material.
1.3 Property, Plant and Equipment
Property, Plant and Equipment are
carried at fair value. Depreciated
historical cost is used as a proxy of
fair value for the following classes
of assets:
furniture and fittings
plant and machinery
•
computers and other IT hardware.
Costs comprise purchase prices
and those costs that are directly
attributable to making the asset
capable of operating in the manner
intended by LSC management.
For the purposes of calculating the
current value of Property, Plant and
Equipment, revaluation is applied
(where material) to the closing
carrying value of assets in use at
31 March using indices prepared by
the Office for National Statistics.
The minimum level for capitalisation of
a Property, Plant and Equipment asset
is £5,000. All assets falling into the
following categories are capitalised:
• individual assets which are capable
of being used for more than one
year, and which have a cost equal to
or greater than £5,000
• groups of assets that individually
may be valued at less than £5,000
but taken together form a single
collective asset because the items
fulfil all of the following criteria:
a. the items are functionally
interdependent
b. the items are acquired at about
the same date and are planned
for disposal at about the
same date
c. the items are under single
managerial control, and
d. each individual asset thus
grouped has a value of over
£1,000.
1.4 Intangible Fixed Assets
Intangible Fixed Assets are carried
at fair value that is determined by
reference to an active market where
possible. Where there is no active
market, the LSC uses depreciated
replacement cost as a proxy for
fair value.
The majority of Intangible Fixed Assets
comprises computer software systems
that have been developed exclusively
for the LSC. Expenditure on research
of such systems is recognised as
expenditure when incurred. Where
separately identifiable, development
expenditure to support the creation of
a software system is capitalised where
the LSC can demonstrate all of the
following criteria:
a. completion of the system is
technically feasible and adequate
resources are available to do so
b. an intention to complete the
system for use
c. ability to use the system
d. how the system can generate
future economic benefits
e. attributable development
expenditure can be reliably
measured.
Computer software licences are
capitalised if they are capable of being
used for more than one year and have
an initial cost, individually or as a
group, equal to or greater than £5,000.
1.5 Depreciation
The depreciation methods that best
reflect the pattern of the consumption
of economic benefits and the periods
over which such benefits are expected
to be consumed by the LSC are
summarised in the table overleaf.
Finance
LSC Annual Report and Accounts 2009–10 49