FSA Annual Report 2006/07 - Better Regulation Ltd

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Section five – Financial statements FSA Annual Report 2006/07 73 Notes to the financial statements – 31 March 2007 1. General information The Financial Services Authority is a company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is given on page two. The nature of the Authority’s operations and its principal activities are set out on page 57. These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Authority operates. At the date of the authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective: • IFRS 7: Financial Instruments: Disclosures; and the related amendments to IAS 1 on capital disclosures • IFRS 8: Segmental Reporting • IFRIC 8: Scope of IFRS 2 • IFRIC 9: Reassessment of embedded derivatives • IFRIC 10: Interim reporting and impairments • IFRIC 11: IFRS 2 – Group and Treasury Share Transactions • IFRIC 12: Service Concession Arrangements The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Authority. 2. Significant accounting policies The financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’). The financial statements have also been prepared in accordance with the IFRS adopted for by the European Union. The financial statements have been prepared on an historical cost basis, except for revaluation of financial assets. The principal accounting policies adopted are set out below:
74 Section five – Financial statements FSA Annual Report 2006/07 a. Income statement The format of the income statement on page 70 has been designed to show net costs before fees levied to cover those costs. It is considered that this format best represents the nature of the activities of the FSA, which involves carrying out statutory functions and levying fees to meet the net cost of those functions. UKLA fees have been reclassified and presented in the income statement as sundry income rather than fee income. The impact is an increase in sundry income, and reduction in fee income, of £5.9m (2005/06: £5.5m). b. Revenue recognition All fee revenue is receivable under the Financial Services and Markets Act 2000 (FSMA), is measured at fair value, and represents the fees to which the FSA was entitled in respect of the financial year. Interest received on bank deposits is accrued on a time basis by reference to the principal outstanding and the effective interest rate applicable. c. Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated to write off the cost less estimated residual value on a straight-line basis over the expected useful economic lives. The principal useful economic lives used for this purpose are: Leasehold improvements Computer equipment (excluding software) Furniture and equipment Up to 10 years Up to 3 years Up to 10 years If events or changes in circumstances indicate the carrying value may not be recoverable then the carrying values of tangible fixed assets are reviewed for impairment. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement. d. Recognition of enforcement expenses All costs incurred to the end of the year are included in the accounts, but no provision is made for the costs of completing current work unless there is a present obligation. In the course of its enforcement activities, the FSA gives indemnities to certain provisional liquidators and trustees. Provision is made in the accounts for costs incurred by such liquidators and trustees to the year end and estimated to be recoverable from the FSA under such indemnities. The amount provided is discounted to present value.
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FSA Annual Report 2006/07 - Better Regulation Ltd

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