FSA Annual Report 2006/07 - Better Regulation Ltd
FSA Annual Report 2006/07 - Better Regulation Ltd
FSA Annual Report 2006/07 - Better Regulation Ltd
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74<br />
Section five – Financial statements<br />
<strong>FSA</strong> <strong>Annual</strong> <strong>Report</strong> <strong>2006</strong>/<strong>07</strong><br />
a. Income statement<br />
The format of the income statement on page 70 has been designed to show<br />
net costs before fees levied to cover those costs. It is considered that this<br />
format best represents the nature of the activities of the <strong>FSA</strong>, which involves<br />
carrying out statutory functions and levying fees to meet the net cost of those<br />
functions.<br />
UKLA fees have been reclassified and presented in the income statement as<br />
sundry income rather than fee income. The impact is an increase in sundry<br />
income, and reduction in fee income, of £5.9m (2005/06: £5.5m).<br />
b. Revenue recognition<br />
All fee revenue is receivable under the Financial Services and Markets Act<br />
2000 (FSMA), is measured at fair value, and represents the fees to which the<br />
<strong>FSA</strong> was entitled in respect of the financial year.<br />
Interest received on bank deposits is accrued on a time basis by reference to<br />
the principal outstanding and the effective interest rate applicable.<br />
c. Property, plant and equipment<br />
Property, plant and equipment is stated at cost less accumulated depreciation<br />
and any accumulated impairment losses.<br />
Depreciation is calculated to write off the cost less estimated residual value<br />
on a straight-line basis over the expected useful economic lives. The principal<br />
useful economic lives used for this purpose are:<br />
Leasehold improvements<br />
Computer equipment (excluding software)<br />
Furniture and equipment<br />
Up to 10 years<br />
Up to 3 years<br />
Up to 10 years<br />
If events or changes in circumstances indicate the carrying value may not be<br />
recoverable then the carrying values of tangible fixed assets are reviewed for<br />
impairment.<br />
The gain or loss arising on the disposal or retirement of an asset is<br />
determined as the difference between the sales proceeds and the carrying<br />
amount of the asset and is recognised in the income statement.<br />
d. Recognition of enforcement expenses<br />
All costs incurred to the end of the year are included in the accounts, but no<br />
provision is made for the costs of completing current work unless there is a<br />
present obligation.<br />
In the course of its enforcement activities, the <strong>FSA</strong> gives indemnities to<br />
certain provisional liquidators and trustees. Provision is made in the accounts<br />
for costs incurred by such liquidators and trustees to the year end and<br />
estimated to be recoverable from the <strong>FSA</strong> under such indemnities. The<br />
amount provided is discounted to present value.