Annual Report and Accounts 2019–20

Notes to the Financial Statements

1. Accounting Policies

These financial statements have been prepared in accordance with the Government Financial Reporting Manual (FReM) in compliance with the Accounts Direction issued by Scottish Ministers. The accounting policies contained in the FReM apply International Financial Reporting Standards (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 Commissioner for the purpose of giving a true and fair view has been selected. The particular policies adopted by the Commissioner are described below. They have been applied consistently in dealing with items that are considered material to the accounts.

1.1 Accounting Convention

These accounts have been prepared under the historical cost convention. The accounts are prepared on an accruals basis meaning that expenses are recognised in the year in which they were incurred, rather than when the cash payment is made.

1.2 Critical Judgements in Applying Accounting Policies

In applying the accounting policies set out in these Notes, the Commissioner has had to make judgements about financial transactions or those involving uncertainty about future events. The critical judgement made in the financial statements is that the organisation will continue as a going concern and will be appropriately funded by the SPCB.

Pension benefits are provided through the Civil Service pension arrangements. The Civil Service pension arrangements are unfunded multi-employer defined benefit schemes with benefits underwritten by the Government. As a result the Commissioner’s office is unable to identify its share of the underlying assets and liabilities and it is, therefore, accounted for as a defined contribution scheme. No liability is shown in the Statement of Financial Position.

1.3 Key Sources of Estimation Uncertainty

The financial statements contain estimated figures that are based on assumptions about the future or that are otherwise uncertain. These estimates relate to the value of tangible and intangible assets, accruals and property leases. Estimates are made taking account of historical experience, current trends and other relevant factors but cannot be determined with certainty. Actual results could be different from the assumptions and estimates but are unlikely to be material. The estimation techniques used for Tangible Assets and Intangible Assets are given in notes 1.4 and 1.5 respectively. Estimates for accruals are made based on committed operational expenditure using invoices or purchase orders. Estimates for the property lease are based on annual agreements with an inflationary uplift where future years apply.

1.4 Tangible Assets

1.4.1 Capitalisation

Purchases of assets, including grouped IT equipment, for a value exceeding £1,000 inclusive of irrecoverable VAT are treated as capital with the exception of land and buildings where the threshold is set at £10,000.

1.4.2 Valuation

As appropriate, non-current assets are valued at depreciated historical cost (DHC) as a proxy for fair value.

1.4.3 Depreciation

Depreciation is provided on all tangible non-current assets at rates calculated to write off the cost or valuation in equal instalments over the remaining estimated useful life of the asset.

1.4.4 Estimated useful life of assets

The estimated useful life of assets are as follows:

1.5 Intangible Assets

Software and licences are capitalised as intangible non-current assets and amortised on a straight-line basis over the expected life of the asset (3 years).

1.6 Funding

Funding received from the SPCB is credited directly to the general fund in the year to which it relates.

1.7 Cash and cash equivalents

Cash and cash equivalents includes cash in hand and deposits held at call in a single bank account.

1.8 Leases

The Commissioner holds no finance leases. Costs in respect of operating leases are charged to the Statement of Comprehensive Net Expenditure on a straight-line basis over the life of the lease. Details of operating leases are given in note 7.

1.9 Value Added Tax

The Commissioner is not VAT registered. All amounts are recorded inclusive of VAT.

1.10 Adoption of New and Revised Standards

1. Standards, amendments and interpretations effective in the current year

   In the current year, the Commissioner has applied a number of amendments to IFRS Standards and Interpretations that are effective for an annual period that begins on or after 1 January 2019. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements:

   • IFRIC 23: Uncertainty over Income Tax Treatment
   • Amendment to IFRS 9: Prepayment Features with Negative Compensation
   • Annual Improvements to IFRS Standards 2015-2017 Cycle


2. Standards, amendments and interpretations early adopted this year

   There are no new standards, amendments or interpretations early adopted this year.

3. Standards, amendments and interpretations issued but not adopted this year

   At the date of authorisation of these financial statements, the Commissioner has not applied the following new and revised IFRS Standards that have been issued but are not yet effective:

   • IFRS 16: Leases – HM Treasury have agreed to defer implementation until 1 April 2021
   • IFRS 17: Insurance Contracts – applicable for periods beginning on or after 1 January 2021. Not yet endorsed for use in the EU.
   • Amendments to References to the Conceptual Framework in IFRS Standards – applicable for period beginning on or after 1 January 2020
   • Amendments to IAS 1 and IAS 8 (Definition of Material) – applicable for periods beginning on or after 1 January 2020
   • Amendments to IFRS 9, IAS 29 and IFRS 7 (Interest Rate Benchmark Reform) – applicable for periods beginning on or after 1 January 2020
   • Amendment to IAS 1 (Classification of Liabilities as Current or Non-Current) – applicable for periods beginning on or after 1 January 2022. Not yet endorsed for use in the EU.

The Commissioner does not expect the adoption of the Standards listed above to have a material impact on the financial statements in future periods.

2. Non Current Assets

2.1 Tangible Assets

The Commissioner purchased £35,197 of additional assets in 2019/20 (2018/19: £2,582). The addition comprised new IT equipment, including a new server.

The former Commissioner purchased £2,582 of additional assets in 2018/19 (2017/18: £2,299). The addition comprised telephone equipment.

2.2 Intangible Assets

The Commissioner purchased £2,675 of additional assets in 2019/20 (2018/19: £58,865). The addition was for the purchase of software.

The former Commissioner purchased £58,865 of additional assets in 2018/19 (2017/18: Nil). The addition comprised a case management system.

3. Trade and other receivables

4. Cash and cash equivalents

5. Trade and other payables

6. Expenditure breakdown

The £13,013 for Auditor & financial advisers includes £12,563 for external auditor’s remuneration. The balance of £450 covers accounting services provided by a third party. The external auditor received no fees in relation to non-audit work.

During the financial year, £38,000 was used to purchase non-current assets being new IT equipment, including a new server as detailed in note 2 to the financial statements (2018/19: £62,000).

7. Leasing Commitments

The Scottish Legal Aid Board provides the Commissioner with office accommodation and associated services under a Memorandum of Terms of Occupation (MOTO). The MOTO may be cancelled on either party giving one year’s written notice or on expiry of the agreement.

The current MOTO runs for five years from 1 April 2016 to 31 March 2021.

Accommodation fees are recharged at cost as agreed each year. The cost for the year 1 April 2020 to 31 March 2021 is estimated to be £89,300. The actual cost in 2019/20 was £81,400 (2018/19: £75,900). The ongoing increase in costs is due to a revaluation of Thistle House in 2017. The revised valuation affected the capital charge applied to our MOTO.

8. Capital commitments

There were no contracted capital commitments as at 31 March 2020 (2019: Nil).

9. Contingent liabilities

The Commissioner had no contingent liabilities as at 31 March 2020 (2019: Nil).

10. Related party transactions

The Commissioner’s role was constituted by legislation enacted by the Scottish Parliament which provides funding via the SPCB. The SPCB is regarded as a related body. The SPCB provided funding of £1,010,000 during the year (2019/20: £916,000).

Neither the Commissioner, nor her staff or related parties has undertaken material transactions with SPCB during the year.

11. Additional legal support costs

In 2018/19, the incoming Commissioner faced several issues when taking up post on 1 April 2019. There were financial implications in their management and resolution.

The Commissioner concluded that these costs, equalling £49,200, represented a liability based on past events. Therefore, these items were considered to be a provision and were accrued into the expenditure for 2018/19.

12. Post statement of financial position events

On 16 March 2020, in response to the Covid-19 lockdown restrictions, the Commissioner took the decision to move the whole office to remote, home working. This has had no material impact on the financial statements for 2019/20. It is as yet unclear what the impact in 2020/21 and going forward will be.

No other events have occurred since the date of the balance sheet which materially affect the financial statements.