THE SCOTTISH PARLIAMENTARY CORPORATE BODY
Annual Resource Accounts 2004-2005 (12 months ended 31 March 2005)

Statement of Accounting Policies

The Statement of Accounts is intended to present a 'true and fair view' of the financial position and transactions of the Corporate Body and has been prepared in accordance with the fundamental accounting principles of accruals, going concern, materiality and primacy of legislative requirements in accordance with the Resource Accounting Manual (RAM). The information has also been prepared taking cognisance of relevance, reliability, comparability and understandability.

a. Accounting Convention
The financial statements have been prepared on a going concern basis, applying the historical cost convention modified to include the revaluation of fixed assets. Stocks are valued at the lower of cost and net realisable value.

b. Tangible Fixed Assets
The minimum level for capitalisation of a tangible fixed asset is £1,000 inclusive of irrecoverable VAT. The threshold for land and buildings is set at £10,000 and the IT threshold is where the group value exceeds £1,000.

Title to all property is held by the SPCB. Land and buildings will be restated at current cost using professional valuations every 5 years. During 2004-05, the Holyrood complex became operational and was professionally valued on a depreciated replacement cost (DRC) basis including an element for finance costs and professional fees in line with RICS guidance on DRC valuations.

c. Intangible Fixed Assets
Software licences are capitalised as intangible fixed assets and amortised on a straight line basis over the expected life of the asset (3 years).

d. Donated Assets
Donated assets are capitalised at current value on receipt and are normally revalued in the same way as purchased assets. The value of donated assets is reflected in the donated asset reserve, which is credited with the value of the original donation and subsequent revaluations. Historic assets which are donated are capitalised at current value on receipt but are not depreciated and therefore there is no release to the income and expenditure account from reserves. Historic assets may be subject to future revaluation.

e. Indexation
Land and buildings will be restated at current cost using professional valuations every 5 years and appropriate indices in intervening years. The indices in use are based on the producer price index (PPI) compiled by the Office of National Statistics using the relevant index codes for each category of asset.

f. Depreciation
Land, historic documents and records, works of art and assets under the course of construction are not depreciated. There is no depreciation applied in the month of acquisition and full depreciation in the month of disposal. Depreciation is provided at a rate calculated to write off the valuation of buildings and other tangible fixed assets by equal instalments over their estimated useful lives. Capitalised building works and other capitalised assets in the interim accommodation are depreciated over an accelerated period, to meet the anticipated life span of the interim accommodation. Asset lives are normally as follows:

Buildings
With interim buildings (i.e. leasehold building adaptations) these are depreciated over the period of their lease.

Equipment and Computers

g. Realised Element of Depreciation from Revaluation Reserve
Depreciation is charged to expenditure on the revalued amount of assets. An element of the depreciation therefore arises due to the increase in valuation, and is in excess of the depreciation that would be charged on the historical cost of assets. The amount relating to this excess is a realised gain on valuation, and is transferred from the Revaluation Reserve to the General Fund.

h. Operating Cost Statement
Operating income and expenditure is that income and expenditure which relates directly to the operating activities of the SPCB. It comprises charges for goods and services provided on a full cost basis to external customers. Income and expenditure is shown net of Value Added Tax where it is recoverable.

i. Capital Charge
A charge, reflecting the cost of capital utilised by the Parliament, is included in operating costs. The charge is calculated at the Government standard rate of 3.5% (2003-04 3.5%) in real terms on all assets less liabilities except for donated assets, cash balances with the Office of the Paymaster General, where the charge is nil.

j. Insurance
No outside insurance is affected against fire, explosion, third party and similar risks except where there is a statutory requirement to do so.

k. Stocks
Goods held for resale are stated at the lower of cost and net realisable value.

l. Foreign Exchange
Transactions which are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the date of each transaction. Foreign currency imprests are translated into sterling at the exchange rate ruling at the time of funding.

m. Pensions

The Principal Civil Service Pension Scheme (PCSPS)

Staff employed directly by SPCB, staff seconded to the SPCB and the Parliamentary Commissioners and their staff are members of the Principal Civil Service Pension Schemes (PCSPS). It is an unfunded multi-employer defined benefit scheme, but the SPCB is unable to identify its share of the underlying assets and liabilities. A full actuarial valuation was carried out as at 31 March 2003. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation (www.civilservice-pensions.gov.uk) which comply with FRS 17.

The Scottish Parliamentary Pension Scheme (SPPS)

A pension scheme for the Members of the Scottish Parliament has been established by the SPCB under the Scotland Act 1998 (Transitory and Transitional Provisions) Scottish Parliamentary Pension Scheme Order, SI 1999/1082. The scheme is a defined benefit scheme, and applies to the salary of members paid through the SPCB, to any ministerial salary and the salary of the Lord Advocate and Solicitor General for Scotland. The cost of pension cover provided for the MSPs is by payment of charges calculated on an accruing basis, with liability for payment of future benefits charged to the Scottish Parliamentary Pension Scheme (SPPS). Any liabilities of the fund arising from a deficit on assets will be met through increased funding and contributions. The liability for this will be met by the SPCB through the Scottish Consolidated Fund.

n. Operating Lease Charges
Rentals payable under operating leases are charged to the income and expenditure account in the period to which they relate.

o. Value Added Tax
The SPCB is treated as a Crown Body for the purposes of the Value Added Tax Act 1994 and accordingly for the purposes of Section 41 of that Act (application to the Crown) it is treated as a government department, and is exempt for VAT on the provision of parliamentary goods and services. The SPCB is standard rated for VAT on its trading activities, such as the Parliament shop.