Appendix 1: Accounts direction

Appendices

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 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 Scottish Parliamentary Corporate Body (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.

Current accommodation arrangements are governed by a Memorandum of Terms of Occupation. This allows for termination with six months’ written notice. Therefore, a lease does not exist and capitalisation is not required

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:

Fixtures, Fittings & Equipment: 5 years
IT Equipment: 5 years

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

The Commissioner discloses accounting standards not yet applied and assesses the possible impact that initial application would have on the financial statements. There is one standard not yet effective, IFRS 17 (Insurance Contracts).

IFRS 17 (Insurance Contracts) was issued in May 2017, replacing IFRS 4 Insurance Contracts, with the effective date of the standard in the public sector being 1 April 2025. IFRS 17 requires that insurance liabilities be measured at the present value of future cash flows, resulting in more uniform measurements and presentation for all insurance contracts.

Management has assessed the likely effect of the new standard and has concluded that there are no material assets or liabilities recognised as insurance contracts in the Ethical Standards Commissioner and this standard will have no impact on our accounts

2. NON CURRENT ASSETS

2.1 Tangible Assets

The Commissioner purchased £5,434 of additional assets in 2024/25 (2023/24: £4,594), consisting primarily of laptops.

2.2  Intangible Assets

The Commissioner did not purchase any intangible assets in 2024/25 (2023/24: Nil).

3. Trade and Other Receivables

4. Cash and Cash Equivalents

5. Trade and Other Payables

6. Expenditure Breakdown

Staff costs include salary as well as employers’ national insurance and pension contributions.

Further analysis of staff costs is located in the Staff Report - Figure 19.

The £28,552 for Audit includes £18,952 for external auditor’s remuneration and £9,600 for internal audit. During the year the Commissioner did not purchase any non-audit services from its auditor.

During the financial year, £5,434was used to purchase non-current assets as detailed in note 2 to the financial statements (2023/24: £4,594). These assets consisted of laptops.

7. Leasing Commitments

The Scottish Legal Aid Board (SLAB) provides the Commissioner with office accommodation and associated services under a Memorandum of Terms of Occupation (MoTO). The Commissioner contributes a percentage of building costs based on occupied floor space, including rates, utilities, cleaning and maintenance, and facilities provided by in-house staff.  The Commissioner also pays rent on a quarterly basis based on a percentage of building capital charges. 

The figures above are estimates provided at the beginning of the financial year. The increase reflects a rise in utility costs and an increase in service charges, including maintenance and cleaning. Actual costs in 2024/25 were £110,992 (2023/24: £101,800).

From 31 March 2022, the MoTO may be extended from year to year until ended by either party giving six months’ notice. It is anticipated this arrangement will continue in the short term and at least until 31 March 2026.

The MoTO has been extended until 31 March 2026 at an estimated cost of £113,000.

8. Capital Commitments

There were no contracted capital commitments as at 31 March 2025 (2024: Nil).

9. Contingent Liabilities

The Commissioner had no contingent liabilities as at 31 March 2025 (2024: 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 £1,709,000 during the year (2023/24: £1,554,000).

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

11. Post Statement of Financial Position Events

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

Statement of changes in taxpayer's equity

Statement of cash flow

Statement of financial position

The accompanying notes to the financial statements form an integral part of these financial statements.

As Accountable Officer, I authorised these financial statements for issue on 3 October 2025
 

Authorisation
 

Ian Bruce
Accountable Officer
Date: 03 October 2025