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 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:
| 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
- 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
- Standards, amendments and interpretations early adopted this year
There are no new standards, amendments or interpretations early adopted this year.
- 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
| 2019/20 | Fixtures, Fittings & Equipment £'000 | IT Equipment £'000 | Total £'000 |
|---|---|---|---|
| Cost | |||
| At 1 April 2019 | 3 | 32 | 35 |
| Additions | - | 35 | 35 |
| Disposals | - | (23) | (23) |
| At 31 March 2020 | 3 | 44 | 47 |
| Depreciation | |||
| At 1 April 2019 | 3 | 26 | 29 |
| Charge for Year | - | 5 | 5 |
| Disposals | - | (22) | (22) |
| At 31 March 2020 | 3 | 9 | 12 |
| Net Book Value at 31 March 2020 | - | 35 | 35 |
| Net Book Value at 31 March 2019 | - | 6 | 6 |
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.
| 2018/19 | Fixtures, Fittings & Equipment £'000 | IT Equipment £'000 | Total £'000 |
|---|---|---|---|
| Cost | |||
| At 1 April 2018 | 3 | 31 | 34 |
| Additions | - | 3 | 3 |
| Disposals | - | (2) | (2) |
| At 31 March 2019 | 3 | 32 | 35 |
| Depreciation | |||
| At 1 April 2018 | 3 | 24 | 27 |
| Charge for Year | - | 4 | 4 |
| Disposals | - | (2) | (2) |
| At 31 March 2020 | 3 | 26 | 29 |
| Net Book Value at 31 March 2019 | - | 6 | 6 |
| Net Book Value at 31 March 2018 | - | 7 | 7 |
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
| 2019/20 | Software £'000 | Total £'000 |
|---|---|---|
| Cost | ||
| At 1 April 2019 | 62 | 62 |
| Additions | 3 | 3 |
| Disposals | (3) | (3) |
| At 31 March 2020 | 62 | 62 |
| Amortisation | ||
| At 1 April 2019 | 3 | 3 |
| Charge for Year | 14 | 14 |
| Disposals | (3) | (3) |
| At 31 March 2020 | 14 | 14 |
| Net Book Value at 31 March 2020 | 48 | 48 |
| Net Book Value at 31 March 2019 | 59 | 59 |
The Commissioner purchased £2,675 of additional assets in 2019/20 (2018/19: £58,865). The addition was for the purchase of software.
| 2018/19 | Software £'000 | Total £'000 |
|---|---|---|
| Cost | ||
| At 1 April 2018 | 3 | 3 |
| Asset under construction | 59 | 59 |
| At 31 March 2019 | 62 | 62 |
| Amortisation | ||
| At 1 April 2018 | 3 | 3 |
| Charge for Year | 0 | 0 |
| At 31 March 2019 | 3 | 3 |
| Net Book Value at 31 March 2019 | 59 | 59 |
| Net Book Value at 31 March 2018 | 0 | 0 |
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
| 2019/20 £'000 | 2018/19 £'000 | |
|---|---|---|
| Prepayments | 16 | 15 |
| 16 | 15 |
4. Cash and cash equivalents
| 2019/20 £'000 | 2018/19 £'000 | |
|---|---|---|
| Balance at 1 April | 91 | 148 |
| Net Change in cash and cash equivalent balances | 18 | (57) |
| Balance at 31 March | 109 | 91 |
| Cash Held at Commercial Banks | 109 | 91 |
5. Trade and other payables
| 2019/20 £'000 | 2018/19 £'000 | |
|---|---|---|
| Trade and other payables | (37) | (52) |
| PAYE and National Insurance | (10) | (9) |
| Pension Contributions | (10) | (7) |
| Accruals | (50) | (53) |
| (107) | (121) |
6. Expenditure breakdown
| 2019/20 £'000 | 2018/19 £'000 | |
|---|---|---|
| Staff Costs | ||
| Commissioner | 106 | 109 |
| Investigating Officers | 97 | 152 |
| Other Staff | 431 | 355 |
| 634 | 616 | |
| Other Administration Costs | ||
| Auditor & financial advisers | 13 | 14 |
| Hospitality | 1 | 2 |
| IT | 31 | 38 |
| Legal advisers | 6 | 8 |
| Other professional fees | 0 | 5 |
| Office costs | 14 | 13 |
| PAA costs | 103 | 136 |
| Printing | 2 | 3 |
| Property | 81 | 76 |
| Training & recruitment | 3 | 2 |
| Travel & expenses | 3 | 5 |
| 257 | 302 | |
| Additional legal support costs | 0 | 49 |
| Depreciation | 19 | 4 |
| 910 | 971 |
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.
| Land & Buildings | ||
|---|---|---|
| As at 31 March 2020 £'000 | As at 31 March 2019 £'000 | |
| Operating leases which expire: | ||
| Within one year | 89 | 82 |
| One to five years | Nil | 88 |
| 89 | 170 | |
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.
Statement of Changes in Taxpayers’ Equity
for Year Ended 31 March 2020
| General Fund 2020 £'000 | General Fund 2019 £'000 | |
|---|---|---|
| Balance at 1 April | 1 | 56 |
| Net Operating Costs for the Year | (910) | (971) |
| Funding From the SPCB | 1,010 | 916 |
| Balance at 31 March | 101 | 1 |
Statement of Cash Flow
for Year Ended 31 March 2020
Notes | 2020 £'000 | 2019 £'000 | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Net operating costs | (910) | (971) | |
| Adjustments for non-cash items: Depreciation | 6 | 19 | 4 |
| (Increase) in Trade and Other Receivables | 3 | (1) | (9) |
| (Decrease)/Increase in Trade and Other Payables | 5 | (62) | 65 |
| Net cash outflow from operating activities | (954) | (911) | |
| Cash flows from investing activities | |||
| Purchase of Tangible Assets | 2.1 | (35) | (3) |
| Purchase of Intangible Assets | 2.2 | (3) | (59) |
| (38) | (62) | ||
| (992) | (973) | ||
| Cash flows from financing activities | |||
| From the SPCB | 1010 | 916 | |
| Net increase/(decrease) in cash and cash equivalents in the year | 18 | (57) | |
| Cash and Cash Equivalents at the beginning of the reporting year | 4 | 91 | 148 |
| Cash and Cash Equivalents at end of the reporting year | 4 | 109 | 91 |
| Net cash requirement | |||
| Cash flows from financing activities | 1010 | 916 | |
| Increase/(Decrease) in cash | 18 | (57) | |
| Net cash requirement | 1028 | 859 |
Statement of Financial Position
as at 31 March 2020
Notes | 2020 £'000 | 2019 £'000 | |
|---|---|---|---|
| Non Current Assets | |||
| Tangible Assets | 2.1 | 35 | 6 |
| Intangible Assets | 2.2 | 48 | 59 |
| Total Non Current Assets | 83 | 65 | |
| Current Assets | |||
| Trade and Other Receivables | 3 | 16 | 15 |
| Cash and Cash Equivalents | 4 | 109 | 91 |
| Total Current Assets | 125 | 106 | |
| TOTAL ASSETS | 208 | 171 | |
| Current Liabilities | |||
| Trade and Other Payables | 5 | (107) | (121) |
| Additional Legal Support Costs | 11 | (0) | (49) |
| Total Current Liabilities | (107) | (170) | |
| ASSETS LESS LIABILITIES | 101 | 1 | |
| Taxpayers' Equity | |||
| General Fund | 101 | 1 | |
| Total Taxpayers' Equity | 101 | 1 |
The accompanying Notes to the Financial Statements form an integral part of these financial statements.
Authorisation
Caroline Anderson FCA
Ethical Standards Commissioner
Date: 7 October 2020
Statement of Comprehensive Net Expenditure
for the year ended 31 March 2020
Notes | 2020 £'000 | 2019 £'000 | |
|---|---|---|---|
| Administration Costs | |||
| Staff Costs | 6 | 634 | 616 |
| Other Administration Costs | 6 | 257 | 302 |
| Additional Legal Support Costs | 11 | 0 | 49 |
| Depreciation | 6 | 19 | 4 |
| Net Administration Costs | 910 | 971 | |
| Total Comprehensive Expenditure | 910 | 971 |
All amounts relate to continuing activities. There have been no gains or losses other than those recognised in the Statement of Comprehensive Net Expenditure.
The accompanying Notes to the Financial Statements form an integral part of these financial statements.
Financial Statements
Independent auditor’s report
to the Commissioner for Ethical Standards in Public Life in Scotland, the Auditor General for Scotland and the Scottish Parliament
Report on the audit of the financial statements
Opinion on financial statements
We have audited the financial statements in the annual report and accounts of Commissioner for Ethical Standards in Public Life in Scotland for the year ended 31 March 2020 under the Scottish Parliamentary Commissions and Commissioners etc. Act 2010. The financial statements comprise the Statement of Comprehensive Net Expenditure, the Statement of Financial Position, the Statement of Cash Flow, the Statement of Changes in Taxpayers’ Equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union, and as interpreted and adapted by the 2019/20 Government Financial Reporting Manual (the 2019/20 FReM).
In our opinion the accompanying financial statements:
- give a true and fair view in accordance with the Scottish Parliamentary Commissions and Commissioners etc. Act 2010 and directions made thereunder by the Scottish Ministers of the state of the body’s affairs as at 31 March 2020 and of its net expenditure for the year then ended;
- have been properly prepared in accordance with IFRSs as adopted by the European Union, as interpreted and adapted by the 2019/20 FReM; and
- have been prepared in accordance with the requirements of the Scottish Parliamentary Commissions and Commissioners etc. Act 2010 and directions made thereunder by the Scottish Ministers.
Basis for opinion
We conducted our audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Auditor General for Scotland. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We were appointed by the Auditor General on 31 May 2016. The period of total uninterrupted appointment is four years. We are independent of the body in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the body. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern basis of accounting
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
- the use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
- the body has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about its ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Risks of material misstatement
We have reported in a separate Annual Audit Report, which is available from the Audit Scotland website, the most significant assessed risks of material misstatement that we identified and our conclusions thereon.
Responsibilities of the Accountable Officer for the financial statements
As explained more fully in the Statement of the Accountable Officer's Responsibilities as the Accountable Officer, the Accountable Officer is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Accountable Officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Accountable Officer is responsible for assessing the body’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless deemed inappropriate.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved. We therefore design and perform audit procedures which respond to the assessed risks of material misstatement due to fraud.
A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other information in the annual report and accounts
The Accountable Officer is responsible for the other information in the annual report and accounts. The other information comprises the information other than the financial statements, the audited part of the Remuneration and Staff Report, and our independent auditor’s report. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except on matters prescribed by the Auditor General for Scotland to the extent explicitly stated later in this report.
In connection with our audit of the financial statements, our responsibility is to read all the other information in the annual report and accounts and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Report on regularity of expenditure and income
Opinion on regularity
In our opinion in all material respects the expenditure and income in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.
Responsibilities for regularity
The Accountable Officer is responsible for ensuring the regularity of expenditure and income. We are responsible for expressing an opinion on the regularity of expenditure and income in accordance with the Public Finance and Accountability (Scotland) Act 2000.
Report on other requirements
Opinions on matters prescribed by the Auditor General for Scotland
In our opinion, the audited part of the Remuneration and Staff Report has been properly prepared in accordance with the Scottish Parliamentary Commissions and Commissioners etc. Act 2010 and directions made thereunder by the Scottish Ministers.
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Performance Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Scottish Parliamentary Commissions and Commissioners etc. Act 2010 and directions made thereunder by the Scottish Ministers; and
- the information given in the Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Scottish Parliamentary Commissions and Commissioners etc. Act 2010 and directions made thereunder by the Scottish Ministers.
Matters on which we are required to report by exception
We are required by the Auditor General for Scotland to report to you if, in our opinion:
- adequate accounting records have not been kept; or
- the financial statements and the audited part of the Remuneration and Staff Report are not in agreement with the accounting records; or
- we have not received all the information and explanations we require for our audit.
We have nothing to report in respect of these matters
Conclusions on wider scope responsibilities
In addition to our responsibilities for the annual report and accounts, our conclusions on the wider scope responsibilities specified in the Code of Audit Practice are set out in our Annual Audit Report.
Use of our report
This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 120 of the Code of Audit Practice, we do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.
Pat Kenny, CPFA (for and on behalf of Deloitte LLP)
110 Queen Street
Glasgow
G1 3BX
United Kingdom
7 October 2020
The audit process
Requirement for accounts
The accounts for the financial year ended 31 March 2020 have been prepared in accordance with the Accounts Direction given by the Scottish Ministers on 22 May 2012 in pursuance of Section 22(1) of the Scottish Parliamentary Commissions and Commissioners etc. Act 2010 (the 2010 Act). The Accounting Officer authorised these financial statements for issue on 1 October 2020.
Disclosure of information to auditor
As Accountable Officer with effect from 1 April 2019, the Commissioner is not aware of any relevant information of which the auditor is unaware. The Commissioner has taken all necessary steps to ensure that she is aware of any relevant information and to establish that the auditor is also aware of this information.
Audit
The accounts are audited by the Auditor General for Scotland in accordance with section 22(1) of the Scottish Parliamentary Commissions and Commissioners etc. Act 2010. The Auditor General appointed Deloitte LLP as external auditor.
Auditor’s Fees
The external auditor’s remuneration for the year was £12,600 (2018/19: £12,900). External audit received no fees in relation to non-audit work.
The Commissioner confirms that the annual report and accounts as a whole is fair, balanced and understandable and that she takes personal responsibility for the annual report and accounts and the judgments required for determining that it is fair, balanced and understandable.
Authorisation
Caroline Anderson FCA
Ethical Standards Commissioner
Date: 7 October 2020