Highways Agency Annual Report and Accounts 2011-2012

Financial Statements: SECTION 10
Notes to the Agency’s Accounts
1 Statement of Accounting Policies
These financial statements have been prepared in accordance with the 2011-12 Government Financial
Reporting Manual (FReM) issued by HM Treasury. 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 the choice of accounting policy, the accounting policy which is judged to be
most appropriate to the particular circumstances of the Agency for the purpose of giving a true and fair
view has been selected. The particular policies adopted by the Agency are described below. They have
been applied consistently in dealing with items considered material to the accounts.
1.1 Accounting Convention
These accounts have been prepared under the historical cost convention modified to account for the
revaluation of non-current assets.
1.2 Other recent accounting developments
Standards
The Agency has reviewed all new accounting standards, amendments and interpretations of standards
that are effective in 2011-12 to determine the impact on the Agency’s financial position. The following
standards were issued
• IFRS 7 Financial Instruments Disclosure (amended); effective for annual periods beginning on or after
1 July 2011. This standard was amended to improve understanding of transfer transactions of financial
assets. The Agency has reviewed relevant disclosures.
• IFRS 9 Financial Instruments: effective for annual periods beginning on or after 1 January 2013.
However, this can be adopted in phases with phase 1 on or after 1 January 2009. This is a new
standard on classification and measurement of financial assets that will replace IAS39. This will have
no material effect on the Agency’s financial statements.
The adoption of the above standards and interpretations in future periods will have no material effect on
the Agency’s financial statements.
FReM
The FReM includes the following accounting changes that have been issued and are effective in 2011-12:
• Governance Statement – Introduction of a Governance Statement to incorporate and replace the
current Statement on Internal Control (see page 43).
• Sustainability Reporting – Requirement to include sustainability report within Annual Reports and
Accounts from 2011-12 (see pages 40 and 41).
1.3 Prior Period Adjustments
Material adjustments applicable to prior periods arising from either changes in accounting policy,
correction of material errors, or the value of trunked/detrunked roads are accounted for as prior year
adjustments. Opening balances are adjusted for the cumulative effect of the prior year adjustment and
comparative figures for the preceding period are restated.
During the year the A3 Hindhead tunnel was opened to traffic, the structure was designated as a Special
Structure for valuation purpose and valued at actual cost rather than standard cost. This approach
resulted in £211,049,000 write back for prior periods.
Highways Agency Annual Report and Accounts 2011-12