Annual Report 2006-2007 - Cafcass

Expected useful lives are as follows:
freehold buildings
leasehold land and buildings
leasehold improvements
office equipment
computers & telecoms
vehicles
up to 60 years
up to 50 years or over
the term of the lease
over the term of the
lease
seven years
five years
up to four years
e) Pensions
Employees of Cafcass are members of the West Yorkshire
Pension Scheme, which is funded on a pay-as-you-go
basis. The amount charged to the staff costs represents
the contributions payable to the scheme in respect of
current employees in the accounting period. Contributions
are charged on a year-by-year basis in accordance with
the requirements of the scheme administrators.
A small number of Cafcass staff retained membership of
the Principal Civil Service Pension Scheme (PCSPS) by
virtue of their earlier employment with one of Cafcass’
predecessor organisations.
f) Grant-in-aid
Grant-in-aid, used to finance activities and expenditure
that supports the statutory and other objectives of
Cafcass, is treated as financing and credited to the general
reserve, because it is regarded as contributions from a
controlling party.
g) Income from activities
Income from activities is generated from training, student
placements and one-off receipts in the year. Income is
recognised on the issuing of an invoice. All income is
stated net of VAT.
h) Insurance
With the exception of comprehensive insurance on
contract lease and hire vehicles, Cafcass does not insure
but carries its own risks for fire, accidental damage and
similar accidents and claims at common law.
i) Operating leases
Rentals under operating leases are charged to the Income
and Expenditure Account on a straight-line basis over the
lease term.
j) Cost of capital charge
As required by Treasury, a charge is made to the Income
and Expenditure Account for the notional cost of capital.
The notional capital charge, which reflects the cost of
financing capital employed, is calculated at 3.5% (2005–06:
3.5%) of average net assets employed during the year
excluding cash balances held by HM Paymaster General.
In accordance with Treasury guidance the notional charge
is credited back to the Income and Expenditure Account
before determining the surplus or deficit for the year.
k) Accounting for Value Added Tax
Cafcass is registered for VAT. It is unable to recover most
of the VAT incurred on expenditure, although a small
amount of VAT can be recovered where it is related to the
costs recovered in court cases. Expenditure is therefore
stated inclusive of any irrecoverable VAT.
l) Pension scheme
Cafcass participates in a defined benefit pension scheme,
the West Yorkshire Pension Scheme. (It also participates
in the Principal Civil Service Pension Scheme). The assets
of the defined benefit scheme are held separately from
those of Cafcass. The scheme assets are measured using
market values. Scheme liabilities are measured using a
projected unit method and discounted at the current rate of
return on a high-quality corporate bond of equivalent term
and currency to the liability. The pension scheme surplus
(to the extent that it is considered recoverable) or deficit
is recognised in full on the face of the Balance Sheet. The
movement in the scheme surplus/deficit is split between
operating charges, financing items and, in the Statement of
Recognised Gains and Losses, actuarial gains and losses.
2 Change of accounting policy
With effect from the 2006–07 reporting period the FReM
requires NDPBs to account for grants and grants in aid
received for revenue purposes as financing because they
are regarded as contributions from a controlling party
which gives rise to a financial interest in the residual
interest of NDPBs. This is a change in accounting policy
from earlier periods when such items were recorded as
income. The effect of this change on the certified 2005–06
accounts and the impact of the change on the results of
the current year is shown below. Note there is no impact
on the net liability position of Cafcass as a result of this
change in policy.
Section 6: Accounts 2006–07 | 55