Item 8 - Sheffield Health and Social Care

Local government pension schemeSome employees are members of the LocalGovernment Pension Scheme, administered bythe South Yorkshire Pensions Authority, which isa defined benefit pension scheme. The schemeassets and liabilities attributable to these employeescan be identified and are recognised in the Trust’saccounts. The assets are measured at fair value,and the liabilities at the present value of futureobligations.The increase in the liability arising from pensionableservice earned during the year is recognised withinoperating expenses. The expected gain duringthe year from scheme assets is recognised withinfinance income. The interest cost during the yeararising from the unwinding of the discount onthe scheme liabilities is recognised within financecosts. Actuarial gains and losses during the year arerecognised in the income and expenditure reserveand reported in the Statement of ComprehensiveIncome as an item of ‘other comprehensive income’.These postings are mostly countered by the terms ofthe current partnership agreement.The terms of the current partnership agreementwith Sheffield City Council (‘the Council’) providethat any long term pension liability arising from thescheme will be funded by the Council, with theexception of any pension changes which relate tosalary increases in excess of any local governmentgrading agreements. The impact on current andprior year Statement of Comprehensive Income andStatement of Changes in Taxpayers’ Equity relatingto the application of IAS 19 – ‘Employee Benefits’within the accounts of the Trust is mostly negatedby the inclusion of a corresponding non-currentreceivable with the Council. As at 31 March 2013,the deficit on the scheme was £3,867,000(31 March 2012 – £2,714,000), which is offsetby a non-current receivable of £3,402,960 (31 March2012 – £2,388,000). For further informationsee note 26.Expenditure on other goods and servicesExpenditure on goods and services is recognisedwhen, and to the extent that they have beenreceived, and is measured at the fair value of thosegoods and services. Expenditure is recognised inoperating expenses except where it results in thecreation of a non-current asset such as property,plant and equipment.Property, plant and equipmentRecognitionProperty, Plant and Equipment is capitalised where:• it is held for use in delivering services or foradministrative purposes;• it is probable that future economic benefitswill flow to, or service potential be provided to,the Trust;• it is expected to be used for more than onefinancial year;• the cost of the item can be measured reliably;and• the item has a cost of at least £5,000; or• collectively, a number of items have a cost ofat least £5,000 and individually have a costof more than £250, where the assets arefunctionally interdependent, they had broadlysimultaneous purchase dates, are anticipated tohave simultaneous disposal dates and are undersingle managerial control (a “grouped asset”); or• items form part of the initial equipping andsetting-up cost of a new building, ward or unit,(treated as a “grouped asset”) .Where a large asset, for example a building, includesa number of components with significantly differentasset lives e.g. plant and equipment, then thesecomponents are treated as separate assets anddepreciated over their own useful economic lives.MeasurementValuationAll property, plant and equipment assets aremeasured initially at cost, representing the costsdirectly attributable to acquiring or constructing theasset and bringing it to the location and conditionnecessary for it to be capable of operating in themanner intended by management. All assets aremeasured subsequently at fair value.Land and buildings used for the Trust’s services or foradministrative purposes are stated in the Statementof Financial Position at their revalued amounts,being the fair value at the date of revaluation lessany subsequent accumulated depreciation andimpairment losses. Revaluations are performedwith sufficient regularity to ensure that carryingamounts are not materially different from those thatwould be determined at the end of the reportingperiod. The current revaluation policy of the Trust isto perform a full valuation every five years with aninterim valuation in the third year. These valuationsare carried out by professionally qualified valuersin accordance with Royal Institution of CharteredSurveyors (RICS) Appraisal and Valuation Manual.Fair values are determined as follows:• Land and non-specialised buildings – marketvalue taking into account existing use• Specialised buildings – depreciatedreplacement costHM Treasury has adopted a standard approach todepreciated replacement cost valuations based onmodern equivalent assets and, where a service couldbe provided in any part of the City, the Trust hasused the alternative site valuation method.An interim valuation exercise was undertaken by theTrust’s valuers, GVA Grimleys, during 2012/13. Thevaluation methodology detailed above was utilisedwithin this revaluation, which was performed asat 1 April 2012.Properties in the course of construction for serviceor administration purposes are carried at cost, lessany impairment loss. Cost includes professionalfees but not borrowing costs, which are recognisedas expenses immediately, as allowed by IAS 23 forassets held at fair value. Assets are revalued anddepreciation commences when they are broughtinto use.The carrying value of plant and equipment is writtenoff over their remaining useful lives and new plantand equipment is carried at depreciated historic costas this is not considered to be materially differentfrom fair value.Subsequent expenditureSubsequent expenditure relating to an item ofproperty, plant and equipment is recognised as anincrease in the carrying amount of the asset when itis probable that additional future economic benefitsor service potential deriving from the cost incurredto replace a component of such item will flowto the enterprise and the cost of the item can bedetermined reliably.Where a component of an asset is replaced, thecost of the replacement is capitalised if it meetsthe criteria for recognition above. The carryingamount of the part replaced is de-recognised. Otherexpenditure that does not generate additionalfuture economic benefits or service potential, suchas repairs and maintenance, is charged to theStatement of Comprehensive Income in the periodin which it is incurred.DepreciationItems of property, plant and equipment aredepreciated over their remaining useful economiclives in a manner consistent with the consumptionof economic or service delivery benefits. Freeholdland is considered to have an infinite life and isnot depreciated.The estimated useful economic lives are as follows:Minimum life years Maximum life yearsBuildings – Freehold 15 50Plant and Machinery 5 15Transport Equipment 3 7Information Technology 5 10Furniture and Fittings 7 10Property, plant and equipment which has been reclassified as ‘Held for Sale’ ceases to be depreciated upon thereclassification. Assets in the course of construction are not depreciated until the asset is brought into use.159160