Ministry of Defence Police and Guarding Agency

I. NOTIONAL AND NON CASH CHARGES
Intra-Departmental Charges
Non-cash amounts are included in the Operating Cost
Statement for charges in respect of services provided from
other areas of the MOD. The amounts so charged are
calculated to reflect the full cost of providing these services
to the Agency and include centrally provided training and
administration costs.
With specific regard to accommodation on other sites, the
costs communicated are based on actual costs supplied by
the host establishment or estimates where actual costs were
unavailable.
Audit Fee
MDPGA is not charged an audit fee by the National Audit
Office. The audit fee shown represents the notional charge to
the Operating Cost Statement based on the cost of the
services provided.
J. CAPITAL CHARGE
A charge reflecting the cost of capital utilised by the
Agency is included in operating costs. The charge is
calculated using HM Treasury's standard rate of 3.5% of the
average value of net assets (3.5% in 2004/05).
K. EARLY RETIREMENT SCHEME
The Civil Service White Paper, Continuity and Change
(Cm 2627) published in July 1994, announced new
arrangements for funding early departure costs of civil
servants departing between 1 October 1994 and 31 March
1997. Under these arrangements 20 per cent of the cost
was to be borne by Agencies and Departments and the
remaining 80 per cent, which would have otherwise fallen
upon the Departments' running costs, was to be met
centrally from the Civil Superannuation Vote. For 1996/97
the 80:20 arrangements applied only after the body had
used all its existing 1996/97 expenditure provision for early
departure costs.
HM Treasury issued a direction that the 20% borne by the
Agency should be charged to the Operating Cost Statement
straight away and taken to a Provision on the Balance Sheet.
The Treasury also directed that a notional charge for the 80%
element borne by the Civil Superannuation Vote should be
reflected in the Agency’s Operating Cost Statement each
year. However, from 1 April 1999 HM Treasury’s Resource
Accounting Manual (now replaced by the Financial Reporting
Manual) no longer requires this notional charge to be made.
With regard to retirements that took place after 1 April
1997, the MDPG Agency has made 100% provision for
liabilities to be incurred in future years.
MINISTRY OF DEFENCE POLICE AND GUARDING AGENCY ANNUAL REPORT
L. PROVISIONS
Provisions for liabilities and charges have been
established under the criteria of FRS 12 and are based on
realistic and prudent estimates of the expenditure required
to settle future legal or constructive obligations that exist at
the Balance Sheet date.
Provisions are charged to the Operating Cost Statement.
All long-term provisions are discounted to current prices by
the use of HM Treasury’s Test Discount Rate, which is
currently 2.2% (3.5% in 2004/05). The discount is unwound
over the remaining life of the provision and shown as an
interest charge in the Operating Cost Statement.
M. LEASES
Rentals payable under operating leases are charged to the
Operating Cost Statement over the term of the lease.
There are no assets held on finance leases or on hire
purchase agreements.
N. SALARY ADVANCES
Where applicable, MOD staff are entitled to salary
advances for house purchase, in accordance with MOD
regulations. These advances are paid through the payroll
system. Balances outstanding at 31 March 2006 relate to
65 MDP Officers and are included in Debtors at Note 10.
O. TAXATION AND SOCIAL SECURITY
As the Ministry of Defence charges the Agency during the
year with the gross payments, inclusive of PAYE and National
Insurance contributions, due to Agency employees, the
Department is liable for the payment of any liabilities which
may be due to the HM Revenue and Customs or Department
for Work and Pensions at the balance sheet date, and these
are not disclosed in the Agency’s Balance Sheet.
P. PENSIONS
Past and present employees are covered by the provisions
of the Principal Civil Service Pension Scheme (PCSPS) and
the Armed Forces Pension Scheme (AFPS) which are
described at Note 3c. These defined benefit schemes are
unfunded and non-contributory except in respect of
dependents’ benefits.
The Agency recognises the expected cost of these
elements on a systematic and rational basis over the period
during which it benefits from employees’ services by payment
to the PCSPS or AFPS of amounts calculated on an accruing
basis.
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