Ministry of Defence Police and Guarding Agency

MINISTRY OF DEFENCE POLICE AND GUARDING AGENCY ANNUAL REPORT
Notes to the Accounts
20. POST BALANCE SHEET EVENTS
On 1 April 2006 the Ministry of Defence transferred responsibility for accounting for fixed assets from the Ministry of Defence
Police and Guarding Agency to other parts of the Ministry of Defence. Where the Agency retains the risks and rewards of ownership
of these assets, they will continue to be accounted for on the Agency’s balance sheet in accordance with FRS5 and SSAP 21. In
other cases, the costs of the use of these assets will be communicated to the Ministry of Defence Police and Guarding Agency
by the asset owners and charged to the operating cost statement. Consequently, these centrally accounted for assets will not be
included on the Agency’s balance sheet as they will be accounted for as operating leases under SSAP 21. There is no effect on
the 2005-06 accounts as a result of this change, and as a result no adjustments have been made to these financial statements.
21. LOSSES AND SPECIAL PAYMENTS
An historic balance emanating from a change in accounting systems at Defence Bills Agency has been written off. The Agency
is content that no assets or cash have been lost or remain un-recovered and that this is a book-keeping loss. There were no other
losses in 2005-06.
22. FINANCIAL INSTRUMENTS
FRS 13, Derivatives and Other Financial Instruments, requires disclosure of the role which financial instruments have had
during the period in creating or changing the risks an entity faces in undertaking its activities.
Because of the largely non-trading nature of its activities and the way in which government Agencies are financed, the Agency
is not exposed to the degree of financial risk faced by business entities. Moreover, financial instruments play a much more limited
role in creating or changing risk than would be typical of the listed companies to which FRS 13 mainly applies.
Financial assets and liabilities are generated by day-to-day operational activities and are not held to change the risks facing the
Agency in undertaking its activities, or for trading. The fair values of all the Agency’s financial assets and liabilities approximate
to their book values. In line with FRS 13, short term debtors and creditors (those which mature or become payable within 12
months from the balance sheet date) have been excluded from these disclosures.
23. NOTES TO THE CASH FLOW STATEMENT
58
Interest rate risk
The Agency has no financial assets and liabilities on which interest is earned or paid, and is therefore not exposed to significant
interest rate risk.
Currency risk
The Agency does not transact in foreign currencies and therefore is not exposed to foreign currency risk.
Liquidity risk
The Agency is not exposed to significant liquidity risk, as liquidity requirements are met by financing from the Ministry of
Defence Resource Account, and it has no borrowing facilities. The Department’s resource requirements are voted annually by
Parliament.
Reconciliation of Net Operating Cost to Operating Cash Outflow 2005/2006 2004/2005
Notes £'000 £'000
Net Operating Cost 312,638 286,842
Depreciation 8 (5,447) (7,595)
Impairment Arising from a Fall in Market Value of Fixed Assets 4 471 (345)
Transfer of Tangible Fixed Assets (749) 24
(Loss)/Gain on Disposal of Tangible Fixed Assets 4 (199) (168)
MOD Non-cash Transactions (Excluding movement in
early retirement provision)
23a/c (27,358) (27,231)
Adjustments for Movements in Working Capital other than Cash 23b 2,051 (1,163)
Movements in Provisions for Liabilities and Charges 23c 424 33
Net Cash Outflow From Operating Activities 281,831 250,397