Report Summary
This report provides members of the Scottish Police Authority's Audit, Risk & Assurance Committee with an overview of of the proposed accounting policies, judgements and estimates, prior to the preparation and approval of the SPA Annual Report and Accounts.
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Meeting
The publication discussed was referenced in the meeting below
Audit, Risk and Assurance Committee - 21 May 2025
Date : 21 May 2025
Location : online
Report detail
It is best practice and outlined in the Scottish Government’s Audit Committee handbook that the ARAC should consider significant accounting policies, any changes to them and any significant estimates and judgements.
This allows committee consideration of key matters prior to the preparation of the Annual Report and Accounts (ARA).
The full draft ARA including these accounting policies, estimates and judgements will be formally presenting for noting in August for submission to external audit. Following completion of the audit the final ARA is expected to be approved in September.
The ARA is prepared according to International Financial Reporting Standards (IFRSs) issued by the International Accounting Standard Board as adapted and interpreted by guidance included in the Government Financial Reporting Manual (FreM).
Accounting Policies
The Authority’s accounting policies are the specific principles, conventions, rules and practices that are applied in the production and presentation of the ARA.
These policies are disclosed as the first note to the accounts. A copy of the proposed policies for 2024/25 is included at Appendix A.
Unless there are major changes to accounting rules and regulation, accounting policies do not change significantly between years. This also ensures the accounts are comparable from one year to the next.
There is a minor change to note 1.3 – segmental reporting. The divisions used in the monthly budget management reporting have been updated to reflect the change in reporting structure used for financial reporting during the year. There are no other proposed changes from the accounting policies used to prepare the ARA from the previous financial year.
Significant Judgements and Estimates
In line with IFRSs and the FReM, the SPA is required to disclose those key judgements and estimates that management have made in the process of applying the accounting policies that have the most significant effect on the financial statements.
Significant judgements include:
• Leases – in line with IFRS16 judgements are made on the estimated term of occupation;
• Provisions – for legal potential legal liabilities, legal opinion and judgement is sought to estimate the probability and amount. For significant lease dilapidations costs the judgement of qualified internal property valuers is used.
Significant estimates include:
• Property plant and equipment. Key estimates include: useful economic life and valuation. Properties are independently valued by an external qualified valuer who makes a professional estimate of the value.
• Pensions. A range of actuarial estimates are used in the valuation of the pension values recorded in the ARA. The SPA uses independent actuarial experts to carry out formal triennial valuations and provide reports to inform the disclosures at the year end.
Further detail of these significant judgements and estimates will be included as the final note to the ARA.
External audit also recognise in their plan a significant risk over the valuation of property, plant and equipment and the valuation of the pension fund net liabilities. They will undertake specific audit testing in response to these risk and report on their findings to management and the ARAC.
