Corporate report

OISC Annual Report and Accounts 2020 - 21 : Part 3: Financial Statements

Published 19 July 2021

3.1 Statement of Comprehensive Net Expenditure

For the year ended 31 March 2021

		2020/21		2019/20
	Note	£’000	£’000	£’000	£’000
Revenue from contracts with customers	3	(986)		(922)
Other operating income	3	(15)		(3)
Total operating income			(1,001)		(925)
Staff costs	4	3,046		2,798
Other expenditure	5	1,016		1,175
Total operating expenditure			4,062		3,973
Net expenditure			3,061		3,048

All income and expenditure is derived from continuing activities. There is no other Comprehensive Net Expenditure.

The Notes to the Accounts form part of these accounts.

3.2 Statement of Financial Position

As at 31 March 2021

		31 March 2021		31 March 2020
	Note	£’000	£’000	£’000	£’000
Non-current Assets
Property, plant and equipment	6	22		36
Intangible assets	7	37		46
Total non-current assets			59		82
Current assets
Trade and other receivables	8	144		163
Cash and cash equivalents	11	943		419
Total current assets			1,087		582
Total assets			1,146		664
Current liabilities
Trade and other payables	9	(734)		(558)
Total current liabilities			(734)		(558)
Non-current assets plus net current assets			412		106
Non-current liabilities
Trade and other payables	9	(33)		(73)
Provisions for liabilities and charges	10	(147)		(99)
Total non-current liabilities			(180)		(172)
Assets less liabilities			232		(66)
Taxpayers’ equity
General fund			232		(66)
Total taxpayers’ equity SoCTE			232		(66)

John Tuckett

Immigration Services Commissioner and Accounting Officer

7 July 2021

The Notes to the Accounts form part of these accounts.

3.3 Statement of Cash Flows

For the year ended 31 March 2021

		2020/21	2019/20
	Note	£’000	£’000
Cash flows from operating activities
Net expenditure	SoCNE	(3,061)	(3,048)
Adjustments for non-cash costs
Depreciation and amortisation	5	23	59
Decrease in trade and other receivables	8	19	138
Increase in trade and other payables	9	136	166
Increase in provision for liabilities and charges	10	48	48
Net cash outflow from operating activities		(2,835)	(2,637)
Cash flows from investing activities
Purchase of property, plant and equipment	6	0	(8)
Net cash outflow from investing activities		0	(8)
Cash flows from financing activities
Grant-in-aid	SoCTE	4,388	3,820
Appropriation of fees to the Home Office	SoCTE	(1,029)	(918)
Net cash inflow from financing activities		3,359	2,902
Net increase in cash and cash equivalents in the year	11	524	257
Cash and cash equivalents at the beginning of the year	11	419	162
Cash and cash equivalents at the end of the year	11	943	419

The Notes to the Accounts form part of these accounts.

3.4 Statement of Changes in Taxpayers’ Equity

For the year ended 31 March 2021

	General Reserve
	£’000
Balance at 31 March 2019	80
Changes in taxpayers’ equity for 2019/20
Appropriation of fees to the Home Office	(918)
Net Expenditure for Year Ended 31 March 2020	(3,048)
Grant-in-aid	3,820
Balance at 31 March 2020	(66)
Changes in taxpayers’ equity for 2020/21
Appropriation of fees to the Home Office	(1,029)
Net Expenditure for Year Ended 31 March 2021	(3,061)
Grant-in-aid	4,388
Balance at 31 March 2021	232

The Notes to the Accounts form part of these accounts.

Notes to the Accounts

1. Statement of Accounting Policies

Basis of Accounts

These financial statements have been prepared in accordance with the 2020/21Government Financial Reporting Manual (FReM) issued by HM Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy that is judged to be most appropriate to the particular circumstances of the OISC for the purpose of giving a true and fair view has been selected. The particular policies adopted by the OISC are described below. They have been applied consistently in dealing with items that are considered material to the accounts.

Accounting Conventions

These accounts have been prepared under the historical cost convention. Depreciated historic cost is used as a proxy for current value in existing use.

Changes in accounting policies and standards: New accounting standards adopted

There are no new accounting standards applicable this year.

New standards, amendments and interpretations issued but not effective for the financial year beginning 1 April 2020 and not early adopted

IFRS 16: Leases will be applicable to OISC from 1 April 22 and will change the way OISC recognises, measures, presents and discloses leases that it holds. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is short term (less than 12 months) or the underlying asset has a low value. The impact of IFRS 16 on OISC is not considered to have a material impact due to the short-term lease and low value exemptions.

Grant-in-aid

Grant-in-aid and grant used to finance activities and expenditure which supports the statutory and other objectives of the OISC are treated as financing and are credited to the General Reserve because they are regarded as contributions from a controlling party.

Going concern

The OISC’s grant-in-aid for 2020/21: £4,388k was approved, which included £552k of supplementary grant-in-aid (2019/20: £3,820k).

There is an expectation that the OISC will continue in operational existence and has a statutory obligation to continue to provide services in 2021/22 and for the foreseeable future. The future financing of the OISC’s liabilities will be met by Grant-in-Aid to support its operations, and future financial support. There is no indication that this will cease over the next twelve months.

Accordingly, it is appropriate to adopt a going concern basis for the preparation of these financial statements.

Non-current assets

Assets are capitalised as non-current assets if they are intended for use on a continuous basis and their original purchase cost, on an individual or grouped basis, is £1,000 or more. The OISC has elected to adopt a depreciated historical cost basis as a proxy for current value in existing use for assets that have short useful lives or low values.

Depreciation and amortisation

Depreciation is provided on all property, plant and equipment over life of the tenancy agreement, March 2014 to November 2022. Amortisation on intangible assets is provided for on a 20% reducing balance basis.

Office refurbishments	on a straight-line basis
Computer equipment	on a straight-line basis
Furniture and office equipment	on a straight-line basis
Themis software	on a 20% reducing balance basis
Office Software	on a 20% reducing balance basis

The dilapidation provision

The OISC recognises a dilapidation provision for the leased premises it occupies where it has an obligation to bring the property into a good state of repair at the end of the lease. The provision is recognised annually as wear and tear is incurred, on a straight line basis.

Revenue from contracts with customers

Fees that accompany applications to the Commissioner for registration or continued registration are recognised in the Statement of Comprehensive Net Expenditure at the point in time when a decision is made as to whether to register the applicant as an immigration adviser.

Under Paragraph 5(2) of Schedule 6 of the Immigration and Asylum Act 1999 the Commissioner cannot entertain an application for either registration or continued registration unless the application is accompanied by the specified fee.

Except where a fee was received in error or a mistake was made in accepting that fee by the OISC, fees are non-refundable either in full or in part.

Where the Commissioner is in receipt of fees for which decisions have not yet been made on the applications at year end, the fees are held in contract liabilities and only recognised when the decision has been made.

Appropriation of fees to the Home Office

All fees are held by the Commissioner in a separate bank account from that used for the running expenses of his Office and are remitted in full to the Home Office on a quarterly basis. These payments are disclosed as an appropriation within the Statement of Changes in Taxpayer’s Equity.

Operating leases

The OISC has commitments under two operating leases in respect of the premises it occupies. The OISC’s commitments are disclosed in Note 12. There are no finance leases.

Payments made under operating leases are charged to expenditure on a straight-line basis over the term of the lease. In accordance with the principles of IAS17 (leases) and the supplementary guidance specified in SIC 15 (operating lease incentives), OISC has spread the value of rent free periods over the lease term.

Pension costs

Past and present employees are covered by the provisions of the Civil Servants and Others Pension Scheme for those in the alpha pension scheme and the Principal Civil Service Pension Scheme (PCSPS) for those in one of the other civil service occupational pension schemes, which are defined benefit schemes and are unfunded and non-contributory. As it is a multi-employer scheme, OISC is unable to identify its share of underlying assets and liabilities. The OISC recognises the expected cost of providing pensions on a systematic and rational basis over the period during which it benefits from employees’ services by payment to the appropriate scheme of amounts calculated on an accruing basis. Liability for payment of future benefits is a charge on the Civil Servants and Other Pension Scheme and the PCSPS. The rate of the employer’s contribution is determined from time to time by the Government Actuary and advised by HM Treasury. Contributions are charged to the Statement of Comprehensive Net Expenditure.

Holiday accrual

An accrual is made of outstanding holiday due to OISC staff as at the end of the financial year. The calculation is based on 229 working days excluding annual and privilege leave. Total holiday accrual at 31 March 2021: £156,635 (31 March 2020: £104,768).

Value Added Tax

The OISC is not registered for VAT and all costs are shown inclusive of VAT.

2. Operating segments

The statutory duty of the OISC, as enacted in the Immigration and Asylum Act 1999, is to promote good practice by those who provide immigration advice or immigration services and to ensure that those who do so are fit and competent. It is also to operate a complaints scheme regarding all who provide immigration advice or services.

All the financial resources of the OISC are used towards the furtherance of this statutory duty. The OISC does not, therefore, have separate reporting of operating segments as envisaged by IFRS 8.

3. Income

Revenue from contracts with customers

	2020/21	2019/20
	£’000	£’000
Adviser fees	986	922
	986	922

Other Operating Income

	2020/21	2019/20
	£’000	£’000
Court costs	1	3
Other income	14*	0
	15	3

*£14k EU Exit Communications Funding Video Messaging

The monies received from fees and other income are passed to the Home Office each quarter. These are shown in the Statement of Comprehensive Net Expenditure.

4. Staff costs

Staff costs comprise:

	Total	2020/21 Permanently Employed	Others	2019/20
	£’000	£’000	£’000	£’000
Wages and salaries	2,260	2,260	0	2,072
Social security costs	236	236	0	216
Other pension costs	550	550	0	510
	3,046	3,046	0	2,798

5. Other expenditure

	2020/21	2019/20
	£’000	£’000
Running costs
Accommodation	303	283
Information technology	71	68
Legal costs*	124	190
Advertising and publicity	26	14
Office supplies and services	28	37
Website	0	2
Training	15	28
External audit fee**	21	20
Other running costs***	111	181
Rentals under operating leases	246	245
Non-cash items
Depreciation and Amortisation	23	59
Dilapidation provision charge	48	48
	1,016	1,175

*Reduction in external legal costs due to employment of in-house lawyer and court hearings postponed due to COVID -19.

**External audit fees do not include any non-audit work undertaken by the National Audit Office (NAO). Total fees paid to NAO for non-audit work £0 (2019/20: nil)

***Decrease due to reduction in staff subsistence, scanning of documents and coaching costs, as a result of staff remote working and budget caps.

6. Property, plant and equipment

		2020/21
	Office Refurbishment	Furniture and Office Equipment	Computer Equipment	Total
	£’000	£’000	£’000	£’000
Cost at 1 April 2020	94	58	279	431
Additions	0	0	0	0
Cost at 31 March 2021	94	58	279	431
Depreciation at 1 April 2020	(66)	(56)	(273)	(395)
Charged during the year	(11)	(1)	(2)	(14)
Depreciation at 31 March 2021	(77)	(57)	(275)	(409)
Net book value at 31 March 2021	17	1	4	22
Net book value at 31 March 2020	28	2	6	36

		2019/20
	Office Refurbishment	Furniture and Office Equipment	Computer Equipment	Total
	£’000	£’000	£’000	£’000
Cost at 1 April 2019	94	54	275	423
Additions	0	4	4	8
Cost at 31 March 2020	94	58	279	431
Depreciation at 1 April 2019	(55)	(46)	(246)	(347)
Charged during the year	(11)	(10)	(27)	(48)
Depreciation at 31 March 2020	66)	(56)	(273)	(395)
Net book value at 31 March 2020	28	2	6	36
Net book value at 31 March 2019	39	8	29	76

7. Intangible assets

		2020/21
	Themis Software	Office Software	Total
	£’000	£’000	£’000
Cost at 1 April 2020	293	26	319
Additions	0	0	0
Cost at 31 March 2021	293	26	319
#Amortisation at 1 April 2020	(262)	(11)	(273)
Provided during the year	(6)	(3)	(9)
Amortisation at 31 March 2021	(268)	(14)	(282)
Net book value at 31 March 2021	25	12	37
Net book value at 31 March 2020	31	15	46

		2019/20
	Themis Software	Office Software	Total
	£’000	£’000	£’000
Cost at 1 April 2019	293	26	319
Additions	0	0	0
Cost at 31 March 2020	293	26	319
Amortisation at 1 April 2019	(254)	(8)	(262)
Provided during the year	(8)	(3)	(11)
Amortisation at 31 March 2020	(262)	(11)	(273)
Net book value at 31 March 2020	31	15	46
Net book value at 31 March 2019	39	18	57

8. Trade and other receivables

	31 March 2021	31 March 2020
	£’000	£’000
Amounts falling due within one year:
Trade receivables	6	10
Impairment allowance for bad and doubtful debts	0	(2)
Other receivables:
Season ticket loans to staff	0	12
Prepayments and accrued income	138	143
Total	144	163

9. Trade and other payables

	31 March 2021	31 March 2020
	£’000	£’000
Amounts falling due within one year:
Contract liabilities*	108	66
Accruals	585	458
Accommodation rent-free period	41	34
Total	734	558
Amounts falling due after more than one year
Accommodation rent-free period	33	73
Total	33	73

*Contract liabilities arising from IFRS 15 Revenue from Contracts with customers.

10. Provisions for liabilities and charges

	£’000
Balance at 1 April 2019	51
Additional provision	48
Balance at 31 March 2020	99
Balance at 1 April 2020	99
Additional provision	48
Balance at 31 March 2021	147
Amounts falling due:
Not later than 1 year	0
Later than 1 year and not later than 5 years 147
Later than 5 years	0
Total	147

11. Analysis of changes in cash and cash equivalents

	£’000
Balance at 1 April 2019	162
Net Change in cash and cash equivalents balances	257
Balance at 31 March 2020	419
Balance at 1 April 2020	419
Net Change in cash and cash equivalents balances	524
Balance at 31 March 2021*	943

*£552k Supplementary Grant received in 2020/21 (2019/20: £nil)

The OISC has no borrowings and relies on departmental grants for its cash requirements and is therefore not exposed to liquidity risks. It also has no material deposits, and all material assets and liabilities are denominated in sterling, so it is not exposed to interest rate risk or currency risk.

The OISC holds all its cash balances with the Government Banking Service (GBS).

The OISC does not have any liabilities arising from financing activities.

12. Commitments under operating leases

	31 March 2021		31 March 2020
	Land and Building	Equipment	Land and Building	Equipment
	£’000	£’000	£’000	£’000
Operating leases that expire:
Not later than 1 year	295	4	289	4
Later than 1 year and not later than 5 years	187	2	482	6
Later than 5 years	0	0	0	0

13. Events after the reporting period

There were no post reporting period events.

These Financial Statements were authorised for issue by the Commissioner on the date they were certified by the Comptroller and Auditor General.

14. Related party transactions

The Home Office, as sponsor body for the OISC throughout 2020/21 is a related party to the OISC. During the year ended 31 March 2021, the Home Office provided the OISC with grant-in-aid of £4,387,831(2019/20: £3,820,000).

A number of transactions were made with other government departments and other central government bodies namely – HM Revenue and Customs (HMRC) £236,334 (2019/20: £211,987) and The Principal Civil Service Pension Scheme (PCSPS): £549,632 (2019/20: £510,063).

During the year ended 31 March 2021 neither the Commissioner, Deputy Commissioner, key managerial staff nor other related parties undertook any material transactions with the OISC.

15. Financial instruments

As the cash requirements of the OISC are met through grant- in- aid provided by the Home Office, financial instruments play a more limited role in creating and managing risk than would apply to a non-public sector body. The majority of financial instruments relate to contracts to buy non-financial items in line with the OISC’s expected purchase and usage requirements and the OISC is therefore exposed to little credit, liquidity or market risk.