The Scottish Parliamentary Corporate Body (SPCB) Was Established in May 1999 Under Section 21 of the Scotland Act 1998 (The Act)

Scottish Parliamentary Corporate Body

Annual Accounts 2006-07

Authorised for issue 6 November 2007 SE/2007/238

Scottish Parliamentary Corporate Body Annual Accounts 2006-07

Contents

Page

Management Commentary 3

Remuneration Report 8

Statement of the SPCB's and the Clerk 12 and Chief Executive's Responsibilities

Statement on Internal Control 13

Independent Auditor's Report 15

Statement of Accounting Policies 17

Schedule 1 - Summary of Resource Outturn 20

Schedule 2 - Operating Cost Statement 21

Schedule 3 - Balance Sheet 22

Schedule 4 - Cash Flow Statement 23

Schedule 5 - Resources by Departmental 24 Aim and Objective

Notes to the Resource Accounts 25

Accounts Direction 35

2 Scottish Parliamentary Corporate Body Annual Accounts 2006-07

Management Commentary

The accounts have been prepared in accordance with the Direction by The Scottish Ministers given on 17 January 2006 in accordance with section 19(4) of the Public Finance and Accountability (Scotland) Act 2000.

HISTORY AND STATUTORY BACKGROUND

The Scottish Parliamentary Corporate Body (SPCB) was established in May 1999 under Section 21 of The Scotland Act 1998 (the Act). The SPCB comprises the Presiding Officer, and four other members of the Scottish Parliament elected by the Parliament. The SPCB has appointed a Clerk (who is also the Chief Executive) in accordance with section 20 of the Act, and other staff of the Parliament. The SPCB is independent of the Scottish Executive.

PRINCIPAL ACTIVITIES

The Parliament exists to determine, debate, decide and legislate on issues of importance to the people of Scotland. In doing so, it holds the Scottish Executive to account and is answerable to the people of Scotland.

The SPCB has a duty to provide the Scottish Parliament, or ensure the Parliament is provided with the property, staff and services required for this purpose. The Parliament may also give general or specific directions for the purpose of, or in connection with the SPCB’s functions.

The SPCB provides the infrastructure (including the Holyrood Building) and allowances which enable members to undertake their duties both at the Parliament and in their local offices. It provides the facilities and staff to allow the Parliament and its Committees to meet and encourage public awareness of and engagement with the parliamentary process.

THE SPCB AND SENIOR MANAGERS

The Members of the SPCB were: Appointed

George Reid MSP, Presiding Officer 07-May-03 Kenny MacAskill MSP 12-Jan-06 Duncan McNeil MSP 20-Dec-01 Nora Radcliffe MSP 30-Jun-05 John Scott MSP 21-May-03

On 14 May 2007, the Parliament elected Alex Fergusson MSP as the new Presiding Officer at which point he also became chair of the SPCB. On 24 May 2007, Alex Johnstone MSP, Tricia Marwick MSP, Tom McCabe MSP and Mike Pringle MSP were elected by Parliament as the new members of the SPCB, replacing John Scott, Kenny MacAskill, Duncan McNeil and Nora Radcliffe.

The SPCB has agreed portfolio arrangements whereby members take a lead interest in specific issues. During 2006-07 these were as follows:

Kenny MacAskill MSP (Alex Johnstone MSP from 24 May) - Directorate of Technology & Facilities Management including building maintenance, IT and local office support.

Duncan McNeil MSP (Tricia Marwick MSP from 24 May) – Directorate of Access & Information including visitor services, events, public information, education and outreach, as well as broadcasting and the broader aspects of media relations; the Scottish Parliament Information Centre (SPICe) together with editorial content of the website and the intranet.

Nora Radcliffe MSP (Tom McCabe MSP from 24 May) – Directorate of Resources & Governance including Procurement, Allowances and Finance Offices.

John Scott MSP (Mike Pringle MSP from 24 May) – Directorate of Resources & Governance including governance, commissioners, equalities and Personnel Office. 3 Scottish Parliamentary Corporate Body Annual Accounts 2006-07

A Register of Members' Interests is published on the Parliament's website.

The senior management employed by the SPCB, apart from Ann Nelson who was on secondment from the Scottish Executive, during the 2006-07 financial year and up to the date of signing the Accounts were:

Paul Grice Clerk to the Parliament/Chief Executive Carol Devon Director of Access and Information Stewart Gilfillan Director of Technology and Facilities Management Ian Leitch Director of Resources and Governance Ann Nelson* Legal Adviser/Director of Legal Services Bill Thomson Director of Clerking and Reporting

* Ann Nelson left on 28 September 2007 and was replaced by Lynda Towers from 1 October 2007.

The Remuneration Report contains information about the salary and pension entitlements of the named individuals.

The Clerk/Chief Executive and Directors hold their appointments on a permanent basis.

At the end of the financial year 18 staff (22 staff in 2005-2006) were on secondment from other organisations.

REVIEW OF THE PRINCIPAL ACTIVITIES

The principal activity of the SPCB and its staff during the year was the continued support of the work of the Parliament.

This is reflected in our management plan for 2006-07 which had 3 strategic priorities:

(1) Provide effective support to members in undertaking their parliamentary functions including:

 Participation in parliamentary business  Representing their constituents

(2) Encourage public engagement with the Parliament by:

 Delivering the opportunity for participation in parliamentary business and activities  Promoting and increasing awareness and understanding of the Parliament throughout Scotland, and elsewhere

(3) Continue to improve the efficiency and effectiveness of the organisation with:

 A skilled, experienced and motivated workforce  Robust corporate and financial governance arrangements  A well-managed Parliamentary estate

A copy of our management plan covering this reporting period is available on www.scottish.parliament.uk.

In the course of the parliamentary year which ran from 1 July 2006 to 2 April 2007:

1. 6 bills were introduced by the Scottish Executive, covering areas such as protection of vulnerable groups and custodial sentences and weapons. 2. 8 Member's bills were introduced covering home energy efficiency targets and treatment of drug users.

All of these were scrutinised by the Parliament, in accordance with the 3 stage process laid down in Standing Orders although not all became Acts of the Scottish Parliament.

3. A total of 27 bills became Acts, including some which had been introduced in the previous year. 4 Scottish Parliamentary Corporate Body Annual Accounts 2006-07

4. The Parliament held debates on a wide range of issues, including debates on matters raised by committees and members. Subjects covered included early years, food chain enquiry, freight transport, accountability and governance, ending child poverty, sectarianism, fairtrade, affordable housing, coastal and marine national parks and violence against women. 5. The Parliament's committees undertook 29 inquiries, and scrutinised 28 bills and 297 pieces of subordinate legislation. Between them, the committees held 324 meetings and heard from 1,460 witnesses. 6. 56 new petitions were considered from members of the public, community groups and other organisations.

Further detail of the SPCB’s main activities are available in the SPCB Annual Report and further detail on Parliamentary activity is contained in The Scottish Parliament Annual Report 2006-07 which is available on The Scottish Parliament website, www.scottish.parliament.uk.

The Parliament has continued to hold committee meetings throughout Scotland, involving local people in issues that affect them.

Since Her Majesty the Queen formally opened the Holyrood building on 9 October 2004, over 1,000,000 people have visited the Parliament with 318,000 of those visiting during 2006-07.

POSITION AT END OF YEAR

The net resource outturn for 2006-07 was £87.7m (2005-06 restated £84.8m). Salaries of parliamentary staff, MSPs and other office holders accounted for £31.2m (2005-06 £30.3m) of this total as disclosed in Note 2 to the Accounts. Members' allowances, which enable MSPs to secure staff and accommodation to assist them in the discharge of their Parliamentary duties were £9.7m (2005-06 £9.6m) as disclosed in Note 3 to the Accounts. Information on the financial position is contained in Schedules 1-5 with further disclosure in the Notes to the Resource Accounts.

The Holyrood building was completed and occupied in the 2004-05 financial year. However, there was some completion and snagging work during 2006-07 which is in the process of being concluded. An independent valuation following Royal Institute Chartered Surveyors (RICS) guidance and appropriate accounting rules was completed in 2004-05 and reflected in our accounts. The building was valued on the basis of depreciated replacement cost and was valued at £333m. Capital expenditure in 2006-07 amounted to £0.4m (2005-06 £0.8m) and is detailed in Notes 5 and 6 to the accounts.

Although the Commissioners and Ombudsman operate functionally independent of the SPCB, the SPCB is responsible for funding their activities. During 2006-07, funding paid to the Scottish Public Services Ombudsman was £2,882,000 (2005-06 £2,474,000), Scottish Information Commissioner was £1,327,000 (2005-06 £1,090,000), Commissioner for Children and Young People in Scotland was £1,090,000 (2005-06 £1,042,000), Commissioner for Public Appointments in Scotland was £397,000 (2005-06 £415,000) and Scottish Parliamentary Standards Commissioner £72,000 (2005-06 £66,000), Scotland’s Futures Forum Limited £18,000 (2005-06 £4,000). All of these, apart from the Scottish Parliamentary Standards Commissioner, are responsible for preparing their own accounts and full details of their expenditure can be found via these organisations. During the reporting period Audit Scotland was invited to consider and prepare a report on the sharing of services by the Commissioners and Ombudsmen. This was submitted to the Finance Committee’s Inquiry into Accountability and Governance, which reported in September 2006 (SP Paper 631) which is available on The Scottish Parliament website, www.scottish.parliament.uk. A summary of funding provided is contained in Note 18 to the Accounts.

INDICATION OF LIKELY FUTURE DEVELOPMENTS

In addition to sustaining very high levels in core parliamentary services, we have identified 6 key developmental programmes to take forward in 2007-10 to help meet our strategic priorities. These are contained in our management plan 2007-10, which along with the 2006-07 management plan is available on the Scottish Parliament website (www.scottish.parliament.uk).

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RISKS AND UNCERTAINTIES

The SPCB has developed a risk register identifying at a corporate level the high level risks it considers should be managed. The risk register is updated by Directors on a quarterly basis. The way the register is prepared and used will be renewed to link in to the work on business continuity. Contingency arrangements in place ensured that, despite the unexpected problems with the chamber strut during the previous reporting period, the Parliament only lost half a day of business time.

EQUAL OPPORTUNITIES

The SPCB is committed to promoting equality of opportunity and eliminating unfair discrimination in its employment practices. It will take steps to ensure that all job applicants and staff will be treated fairly, with respect and without bias and that no one will be disadvantaged because of their gender; sexual orientation; marital or family status; racial group; religious belief, or a similar philosophical belief (or lack of any of these); disability; age; part-time or fixed term contract status; and trade union membership status/activities.

The SPCB has also adopted the two ticks Disability Symbol which recognises good practice in the employment of disabled people.

PENSION LIABILITIES

The treatment of pension liabilities and details of the relevant pension schemes are set out in the statement of accounting policies (note m).

SUPPLIER PAYMENT POLICY

The SPCB's policy is to comply with the Confederation of British Industry’s Prompt Payers Code. The target is for payment to be made within agreed payment terms or 30 days of receipt of invoices not in dispute for goods and services received. Average payment performance achieved for 2006-07 was 63.1% (2005-06 70.2%). We have introduced a number of process changes in 2007-08 to improve payment performance and performance is already improving.

IMPORTANT EVENTS OCCURRING AFTER YEAR END

The Scottish Parliament dissolved on 2 April 2007 with the subsequent election on 3 May 2007 leading to the third session of Parliament starting in 2007-08. Although these are significant events after the year end, they have not required any accounting adjustments except the disclosure of the change in Presiding Officer and members of the SPCB.

HEALTH AND SAFETY

The SPCB is committed to promoting health and safety as a priority issue. Its aim is to take appropriate and reasonable steps to ensure that it conducts its business in such a way that employees and other people who may be affected by its work are not exposed to risks to their health and safety.

To deliver this policy, the SPCB has established a Health and Safety Committee and a Fire Safety Committee; developed procedures necessary to form a robust Health and Safety management system; and has delivered a comprehensive training programme to enable all staff and other users of the Parliament accommodation to meet their Health and Safety responsibilities.

STAFF COMMUNICATIONS

The SPCB has in place an internal communication strategy to help ensure that staff:

 know what is going on in the organisation;  have the opportunity to feed in views; and  are aware of the need to keep updated on relevant policies, initiatives etc.

6 Scottish Parliamentary Corporate Body Annual Accounts 2006-07

Key features include a bimonthly Chief Executive's message to staff to be discussed at team meetings, with comments and questions fed back. A corporate section on the SPCB intranet (SPEIR) and a corporate bulletin are produced, to improve knowledge among staff of the main issues being addressed across the Parliament.

AUDIT

The Accounts are audited by auditors appointed by the Auditor General for Scotland in accordance with the Public Finance and Accountability (Scotland) Act 2000. The audit costs for 2006-07 were £67,800 (2005-06 £73,000).

DISCLOSURE OF RELEVANT AUDIT INFORMATION

As Principal Accountable Officer, I have taken all necessary steps to ensure that I am aware of any relevant audit information and to establish that the auditors are also aware of this information.

ADVISORY AUDIT BOARD (AAB)

The SPCB’s Advisory Audit Board supports the Principal Accountable Officer in monitoring and reviewing corporate governance, risk management and control systems. Membership of the AAB consists of two independent external members, one of which has the role of Chair and two members from the SPCB, helping to ensure objectivity. Members during the year to 31 March 2007 were:

Professor Niall Lothian Robert Bertram Duncan McNeill MSP John Scott MSP

P E GRICE Date: 31 October 2007 Clerk to the Parliament and Chief Executive

7 Scottish Parliamentary Corporate Body Annual Accounts 2006-07

Remuneration Report

Remuneration policy

The remuneration of SPCB’s directors and the Clerk/Chief Executive is set by the SPCB taking into account their roles and responsibilities.

MSPs salaries are set at 87.5% of the level determined for MPs at Westminster. In 2006-07 this equated to a salary excluding Employers National Insurance and pension contributions of £52,441 (2005-06 £51,709). MSPs are members of their own pension scheme, The Scottish Parliamentary Contributory Pension Fund, and separate annual accounts are published for this on the Scottish Parliament website at www.scottish.parliament.uk.

The SPCB comprises 4 MSPs and the Presiding Officer. The MSPs are elected by the Parliament and the Presiding Officer has membership in accordance with the Scotland Act. The SPCB members receive no additional remuneration for this role. Similarly, MSPs serving as Conveners to Parliamentary Committees do not receive any additional remuneration. The Presiding Officer and two Deputy Presiding Officers receive additional salary for delivery of their roles.

In respect of Ministers in the Scottish Executive, the salary for their services as an MSP along with the supplementary element for ministerial appointment, are both paid by the SPCB. Disclosure on the ministerial element of salary and pension entitlements is contained within the Scottish Executive Consolidated Resource Accounts which can be accessed at www.scotland.gov.uk. These also include disclosure details on the two Law Officer appointments within Scotland (the Lord Advocate and the Solicitor General for Scotland).

Under the various statutes establishing the offices of Commissioners and Ombudsmen (and the Auditor General for Scotland) the SPCB is responsible for determining the salaries of each officeholder. Details of the salaries of each officeholder are available in their own accounts. In relation to the Scottish Parliamentary Standards Commissioner, his salary details are set out in Note 18 to the accounts. Salaries for these officeholders are uprated on an annual basis in line with the Review Board recommendations for the senior civil service annual pay award.

Service contracts

Appointments of SPCB staff, on terms and conditions set by the SPCB, are made in accordance with SPCB recruitment policy which requires appointment to be on merit on the basis of fair and open competition but also includes the circumstances when appointments may otherwise be made. These principles are set out in the staff handbook and are in line with the Civil Service Commissioners’ Recruitment Code. More information is available on the SPCB staff handbook at www.scottish.parliament.uk.

Staff are not members of the Civil Service but are entitled to membership of the Principal Civil Service Pension Scheme (PCSPS).

Recommendations to the Parliament on the nomination of individuals as Commissioners and Ombudsmen for appointment by Her Majesty The Queen are made by a selection panel of members under rule 3.11 of the Parliament’s Standing Orders. Any recommendation for the reappointment of an individual to an office, where it is provided for by an enactment, is for the SPCB to recommend to the Parliament in accordance with Rule 3.11A of Standing Orders. During this reporting period the Scottish Public Services Ombudsman and the two Deputy Ombudsmen have been re-appointed for terms of 4 years for the Ombudsman and 1 year each for the Deputies. There has been no other reappointment of Crown appointed Commissioners.

The Scottish Parliamentary Standards Commissioner is appointed or reappointed by Parliament on the recommendation of the SPCB in accordance with Rule 3A.1 of Standing Orders. The Scottish Parliamentary Standards Commissioner’s first term of office ended on 31 March 2006. On 17 March 2006, Parliament agreed to an SPCB motion to his reappointment for a further 3 years commencing on 1 April 2006.

Unless otherwise stated below, officials covered by this report hold appointments which are open-ended until they reach normal retiring age of 60. Early termination, other than for misconduct, would result in the individual receiving 8 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 compensation as set out in the Civil Service Compensation Scheme. All SPCB senior staff are directly employed by the SPCB with the exception of Ann Nelson, who was on secondment from the Scottish Executive.

Salaries and pension entitlements

The following sections provide details of the remuneration and pension interests of senior staff and office holders. These are presented in banding ranges for salary and pension.

Name and Salary Salary Real increase Total accrued CETV at CETV at Real increase title 2006/07 2005/06 in pension and pension at age 31/3/06 31/3/07 in CETV related lump 60 and related sum at age 60 lump sum at 31/3/07 £’000 £’000 £’000 £’000 £’000 £’000 £’000 SPCB senior staff Paul Grice 105-110 110-115 0-2.5 25-30 421 445 20 Clerk to the plus lump sum plus lump sum of Parliament of 85-90 and Chief 2.5-5 Executive Carol Devon 85-90 85-90 0-2.5 15-20 248 274 24 Director of plus lump sum plus lump sum of Access and of 50-55 Information 2.5-5

Stewart 85-90 80-85 2.5-5 30-35 482 545 53 Gilfillan plus lump sum plus lump sum of Director of of 75-80 Technology 2.5-5 and Facilities Management Ian Leitch 70-75 65-70 0-2.5 10-15 178 233 48 Director of plus lump sum plus lump sum of Resources of 30-35 and 5-7.5 Governance Ann Nelson 85-90 80-85 0-2.5 10-15 224 272 39 Director of plus lump sum plus lump sum of Legal of 20-25 Services 0-2.5 Bill Thomson 85-90 80-85 2.5-5 35-40 625 706 65 Director of plus lump sum plus lump sum of Clerking and of 105-110 Reporting 10-12.5 Scottish Parliament office holders George Reid 35-40 35-40 0-2.5 0-5 30 40 9 Presiding Officer Trish 20-25 20-25 0-2.5 0-5 58 65 6 Godman Deputy Presiding Officer Murray Tosh 20-25 20-25 0-2.5 0-5 23 29 5 Deputy Presiding Officer

9 Scottish Parliamentary Corporate Body Annual Accounts 2006-07

Salary

Salaries in the above table are the amount earned in the financial year and include, where applicable, performance bonuses payable, reserved rights, recruitment and retention allowances. They do not include National Insurance or Superannuation contributions. The scheme for payment of performance bonuses ended in 2005/06.

Cash Equivalent Transfer Values

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any spouse’s pension contingently payable from the scheme. A CETV is the amount payable by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which the disclosure applies. The CETV figures, and from 2003-04 the other pension details, include the value of any pension benefit in another scheme or arrangement which the individual has transferred to the Civil Service Pension (CSP) arrangement and for which the Civil Service (CS) Vote has received a transfer payment commensurate to the additional pension liabilities being assumed. They also include any additional pension benefit accrued to the scheme member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETV’s are calculated within the framework prescribed by the Institute and Faculty of Actuaries.

Real Increase in CETV

The factors used to calculate the CETV were revised on 1 April 2005 on the advice of the Scheme Actuary. The real increase in CETV reflects the increase effectively funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Benefits in kind

No benefits in kind are paid to the Chief Executive, Directors, the Presiding Officer or the Deputy Presiding Officers.

Office Holders

In respect of office holders, the salary shown is that for the appointment itself together with related pension. Scottish Ministers’ disclosure is contained within the Scottish Executive’s accounts. The Presiding Officer’s pension is payable from the Consolidated Fund and is equal to one half of salary payable in respect of the office in question at the rate in force on him/her ceasing to hold that office. There is no option of commutation, i.e. members may not commute (give up) some of their pension to provide a lump sum. The Deputy Presiding Officers’ pension benefits in respect of their offices accrue at the rate of 1/50th of final pensionable earnings for each year that the office is held. There is no automatic lump sum but these officers may commute some of their pension to provide a lump sum.

Pensions

Pension benefits for SPCB employees are provided through the Principal Civil Service Pension Scheme (PCSPS) arrangements. The PCSPS is an unfunded multi-employer defined benefit scheme but the Scottish Parliamentary Corporate Body is unable to identify its share of the underlying assets and liabilities. The scheme actuary valued the scheme as at 31 March 2003. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation (www.civilservice-pensions.gov.uk). For 2006-07, employer contributions at one of the four rates in the range 17.1% to 25.5% of pensionable pay, based on salary bands (the rates in 2005-06 were between 16.2% and 24.6%). The scheme’s Actuary reviews employer contributions every four years following a full scheme valuation. From 2007-08, the salary bands will be revised but the rates remain the same. The contribution rates are set to meet the cost of the benefits accruing during 2006-07 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.

10 Scottish Parliamentary Corporate Body Annual Accounts 2006-07

From 1 October 2002, employees may be in one of three statutory based ‘final salary’ defined benefit schemes (classic, premium and classic plus). The schemes are unfunded with the cost of benefits met by monies voted by the UK Parliament each year. Pensions payable under classic, premium and classic plus are increased annually in line with changes to the Retail Price Index. New entrants after 1 October 2002 may choose between membership of premium or joining a good quality ‘money purchase’ stakeholder based arrangement with a significant employer contribution (partnership pension account).

Employee contributions are set at the rate of 1.5% of pensionable earnings for Classic and 3.5% for Premium and Classic Plus. Benefits in Classic accrue at the rate of 1/80th of the pensionable salary for each year of service. In addition, a lump sum equivalent to three years’ pension is payable on retirement. For Premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike Classic, there is no automatic lump sum, but members may commute some of their pension to provide a lump sum. Classic plus is essentially a variation of Premium, but with benefits in respect of service before 1 October 2002 calculated broadly as per Classic.

The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 7 and 15% (depending on the age of the member) into a stakeholder pension product chosen by the employee. The employee does not have to contribute but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.8% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).

Commissioners and Ombudsmen are members of the PCSPS.

Further details about the PCSPS arrangements can be found at the website www.civilservice-pensions.gov.uk.

Parliamentary Office Holders and Members of the Scottish Parliament belong to the SPCPF which is a scheme established under the Scotland Act 1998 (Transitory and Transitional provisions) (Scottish Parliamentary Pension Scheme) Order 1999 (S.I. No.1082). The scheme is a defined benefit scheme and applies to the salary of members, to any ministerial salary and the salary of the Lord Advocate and the Solicitor General for Scotland.

The main benefits of the scheme are an immediate pension of 1/50th of final salary for each year of service on retirement at age 65. Pensions are increased annually in line with changes in the Retail Prices Index. Members pay a contribution equivalent to 6% of their salary including any additional element for an office holder position, with the SPCB contributing an employer contribution representing 20.3% equivalent of their salary.

P E GRICE Date: 31 October 2007 Clerk to the Parliament and Chief Executive

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Statement of the SPCB’s and the Clerk and Chief Executive's Responsibilities

The Clerk and Chief Executive has prepared the statement of accounts in accordance with the Direction by the Scottish Ministers and with the accounting principles and disclosure requirements set out in the Financial Reporting Manual. The Resource Accounts are prepared on an accruals accounting basis and give a true and fair view of the SPCB's state of affairs at the year-end, the net resource outturn, resources applied to objectives, operating cost statement, recognised gains and losses and cash flows for the financial year.

In preparing the accounts the Clerk and Chief Executive has:

 Observed the accounts direction issued by Scottish Ministers;  Observed relevant accounting and disclosure requirements, and applied suitable accounting policies on a consistent basis;  Made judgements and estimates which are reasonable and prudent;  Stated whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts; and  Prepared the accounts on a going concern basis.

The Clerk to the Parliament and Chief Executive is, by virtue of his appointment, Principal Accountable Officer for the SPCB. The relevant responsibilities of the Principal Accountable Officer, including the responsibility for the propriety and regularity of the finances of the SPCB, and for the keeping of proper records, are set out in section 16 of the Public Finance and Accountability (Scotland) Act 2000.

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Statement on Internal Control

Scope of responsibility

As Principal Accountable Officer of the SPCB, I acknowledge my responsibility for ensuring that an effective system of internal control is maintained and operated to safeguard the public funds and assets for which I am personally responsible in accordance with the responsibilities assigned to me.

Purpose of the system of internal control

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve the organisation’s policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.

The system of internal control is based on an ongoing process designed to identify the principal risks to the achievement of the organisation’s policies, aims and objectives, to evaluate the nature and extent of those risks and to manage them efficiently, effectively and economically. This process has been in place for the year ended 31 March 2007 and has been in place up to the date of approval of the annual accounts and accords with guidance from the Scottish Public Finance Manual (SPFM).

Control framework and management of risk

The SPCB operate a risk management strategy which includes maintenance of an organisation wide risk register in line with the requirements of the SPFM and in accordance with relevant guidance issued by the Scottish Ministers. As such the risk management strategy forms an integral part of the corporate governance arrangements for which the Accountable Officer is responsible.

Review of effectiveness

As Principal Accountable Officer, I also have responsibility for reviewing the effectiveness of the system of internal control. The following processes and institutional arrangements have been established:

 A review of corporate governance in 2006-07 by Audit Scotland indicated that the SPCB had developed a sound and comprehensive framework of systems and processes to support its governance arrangements, incorporating many aspects of good practice. This represents good progress over the relatively early years of the new Scottish Parliament and devolution arrangements. The SPCB is committed to evolving its governance arrangements to help meet its aspiration to become an exemplar of good governance in the public sector. The Corporate Body recognises that there is scope for further development in some areas, taking account of the Good Governance Standard for Public Services published in 2005.

 The Advisory Audit Board (AAB) met 4 times in the year ended 31 March 2007. The AAB is composed of two independent members and two members of the Corporate Body. The Board is chaired by one of the independent members. Further independent AAB members will be recruited during 2007-08. The AAB receives reports from both external and internal auditors and provides guidance to the Principal Accountable Officer on corporate governance issues.

 Directors meet fortnightly to consider the plans and strategic direction of the organisation.

 During 2006-07, the Head of Internal Audit, who works on a part-time basis with the SPCB, took the lead on audit matters. Henderson Loggie CA were appointed following competitive tender to support the Head of Internal Audit in this role.

 Regular reports are presented to the AAB by the Head of Internal Audit as an independent opinion on the adequacy and effectiveness of the system of internal control together with recommendations for improvement.

 The AAB approves the Internal Audit Plan each year. 13 Scottish Parliamentary Corporate Body Annual Accounts 2006-07

 Regular reports from managers on the steps they are taking to manage risks in their areas of responsibility including progress reports on key projects.

 A regular programme of facilitated workshops to identify and keep up to date the register of risks facing the organisation.

 A programme of training for senior managers which includes corporate governance and risk management training.

 Establishment of key performance and risk indicators.

 A policy on fraud prevention and fraud prevention guidance.

 The SPCB formally complies with the principles of the Scottish Public Finance Manual.

 The SPCB have a dedicated set of Standing Financial Instructions based on the Scottish Public Finance Manual which contain financial policies and procedures that are specific to the SPCB.

 The SPCB approves the accounts including the Statement on Internal Control.

The SPCB is responsible for funding a number of Commissioner and Ombudsman bodies. These bodies were created by Acts of the Scottish Parliament and operate independently from the SPCB. I rely on the Accountable Officer for each of these bodies to be responsible for ensuring that an effective system of internal control is maintained and operated to safeguard the public funds and assets for which they are personally responsible.

My review of the effectiveness of the system of internal control is informed by the work of the internal auditors and the senior managers within the organisation who have responsibility for the development and maintenance of the internal control framework. I am also informed by our external auditors, Audit Scotland, on matters of internal control through their management letters and reports.

P E GRICE Date: 31 October 2007 Clerk to the Parliament and Chief Executive

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Independent Auditor’s Report

Report of the Auditor General for Scotland to the Scottish Parliament

I have audited the financial statements of the Scottish Parliamentary Corporate Body for the year ended 31 March 2007 under the Public Finance and Accountability (Scotland) Act 2000. These comprise the Summary of Resource Outturn, the Operating Cost Statement, the Balance sheet, the Cash Flow Statement, the Statement of Recognised Gains and Losses, the Resources by Aims and Objectives and related notes. These financial statements have been prepared under the accounting policies set out within them.

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 123 of the Code of Audit Practice approved by me, I do not undertake to have responsibilities to members, in their individual capacities, or to third parties.

Respective responsibilities of the Accountable Officer and Auditor General

The Scottish Parliamentary Corporate Body and the Principal Accountable Officer are responsible for the preparation of the financial statements in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers and for ensuring the regularity of expenditure and receipts. These responsibilities are set out in the Statement of the Scottish Parliamentary Corporate Body’s and the Principal Accountable Officer’s Responsibilities.

My responsibility is to audit the financial statements in accordance with the relevant legal and regulatory requirements and with International Standards on Auditing (UK and Ireland) as required by the Code of Audit Practice which was prepared by Audit Scotland and approved by me.

I report my opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers. I also report whether in all material respects:

 the expenditure and receipts shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers, the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public Finance and Accountability (Scotland) Act 2000; and

 the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the expenditure shown in the financial statements were applied in accordance with section 65 of the Scotland Act 1998.

I also report if, in my opinion, the Management Commentary and Remuneration Report are not consistent with the financial statements, if the Scottish Parliamentary Corporate Body has not kept proper accounting records, if I have not received all the information and explanations I require for my audit, or if information specified by relevant authorities regarding remuneration and other transactions is not disclosed.

I review whether the Statement on Internal Control reflects the relevant guidance issued on behalf of Scottish Ministers. I report if, in my opinion, the statement does not comply with the guidance or if the statement is misleading or inconsistent with other information I am aware of from my audit of the financial statements. I am not required to consider, nor have I considered, whether the statement covers all risks and controls. Neither am I required to form an opinion on the effectiveness of the Scottish Parliamentary Corporate Body’s corporate governance procedures or its risk and control procedures.

15 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Basis of audit opinion

I conducted my audit in accordance with the Public Finance and Accountability (Scotland) Act 2000 and International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board as required by the Code of Audit Practice. An audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of expenditure and receipts included in the financial statements and the part of the Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgements made by the Scottish Parliamentary Corporate Body and Principal Accountable Officer in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Scottish Parliamentary Corporate Body’s circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements and the part of the Remuneration Report to be audited are free from material misstatement, whether caused by fraud or error, and that in all material respects the expenditure and receipts shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Remuneration Report to be audited.

Opinions

Financial statements In my opinion:

 the financial statements give a true and fair view, in accordance with the Public Finance and Accountability (Scotland) Act 2000 and the directions made thereunder by the Scottish Ministers, of the state of affairs of the Scottish Parliamentary Corporate Body at 31 March 2007 and of the net cash requirement, net resource outturn, resources applied to aim, recognised gains and losses and cash flows for the year then ended; and

 the financial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Regularity In my opinion, in all material respects:

Robert W Black Auditor General for Scotland 110 George Street Edinburgh EH2 4LH

Date: 6 November 2007

16 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Statement of Accounting Policies

Resource Accounts 2006-07 (year ended 31 March 2007)

The Statement of Accounts is intended to present a 'true and fair view' of the financial position and transactions of the Corporate Body and has been prepared in accordance with the fundamental accounting principles of accruals, going concern, materiality and primacy of legislative requirements in accordance with the Financial Reporting Manual (FReM). The information has also been prepared taking cognisance of relevance, reliability, comparability and understandability. a. Accounting Convention The financial statements have been prepared on a going concern basis, applying the historical cost convention modified to include the revaluation of fixed assets. Stocks are valued at the lower of cost and net realisable value. b. Tangible Fixed Assets The minimum level for capitalisation of a tangible fixed asset is £1,000 inclusive of irrecoverable VAT. The threshold for land and buildings is set at £10,000 and the IT threshold is where the grouped value of related asset purchases exceeds £1,000.

Title to all property is held by the SPCB. Land and buildings will be restated at current cost using professional valuations at a minimum of every 5 years. During 2004-05, the Holyrood complex became operational and was professionally valued on a depreciated replacement cost (DRC) basis, including an element for finance costs and professional fees, in line with RICS guidance on DRC valuations. c. Intangible Fixed Assets Software licences are capitalised as intangible fixed assets and amortised on a straight line basis over the expected life of the asset (3 years). d. Donated Assets Donated assets are capitalised at current value on receipt and are normally revalued in the same way as purchased assets. The value of donated assets is reflected in the donated asset reserve, which is credited with the value of the original donation and subsequent revaluations. e. Indexation Land and buildings will be restated at current cost using professional valuations at a minimum of every 5 years and appropriate indices in intervening years. The indices in use are based on information compiled by the Office of National Statistics using the relevant index codes for each category of asset. However, the buildings indexation is based on RICS Tender Price Indices.

Land Valuation and RPI (Retail Price Index) Buildings Valuation and TPI (Tender Price Index) Fixtures & Fittings and Equipment PPI (Producer Price Index) Vehicles PPI IT Systems Not indexed Donated Assets PPI Intangible Assets Not indexed f. Prior Year Adjustment In 2006-07 following Financial Reporting Advisory Board (FRAB) clarification, the indexation movement on buildings and fixed plant relating to the Holyrood building is now shown as a movement through the Revaluation Reserve rather than a credit to the Operating Cost Statement. This has resulted in a prior year adjustment in the 2006-07 accounts for the 2005-06 movement. Further detail is provided in note 5. g. Depreciation Land, historic documents and records and works of art are not depreciated. Depreciation is provided at a rate calculated to write off the valuation of buildings and other tangible fixed assets by equal instalments over their estimated useful lives. Asset lives are normally as follows:

Buildings Holyrood building 50 years Holyrood fixed plant 10-25 years 17 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Equipment and Computers Computers, Telecom systems and Broadcasting Equipment 3 years Fixtures and fittings 5 years Machinery and motor vehicles 5 years Office equipment 5 years

Historic assets which are donated are capitalised at current value on receipt but are not depreciated and therefore there is no release to the operating cost statement from reserves. h. Realised Element of Depreciation from Revaluation Reserve Depreciation is charged on the revalued amount of assets. An element of the depreciation therefore may arise due to an increase in valuation and would be in excess of the depreciation that would be charged on the historical cost of assets. The amount relating to such an excess would be a realised gain on valuation, and is transferred from the Revaluation Reserve to the General Fund. i. Operating Cost Statement Operating income and costs relate directly to the operating activities of the SPCB. Income includes charges for goods and services provided on a full cost basis to external customers. Income and costs are shown net of Value Added Tax where it is recoverable. j. Capital Charge A charge, reflecting the cost of capital utilised by the Parliament, is included in operating costs. The charge is calculated at the Government standard rate of 3.5% (2005-06 3.5%) on the average of net relevant assets. Net relevant assets are defined as all assets less liabilities except for donated assets and cash balances with the Office of the Paymaster General. Average is calculated by adding together the balances at this year end and the previous year end, and dividing by two. k. Stocks Stocks, including goods held for resale, are stated at the lower of cost and net realisable value. l. Foreign Exchange Transactions which are denominated in a foreign currency are translated into sterling at the exchange rate ruling on the date of each transaction. Foreign currency imprests are translated into sterling at the exchange rate ruling at the time of funding. m. Pensions

The Principal Civil Service Pension Scheme (PCSPS)

Staff employed directly by SPCB, staff seconded to the SPCB and the Parliamentary Commissioners and their staff are members of the Principal Civil Service Pension Scheme (PCSPS). It is an unfunded multi- employer defined benefit scheme and the SPCB is unable to identify its share of the underlying assets and liabilities. A full actuarial valuation was carried out as at 31 March 2003. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation (www.civilservice-pensions.gov.uk) which comply with FRS 17.

The Scottish Parliamentary Pension Scheme (SPPS)

A pension scheme for the Members of the Scottish Parliament has been established by the SPCB under the Scotland Act 1998 (Transitory and Transitional provisions) (Scottish Parliamentary Pension Scheme) Order 1999 (S.I. No.1082). The scheme is a defined benefit scheme, and applies to the salary of members, to any ministerial salary and the salary of the Lord Advocate and Solicitor General for Scotland. The cost of pension cover provided for the MSPs is by payment of charges calculated on an accruing basis, with liability for payment of future benefits charged to the Scottish Parliamentary Pension Scheme (SPPS). Any liabilities of the fund arising from a deficit on assets will be met through increased funding. The liability for this will be met by the SPCB through the Scottish Consolidated Fund. n. Operating Lease Charges Rentals payable under operating leases are charged to the operating cost statement in the period to which they relate.

18 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______o. Value Added Tax The SPCB is treated as a Crown Body for the purposes of the Value Added Tax Act 1994 and accordingly for the purposes of Section 41 of that Act (application to the Crown) it is treated as a government department, and is exempt for VAT on the provision of parliamentary goods and services. The SPCB is standard rated for VAT on its trading activities, such as the Parliament shop.

19 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Schedule 1

Summary of Resource Outturn 2006-07

For the year ended 31 March 2007

2006-07 2005-06 Restated BUDGET OUTTURN Net total outturn compared Gross Income NET Gross Income NET with Prior year Expenditure TOTAL Expenditure TOTAL Budget Outturn

1 2 3 4 5 6 7 8

£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 NET OPERATING COST (Schedule 2) 82,591 (695) 81,896 84,808 PRIOR YEAR ADJUSTMENT (i) 5,818 - 5,818 - TOTAL RESOURCES (Schedule 2) 93,140 (722) 92,418 88,409 (695) 87,714 4,704 84,808

NET CASH REQUIREMENT 94,015 73,174 20,841 69,849

Reconciliation of Total Resources to Net Cash Requirement

£ ' 000 Note £ ' 000 £ ' 000

Total Resources (i) 92,418 87,714 84,808

Capital: Purchase of fixed assets (ii) 3,000 5, 6 & 13 432 838

Accruals adjustments: Non-cash items (26,403) 3 (23,201) (23,374) Prior year adjustment 5 (5,818) Movements in working capital other than cash 25,000 7 14,047 7,577

Net Cash Requirement (Schedule 4) (iii) 94,015 73,174 69,849

Explanation of the variation between Budget and Outturn Total Resources:

(i) A movement in building indexation of £5.8m previously treated as a credit to the operating cost statement in 2005-06 has been restated as a prior year adjustment in 2006-07. £3.1m variation from budget reflects reduced depreciation charge and cost of capital.

Explanation of the variation between Budget and Outturn Purchase of fixed assets

(ii) Budget provision was not fully required in 2006-07

Explanation of the variation between Budget and Outturn Net Cash Requirement:

(iii) The timing of cash settlement of final accounts and release of retentions originally budgeted for 2006-07 is anticipated to be concluded in subsequent financial years.

The notes on pages 25 to 34 form part of these accounts 20 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Schedule 2

Operating Cost Statement

For the year ended 31 March 2007

2006-07 2005-06 Restated Note £ ' 000 £ ' 000 Administration Costs

Staff costs 2. 31,227 30,298 Other administration costs 3. 50,585 49,984 Other related parties 18. 5,786 5,087

Gross Administration Costs 87,598 85,369

Operating income 4. (695) (561)

Net Administration Costs 86,903 84,808

Reduction in estimated Holyrood final cost 5. (5,007) -

NET OPERATING COST Schedule 1 81,896 84,808

NET RESOURCE OUTTURN Schedule 1 87,714 84,808

Statement of Recognised Gains and Losses

For the year ended 31 March 2007

2006-07 2005-06 £ ' 000 £ ' 000

Net gain on revaluation of tangible fixed assets 5. & 13. 16,868 419

Prior year adjustment 5 (5,818) - Donated asset additions 13 7 -

Recognised gains and losses for the year ended 31 March 2007 11,057 419

The above results relate to continuing activities.

The notes on pages 25 to 34 form part of these accounts

21 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Schedule 3 Balance Sheet

As at 31 March 2007

31 March 2007 31 March 2006

Restated Note £ ' 000 £ ' 000 £ ' 000 £ ' 000

Fixed Assets Tangible assets 5. 343,119 339,743 Intangible assets 6. 374 445

343,493 340,188 Current Assets Stock 8. 102 99 Debtors 9. 1,652 821 Cash at bank and in hand 10. 2,713 3,287

4,467 4,207

Creditors (due within one year) 11. (16,980) (32,047)

Net Current Liabilities (12,513) (27,840)

Total Assets less Current Liabilities 330,980 312,348

Creditors: amounts falling due after one year 12. (120) (140)

330,860 312,208

Taxpayers' Equity General Fund 17. 300,535 297,705

Revaluation Reserve 13. 30,179 14,368

Donated Asset Reserve 13. 146 135

330,860 312,208

P E GRICE Date: 31 October 2007 Clerk to the Parliament and Chief Executive

The notes on pages 25 to 34 form part of these accounts 22 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Schedule 4 Cash Flow Statement

For the year ended 31 March 2007

Note 2006-07 2005-06 Restated £ ' 000 £ ' 000

Net cash (outflow) from operating activities (72,742) (69,011)

Capital expenditure and financial investment (432) (838)

Financing from the Consolidated Fund 72,600 64,925

(Decrease) in cash in the period (574) (4,924)

Reconciliation of operating cost to operating cash flows

Net operating cost 81,896 84,808

Adjust for non-cash transactions 3. (23,201) (23,374)

Adjust for movements in working capital other than cash 7. 14,047 7,577

Net cash outflow from operating activities 72,742 69,011

Analysis of capital expenditure and financial investment

Purchase of fixed assets Tangibles 5. & 13. 253 515 179 323 Intangibles 6.

Net cash outflow from investing activities 432 838

Analysis of financing

From Consolidated Fund (Supply) 17. 72,600 64,925

Decrease /(Increase) in cash 10. 574 4,924

Net cash requirement (Schedule 1) 73,174 69,849

The notes on pages 25 to 34 form part of these accounts

23 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Schedule 5

Resources By Departmental Aim And Objectives

For the year ended 31 March 2007

2006-07 2005-06 Restated Gross Income Net Gross Income Net £'000 £'000 £'000 £'000 £'000 £'000

Aim

Objective

To provide the Scottish Parliament, or ensure the Parliament is provided with the property, staff and services required for this purpose. 82,591 (695) 81,896 85,369 (561) 84,808

NET OPERATING COSTS 82,591 (695) 81,896 85,369 (561) 84,808

24 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Notes to the Resource Accounts Annual Resource Accounts 2006-07 (year ended 31 March 2007)

1. Background The accounts for the Scottish Parliamentary Corporate Body have been prepared for the year ended 31 March 2007. Comparable figures used for 2005-06 reflect those shown in the audited and published accounts prepared for the year ended 31 March 2006 except where they have been restated to reflect a prior year adjustment.

2. Members and Staff Numbers and Costs

A. Pay costs consist of: 2006-07 2005-06

£ ' 000 £ ' 000 £ ' 000 £ ' 000 £ ' 000 £ ' 000 Total Staff Members & Total Staff Members & Office Office Bearers Bearers Salaries SPCB 22,720 15,828 6,892 22,080 15,338 6,742 Seconded staff 869 869 - 939 939 - Ministers 834 - 834 834 - 834 Social security costs SPCB 1,913 1,224 689 1,864 1,187 677 Seconded staff 87 87 - 85 85 - Ministers 101 - 101 102 - 102 Other pension costs SPCB 4,351 2,968 1,383 4,126 2,857 1,269 Seconded staff 201 201 - 194 194 - Ministers 151 - 151 74 - 74

Total Salary Cost per Operating Cost Statement 31,227 21,177 10,050 30,298 20,600 9,698

Other Related Parties - salary costs

Scottish Parliamentary Standards Commissioner (Note 18) 53 - 53 56 - 56

Total salary costs 31,280 21,177 10,103 30,354 20,600 9,754

25 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

B. The average number of whole-time equivalent persons employed (including senior management) during the year was as follows:

2006-07 2005-06

Total Staff Members & Total Staff Members & Office Office Bearers Bearers

SPCB 596 485 111 611 500 111 Seconded staff 18 18 - 22 22 - Ministers 20 - 20 20 - 20 Scottish Parliamentary Standards Commissioner 0.5 - 0.5 0.5 - 0.5

The Commissioner works on a part time basis.

C. The number of Members of the Scottish Parliament is 129.

D. The SPCB is, as defined in the Scotland Act 1998 S.21, the Presiding Officer and 4 elected Members (see Management Commentary for detail). Apart from the Presiding Officer, they do not receive remuneration for carrying out the functions of the SPCB. All senior managers are the staff of the SPCB.

Pensions

a. Members of the Principal Civil Service Pension Scheme (PCSPS) - see accounting policies.

For 2006-07, Employer’s contributions of £3,147,841 were payable to the PCSPS (2005-06 £3,050,577).

Employees joining the SPCB after 1 October 2002 can opt to open a partnership pension account, being a stakeholder pension with an employer contribution. Employers' contributions of £6,405 (2005-06 £3,735) relating to stakeholder pensions were paid to one or more of a panel of four appointed stakeholder pension providers. In addition, employer contributions of £542 (2005-06 £282), 0.8% of pensionable pay, were payable to the PCSPS to cover the cost of the future provision of lump sum benefits on death in service and medical retirement of employees with stakeholder pensions. Medical retirement is possible in the event of serious ill health. There were no medical retirals in 2006-07 (2005-06, none).

There were no outstanding or prepaid scheme contributions at the balance sheet date.

On death, pensions are payable to the surviving spouse at a rate of half of the member's pension. On death in service, the Classic scheme pays a lump sum benefit of twice pensionable pay and the Premium scheme pays three times pensionable pay. A service enhancement is also provided in computing the spouse's pension. The enhancement depends on the length of service up to a maximum of ten years.

Medical retirement is possible in the event of serious ill health. In this case, pensions are brought into payment immediately without actuarial reduction and with service enhanced as for widow(er) pensions.

Staff seconded to SPCB from other organisations are members of the pension schemes operated by their respective employers.

b. Members of the Scottish Parliamentary Pension Scheme (SPPS) - see accounting policies.

The cost of benefits accruing for each year of service is met partly by a specified contribution from members, with the SPCB meeting the balance of the cost of the benefits. The total cost of benefits accruing in the year 2006-2007 (other than insured death benefits) has been assessed using the methodology and assumptions set out below. The results are as follows: % of Pensionable Pay Members’ Contribution Rate 6.00% Employer’s Contribution Rate 20.30% Total Contribution Rate 26.30%

Methodology The value of the liabilities has been obtained using the projected unit method, with allowance for expected future pay increases in respect of active members. The contribution rate for accruing costs has been determined using the projected unit method.

Assumptions The principal financial assumptions adopted for the pension assessments made in relation to this statement are an investment return in excess of a price increase of 1.9% p.a. (2005-06 2.8%) as pension benefits under this scheme will be increased in line with prices. The gross rate of return is 5.4% and the real rate of return, net of earnings is 0.5%.

In relation to the pensionable payroll for the financial year, the SPCB’s contributions for 2006-07 were £1,524,019 (2005-06 £1,369,275).

26 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

The value of the whole Pension Fund 2006-07 2005-06 £ ' 000 £ ' 000

Units in Baillie Gifford Managed Fund 18,399 15,673 AVC 282 243 18,681 15,916

The Scheme is valued triennially, with the latest valuation being completed by the Government Actuary’s Department as at 31 March 2005.

2006-07 2005-06 £ ' 000 £ ' 000

Value of the Pension Fund as at 31 March 18,538 15,787 Actuarial Valuation of the future liabilities of the Scheme 23,400 15,900

(Deficit) in Scheme for year (4,862) (113)

The pension benefits taken into account in this assessment are those provided under the rules of the scheme, including normal retirement benefits, medical retirement benefits, and benefits applicable following the death of a member. (The accruing costs exclude the death in service lump sum, which is insured separately by the scheme).

The scheme liability at 31 March 2007 stands at £23.4m, an increase of £7.5m (47%) on the liability of £15.9m reported as at 31 March 2006. The liability has grown for 2 reasons. Firstly, due to a change in actuarial assumptions, where the discount rate applied in calculating the net present value of the future liabilities has been reduced from 2.8% to 1.9%, accounting for a £4.5m growth in the reported liability. This change in actuarial assumption is in line with actuarial changes in other schemes. Secondly, due to the underlying growth in the liability as a result of the active scheme members accruing an extra year’s worth of benefit accounting for £3.0m.

The value of the fund assets has increased to £18.5m, an increase of £2.7m from the value as at 31 March 2006. This arises from contributions of £2m and investment growth of £0.7m.

The value of the Pension Fund is monitored on an on-going basis. The next full valuation of the scheme, which may recommend a change in contribution rates and which is carried out on a triennial basis is due as at 31 March 2008.

Any surpluses or deficits in the valuation of the Scheme is required to be met via decreased or increased contribution rates, as advised by the Government Actuary’s Department.

27 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

3. Other Administration Costs

2006-07 2005-06

£ ' 000 £ ' 000 £ ' 000 £ ' 000

MSP allowances 9,738 9,572 Rentals under operating leases 18 109 Other accommodation costs Rates 3,376 3,430 Utilities 905 606 Other 2,878 7,159 2,067 6,103 Travel and Expenses, Hospitality 345 389

Other expenditure Contractors and consultants 582 928 Equipment and IT maintenance 2,175 2,391 Postage, stationery and publications 1,797 1,484 Broadcasting 660 722 Other staff costs 486 585 Other (a) 4,424 10,124 4,327 10,437 Non cash items:

Depreciation 11,966 12,412 Cost of capital charge 11,167 10,889 Auditor's remuneration and expenses 68 23,201 73 23,374

Total other admin cost per operating cost statement 50,585 49,984

Other Related Parties

Scottish Parliamentary Standards Commissioner Note 18 19 10

50,604 49,994

(a) - These figures include the costs incurred by Members in respect of their office supplies to assist them in the discharge of their Parliamentary duties. An analysis of these costs, by individual Member, is published separately.

4. Operating Income

2006-07 2005-06

£ ' 000 £ ' 000 Operating income analysed by classification and activity, is as follows: Income from broadcasting 24 27 Shop trading income 221 316 Income from guided tours 105 148 Miscellaneous income 345 70

Total Income 695 561

28 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

5. Tangible Fixed Assets 2006-2007 Fixtures & Artwork & Land & Fittings and Donated Buildings Equipment Vehicles IT Systems Assets Total Cost or valuation £ ' 000 £ ' 000 £ ' 000 £ ' 000 £ ' 000 £ ' 000 At 1 April 2006 339,450 12,064 10 8,111 513 360,148 Additions - 113 - 132 15 260 Cost clarification adjustment (2,360) (2,360) Indexation 16,762 87 - - 19 16,868 At 31 March 2007 356,212 9,904 10 8,243 547 374,916

Depreciation At 1 April 2006 10,485 3,164 10 6,746 - 20,405 Charged in year 8,409 2,369 - 938 - 11,716 Cost clarification adjustment - (1,060) - - - (1,060) Indexation 699 37 - - - 736 At 31 March 2007 19,593 4,510 10 7,684 - 31,797

Net book value at 31 March 2007 336,619 5,394 - 559 547 343,119 At 1 April 2006 328,965 8,900 - 1,365 513 339,743

Note:

The principal fixed asset of the SPCB is the parliamentary building at Holyrood, Edinburgh. This was occupied in the 2004-2005 financial year. The Parliament land and building was professionally valued on a depreciated replacement cost basis as at 7 January 2005 by James Barr (Chartered Surveyors) at £333,000,000. This included structural buildings valued at £274,185,000, a land value of £13,500,000 and £45,315,000 in respect of fixed plant. The valuation was made in accordance with the RICS Appraisal and Valuation Manual and included an element of £27,900,000 for finance costs. A full revaluation will be commissioned at a minimum of every five years, in line with the SPCB fixed asset policy. Revaluation may result in an increase or decrease of the previous recorded value.

Clarification of final Holyrood costs:

Arising from the report published by the SPCB in February 2007 on the Holyrood Project Close-Out, which finalised the cost of the Holyrood building, initial cost estimates made at the time of the valuation in 2004-05 for accounting purposes were clarified. This resulted in a decrease of estimated cost by £6,307,000. However, this did not affect the valuation of the building within fixed assets and the cost reduction against the cost to complete has been reflected through the operating cost statement.

The report also confirmed that costs estimated in 2004-05 for Fixtures and Fittings were higher than the final cost and a compensating adjustment of £1,300,000 has been reflected through the fixed assets note. The associated charge has been reflected through the operating cost statement along with the cost reduction.

Prior year adjustment:

In 2006-07, following clarification from the Financial Reporting Advisory Board (FRAB), the indexation movement on buildings and fixed plant relating to Holyrood building is now shown as a movement through the Revaluation Reserve rather than a credit to the Operating Cost Statement. This is in line with the treatment for indexation movement of land costs through the revaluation reserve. The indexation movement for 2006-07 is £16,129,000 on buildings and £633,000 on land. A prior year adjustment is now shown for 2005-06 of £6,123,000 for buildings less an amount of £305,000 relating to indexation depreciation movement (net £5,818,000). The land indexation movement had previously already been disclosed through the revaluation reserve.

29 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

6. Intangible Assets 2006-07 £’000 Software Cost At 1 April 2006 2,243 Additions 179 At 31 March 2007 2,422

Depreciation At 1 April 2006 1,798 Charged in year 250 At 31 March 2007 2,048

Net book value At 31 March 2007 374 At 1 April 2006 445

7. Movements in Working Capital other than Cash 2006-07 2005-06 £ ' 000 £ ' 000

Increase in stock 3 7 Increase/(Decrease) in debtors 831 (496) Decrease/(Increase) in creditors 13,213 8,066

14,047 7,577

8. Stocks Retail 81 88 Other stock 21 11

102 99

9. Debtors: Amounts falling due within one year VAT 1,047 505 Trade Debtors 253 35 Prepayments and accrued income 151 62 Other debtors 201 219

1,652 821

30 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

10. Cash at Bank and in Hand

2006-07 2005-06 £ ' 000 £ ' 000

Balance at 1 April 3,287 8,211 Net cash (outflow)/inflow (574) (4,924)

Balance at 31 March 2,713 3,287

The Office of HM Paymaster General (OPG) provides a current account banking service.

The following balances were held as at 31st March:

Balances at OPG 2,550 3,105 Commercial banks and cash in hand 163 182

Total balance 2,713 3,287

11. Creditors: amounts falling due within one year

Accruals 12,247 19,372 Trade Creditors 513 651 MSP Staff Pension Scheme 37 27 Other creditors 1,470 1,371 Scottish Consolidated Fund (SCF) 2,713 3,287 Capital Retentions - 7,339

16,980 32,047

12. Creditors: Amounts falling due after one year

Other creditors 120 140

31 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

13. Reserves 2006-07 2005-06 Restated £ ' 000 £ ' 000 Revaluation Revaluation Reserve Reserve

Balance as at 1 April 14,368 8,156

Arising on indexation during the year (net) - Buildings (Note 5) 15,430 5,818 - Land (Note 5) 633 327 - Fixtures, Fittings and Equipment (Note 5) 50 71 - Artwork and donated assets (Note 5) 19 21

Transferred to general fund in respect of realised element of revaluation reserve (Note 17) (317) (13)

Transferred to donated asset reserve in respect of indexation on donated asset (4) (12)

Balance at 31 March 30,179 14,368

The revaluation reserve reflects the unrealised element of the cumulative balance of indexation and revaluation adjustments.

Donated Asset Donated Asset Reserve Reserve

Balance as at 1 April 135 123 Transferred from revaluation reserve 4 12 Donated artwork 7 -

Balance at 31 March 146 135

14. Capital Commitments

There are no capital commitments as at 31 March 2007 (2005-06 none).

15. Commitments under operating leases

Land and Land and Buildings buildings At 31 March the SPCB committed to making the following payments during the next year in respect of operating leases expiring: within one year 5 5 between two and five years - -

5 5

16. Contingent Liabilities

The SPCB has provided a number of letters of indemnity for loaned artwork which is on display within the Scottish Parliament. The maximum contingent liability in respect of these indemnities is £274,000. There are no other contingent liabilities.

32 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

17. Reconciliation of Net Operating Cost to changes in General Fund

This is the movement in the General Fund over the year to 31 March 2007.

2006-07 2005-06 Restated £ ' 000 £ ' 000 £ ' 000 £ ' 000

Net operating cost for the year (81,896) (84,808) Movement in cash balances held at the year end (Note 10) 574 4,924 (81,322) (79,884)

Net Parliamentary funding 72,600 64,925

Transferred to General Fund in respect of realised element of 317 13 revaluation reserve (Note 13)

Non-cash charges: cost of capital 11,167 10,889 auditor's remuneration 68 73 11,235 10,962 Net increase / (decrease) in General Fund 2,830 (3,984)

General Fund at 1 April 297,705 301,689

General Fund at 1 April – as previously reported 303,523 General Fund at 1 April – prior year adjustment (5,818)

General Fund at 31 March (Schedule 3) 300,535 297,705

18. Related Party Transactions

Scotland’s Futures Forum Limited was established on 16 August 2005 as a Company Limited by Guarantee. It was created by the Scottish Parliament to help its Members, along with policy makers, businesses, academics, and the wider community of Scotland, look beyond immediate horizons, to some of the challenges and opportunities in the future. All shares are owned by the Scottish Parliamentary Corporate Body. Net spending by Scotland’s Futures Forum Limited in 2006-07 was £52,641, being £22,727 contributed by SPCB and £29,914 from other partners. Taking into account surplus funding provided by other partners, the net funding provided by SPCB was £18,000 as shown below. In 2005-06 costs of £4,359 were included within Note 3 Other Administration Costs. Since funding including sponsorship from other organisations, was higher than actual spending, this created bank balances of £6,268 (£387 in 2005-06), which are included within Note 10 Cash at Bank and in Hand. A set of the accounts is available on request.

The SPCB has a number of transactions with the Scottish Executive and with other government departments and public bodies, including Historic Scotland and HM Revenue & Customs. Additionally, regular transactions take place with the Scottish Parliamentary Pension Scheme, see note 2.

In 2006-07 the Scottish Public Services Ombudsman, The Scottish Information Commissioner, the Commissioner for Children and Young People in Scotland and the Commissioner for Public Appointments in Scotland were responsible for the management of their funds and preparation of their accounts. Further detail on their accounts can be found on the appropriate websites. The Scottish Parliamentary Standards Commissioner figures are included within those of the SPCB and details of amounts paid are set out below.

Funding provided was:

2006-07 2005-06

£’000 £’000

Scottish Public Services Ombudsman 2,882 2,474 Scottish Information Commissioner 1,327 1,090 Commissioner for Children and Young People in Scotland 1,090 1,042 Commissioner for Public Appointments in Scotland 397 415 Scottish Parliamentary Standards Commissioner 72 66 Scotland’s Futures Forum Limited 18 - Net Cost (Schedule 2) 5,786 5,087 33 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

Scottish Parliamentary Standards Commissioner

The above organisation was set up on the 1 April 2003 under the terms of the Scottish Parliamentary Standards Commissioner Act 2002. SPCB pays all salaries and expenses. The Clerk/Chief Executive of the SPCB is the Accountable Officer for the SPSC.

The following amounts were paid out: 2006-07 2005-06

£ ' 000 £ ' 000

Salaries (see Note 2) 53 56 Other Administration Costs (see Note 3) 19 10

Net Operating Cost 72 66

Remuneration details are set out below:

Scottish Parliamentary Standards Commissioner Name and Salary Salary Real Total CETV at CETV at Real title 2006/07 2005/06 increase in accrued 31/3/06 31/3/07 increase in pension pension at CETV and related age 60 lump sum and at age 60 related lump sum at 31/3/07 Jim Dyer 35-40 40-45 0-2.5 0-5 47 66 18 Scottish Parliamentary Standards Commissioner

The Scottish Parliamentary Standards Commissioner is the only Commissioner for whom the Chief Executive of the SPCB is the Accountable Officer. Dr Dyer works on a part time basis.

19. Presentation of Resource Budgets and Comparative Information

The approved resource budgets for 2006-07 are shown for indicative purposes. Resource Budgets include major resource items such as capital charges and capital expenditure.

20. Notional Charges

The following notional charges have been included in the accounts: 2006-07 2005-06

£ ' 000 £ ' 000

Cost of Capital 11,167 10,889 Auditor's Fee 68 73

The cost of capital charge is calculated as explained in the Statement of Accounting Policies (note j Capital Charge).

21. Losses Statement

Losses and special payments for the year total £2,000 (2005-06 £60,000).

There were no individual losses or special payments in excess of £250,000 which would require separate disclosure.

34 Scottish Parliamentary Corporate Body Annual Accounts 2006-07 ______

SCOTTISH PARLIAMENTARY CORPORATE BODY

DIRECTION BY THE SCOTTISH MINISTERS in accordance with section 19(4) of the Public Finance and Accountability (Scotland) Act 2000

The statement of accounts for the financial year ended 31 March 2007 and subsequent years shall comply with the accounting principles and disclosure requirements of the edition of the Government Financial Reporting Manual (FReM) which is in force for the year for which the statement of accounts are prepared.

The accounts shall be prepared so as to give a true and fair view of the net resource outturn, resources applied to objectives, recognised gains and losses and cash flows for the financial year, and of the state of affairs as at the end of the financial year.

This direction shall be reproduced as an appendix to the statement of accounts. The direction given on 15 July 2002 is hereby revoked.

Signed by the authority of the Scottish Ministers

Dated 17 January 2006