5.1 Going concern

The financial position of the Agency and its cash flows are detailed in the financial statements. The Agency members havea reasonable expectation that the entity has adequate resources to continue in operational existence and discharge its mandate for the foreseeable future. Therefore the Agency continues to adopt the going concern basis of accounting in preparing the financial statements.

5.2 Operating income

The Agency is required to provide business and support services and systems, in addition to assigning staff to a number of businesses under prescribed legislation. The Agency adopts a cost recovery basis from these businesses for the provision of staff and services and account for this on an accruals basis. Other income is recorded on an accruals basis in the Statement of Income and Expenditure and Other Comprehensive Income.

5.3 Central fund income

Central fund income included in the Statement of Income and Expenditure and Other Comprehensive Income represents the amount necessary to meet the operating and administration costs incurred by the Agency. The amount is recognised based on an accrual basis in line with FRS 102 Section 25 Government Grants.

5.4 Expenditure

The costs and expenses incurred by the Agency in the performance of its functions are recognised on an accruals basis in the Statement of Income and Expenditure and Other Comprehensive Income.

5.5 Non current assets and depreciation

Non current assets are stated in the Statement of Financial Position at cost less accumulated depreciation. Depreciation is charged to the Statement of Income and Expenditure and Other Comprehensive Income on a straight line basis, with the charge being calculated over the asset's expected useful life.

5.6 Leasing

Rentals under operating leases are charged to the Statement of Income and Expenditure and Other Comprehensive Income on an accruals basis.

5.7 Pensions

The Agency operates a defined benefit pension scheme, and for staff who choose not to join the scheme it makes contributions to Personal Retirement Savings Accounts (“PRSA”). Contributions are funded out of the Agency’s administration budget.

The defined benefit pension scheme costs are accounted for under section 28 of FRS 102. Pension scheme assets are measured at fair value. Pension scheme liabilities are measured on an actuarial basis using the projected unit method. An excess of scheme liabilities over scheme assets is presented in the Statement of Financial Position as a liability. Deferred pension funding represents the corresponding asset to be recovered in future periods from the Central Fund.

The defined benefit pension change in the Statement of Income and Expenditure and Other Comprehensive Income comprises the current service cost and past service cost plus the net interest (note 10.5) cost on the scheme assets and liabilities.

Actuarial gains and losses arising from changes in actuarial assumptions and from experience are recognised in Other Comprehensive Income for the year in which they occur and a corresponding adjustment is recognised in the amount recoverable from the Central Fund.

The cost of contributions by the Agency to PRSAs is recognised as a charge to the Statement of Income and Expenditure and Other Comprehensive Income in the financial year to which the employee service relates.

5.8 Software

Computer software costs are charged to the Statement of Income and Expenditure and Other Comprehensive Income in the year in which they are incurred.

5.9 Capital account

The capital account represents receipts from the Central Fund which have been allocated for the purchase of non current assets. The receipts are amortised in line with depreciation on the related non current assets.

5.10 Provisions

Provisions are recognised when the Agency has a present obligation (legal or constructive) as a result of a past event, it is probable that the Agency will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amounts recognised as provisions are the best estimates of the consideration required to settle the present obligation at the end of the reporting period.

5.11 Taxation

The Agency is a State body for tax purposes. Under specific provisions in the Taxes Consolidation Act 1997, the Agency is exempt from corporation tax. In addition, the Agency is not subject to Irish capital gains tax or corporation tax on any chargeable gains accruing to it.

5.12 Key judgements and estimates

The presentation of the financial statements requires management to make judgements, estimates and assumptions that effect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Defined benefit pension scheme (note 10)

The Agency has obligations to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors, including; life expectancy, salary increases, asset valuations and discount rates. Management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends.

Provisions (note 15)

The Agency makes provisions for legal and constructive obligations, which are known to be outstanding at the reporting date. Provisions require management's best estimates of the expected expenditure required to settle the obligation.

Property, equipment and vehicles useful life (note 11)

The charge in respect of periodic depreciation is derived after determining an estimate of an asset's expected useful life and the expected residual value at the end of its life. Changing an asset's expected life or its residual value would result in a change in the depreciation charge in the Statement of Income and Expenditure and Other Comprehensive Income.

The useful lives of the Agency’s assets are determined by management and reviewed at least annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life.