 |
Annual Report & Accounts 1998 - 1999 |
History and Background
The Radiocommunications Agency is responsible for most non-military radio matters in the UK. It was established as an Executive Agency of the Department of Trade and Industry (DTI) in April 1990. The Agency is funded through the DTI Vote (Class V Vote 1). HM Treasury's latest Accounts Direction dated 29 June 1999, under the provisions of Section 5 of the 1921 Exchequer and Audit Departments Act requires the Agency to produce resource based accounts. These accounts have been audited by the Comptroller and Auditor General.
Results and Appropriations
The surplus for the year amounted to £13.7M (1997/98: £1.7M). Details of the amount surrendered to the DTI and other movements on the General Fund are shown in note 12.
The Agency achieved its key financial target for the year, as stated in Note 3. Performance against other measures is listed on pages 22-23 of the Annual Report.
Review of Activities
The activities of the Agency and the development of its business are reviewed in the preceding pages.
The Wireless Telegraphy Act 1998 provides new powers to manage the spectrum by charging for licences on the basis of spectrum management considerations so as to promote optimal use of the radio spectrum. The new powers replace the constraint of having to aim to match income to costs. The immediate result in 1998/99 was a significant overall rise in the Agency's income as new licence charges were introduced, although at the same time large numbers of licensees benefited from fee reductions.
A joint venture company, Radio Spectrum International Consulting Ltd known as RSI, was formed in June 1998 to help provide the resources required to meet the Agency's IT needs. Since formation, RSI has supplied virtually all the IT services required by the Agency. RSI will also build on the Agency's international connections by providing consultancy services to overseas administrations. See note 9 for details.
RSI has provided the increasing level of IT resources needed to develop the Agency's systems. Notable among these is RULES, a new licensing system due to go live in 1999/2000; and ALPACA, an integrated accounting system which is nearly complete. The EROS project is renewing desktop services to all staff. The increasing use of IT resources is reflected in the operating charge for IT support (Note 5) and in additions to Assets Under Construction (Note 8).
There are no other special factors that affect these accounts.
Fixed Assets
The changes in fixed assets are detailed in Note 8 to the accounts.
The Agency transferred all its IT hardware and most of its third party software to RSI as part of the joint venture contract. This resulted in a loss on disposal of IT assets of £0.6M.
Research and Development
The Agency's programme of research and development covers a wide area of activity and responsibility within the Agency. It is focussed on the fundamentals of radio propagation and support for the Agency's standardisation and specification programme. Research is intended both to extend the usable spectrum, as new technologies develop, and to make greater use of existing spectrum through sharing and more efficient modulation and coding techniques.
Future Developments
The new spectrum pricing powers granted by the Wireless Telegraphy Act 1998 will be implemented over a number of years. The Agency's licence income will rise in relation to expenditure as the programme introduces spectrum pricing based charges to all business sectors. Preparations are in hand for an auction in 1999/2000 of new licences for Third Generation mobile communications. Auctions may be used selectively in other business sectors for new regional or national services as appropriate, subject to decisions by Ministers.
A new IT system, known as RULES, will be introduced in 1999/2000, which will help to administer spectrum pricing based licences.
The Agency's joint venture company, RSI, will make use of the Agency's international contacts to develop an overseas consultancy business. The Agency will participate in RSI's future profits from this business. See note 9 for further information about RSI.
The Agency's HQ will return to London Docklands in 1999/2000, when work on the office building is complete. The building has been extensively refurbished since it was damaged by an IRA bomb in February 1996.
Steering Board Members
The membership of the Agency's Steering Board since 1 April 1998 has been as follows:
Chairman:
Mr Alastair Macdonald CB
Director General, Industry, DTI
Members
Dr John Thynne CB
Director and Executive Council Member,
Newbridge Networks Corporation
(Resigned 15 December 1998)
Mr Bill Dennay
Consultant, Quantel
Mr David Edmonds
Director General, Office of Telecommunications (OFTEL)
(Appointed 30 April 1998)
Mr Jonathan Phillips
Director, Finance and Resource Management,
DTI
Mr William Macintyre CB
Director, Communications and Information
Industries Directorate, DTI
Mr Jim Norton
Chief Executive, Radiocommunications Agency
(Resigned 3 May 1998)
Mr David Hendon
Chief Executive, Radiocommunications Agency
(Appointed 4 May 1998)
Mr Rob Meakin
Director, GEC Group
(Appointed 17 September 1998)
Supplier Payment Policy
In line with the CBI code and the Government's commitment on prompt payment of bills, the Agency aims to pay valid invoices within 30 days of receipt or as agreed with suppliers. In 1998/99, this was achieved for 99.3% of invoices.
Disabled Persons
The Agency's policy is to promote equal opportunity for all, regardless of disability, subject only to capability and suitability for the post in question. Wherever possible, staff who become disabled during employment are provided with an alternative post which makes use of their expertise, should this be necessary.
Employee Involvement
The Agency encourages teamwork and communication between staff at all levels in the organisation. Business and other issues which may be of interest or concern are brought to the attention of staff at various levels in a variety of ways.
There is a continuing dialogue, both formal and informal, with trade union representatives.
The Agency achieved Investors in People accreditation in March 1999.
Year 2000 Compliance
The Agency expects to achieve its Year 2000 (Y2K) compliance objectives for its IT systems and infrastructure in good time for December. The Agency is also developing a Business Continuity Plan to cover the effects of Y2K failures in the systems of suppliers, customers and other third parties beyond the Agency's control.
The staff and consultancy costs, estimated at £1m, have been included in the Agency's various IT projects. There is no requirement to purchase additional hardware or software.
David Hendon,
Chief Executive
7 July 1999
Under Section 5 of the Exchequer and Audit Departments Act 1921, the Treasury has directed the Radiocommunications Agency to prepare a statement of accounts for each financial year in the form and on the basis set out in the accounts direction (on page 67) of these financial statements. The accounts are prepared on an accruals basis and must give a true and fair view of the Agency's state of affairs at the year end and of its income and expenditure, recognised gains and losses and cash flows for the financial year.
In preparing the accounts, the Agency is required to:
observe the accounts direction issued by the Treasury and apply suitable accounting policies on a consistent basis; and
The Accounting Officer for the Department of Trade and Industry has appointed the Chief Executive of the Radiocommunications Agency as the Accounting Officer for the Agency. His relevant responsibilities as Accounting Officer, including responsibility for the propriety and regularity of the public finances and for the keeping of proper records, are set out in the Accounting Officers' Memorandum, issued by the Treasury and published in Government Accounting.
As Accounting Officer, I acknowledge my responsibility for ensuring that an effective system of internal financial control is maintained and operated by the Radiocommunications Agency.
The system can provide only reasonable and not absolute assurance that assets are safeguarded, transactions authorised and properly recorded, and that material errors of irregularities are either prevented or would be detected within a timely period.
The system of internal financial control is based on a framework of regular management information, administrative procedures including the segregation of duties, and a system of delegation and accountability. In particular, it includes:-
The Agency enjoys the services of the Depart-ment's internal audit unit, which operates to standards defined in the Government Internal Audit Manual. The work of the internal audit unit is informed by an analysis of the risk to which the Agency is exposed, and annual internal audit plans are based on this analysis. The analysis of risk and the internal audit plans are endorsed by the Agency's Audit Committee and approved by me. At least annually, the Head of Internal Audit (HIA) provides me with a report on internal audit activity in the Agency. The report includes the HIA's independent opinion on the adequacy and effectiveness of the Agency's system of internal financial control.
My review of the effectiveness of the system of internal financial control is informed by the work of the internal auditors, the Audit Committee which oversees the work of the internal auditor, the executive managers within the body who have responsibility for the development and maintenance of the financial control framework, and comments made by the external auditors in their management letter and other reports.
During the year, additional resources have been applied to reconciling and balancing all the Agency's income systems, and this has increased confidence that all income is properly accounted for.
David Hendon,
Chief Executive
7 July 1999
I certify that I have audited the financial statements on pages 54 to 66 under the Exchequer and Audit Departments Act 1921. These financial statements have been prepared under the historical cost convention as modified by the revaluation of certain fixed assets and the accounting policies set out on pages 57 and 58.
Respective responsibilities of the Agency, the Chief Executive and Auditor
As described on page 50 the Agency and Chief Executive are responsible for the preparation of the financial statements and for ensuring the regularity of financial transactions. The Agency and Chief Executive are also responsible for the preparation of the other contents of the Annual Report. My responsibilities, as independent auditor, are established by statute and guided by the Auditing Practices Board and the auditing profession's ethical guidance.
I report my opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Exchequer and Audit Departments Act 1921 and Treasury directions made thereunder, and whether in all material respects the expenditure and income have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. I also report if, in my opinion, the Foreword is not consistent with the financial statements, if the Agency has not kept proper accounting records, or if I have not received all the information and explanations I require for my audit.
I read the other information contained in the Annual Report, and consider whether it is consistent with the audited financial statements. I consider the implications for my certificate if I become aware of any apparent misstatements or material incon-sistencies with the financial statements.
I review whether the statement on page 51 reflects the Agency's compliance with Treasury's guidance Corporate governance: statement on the system of internal financial control. I report if it does not meet the requirements specified by the Treasury, or if the statement is misleading or inconsistent with other information I am aware of from my audit of the financial statements.
Basis of opinion
I conducted my audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of financial transactions included in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Agency and Chief Executive in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Agency'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 are free from material misstatement, whether caused by error, or by fraud or other irregularity and that, in all material respects, the expenditure and income have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. In forming my opinion I have also evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In my opinion:
I have no observations to make on these financial statements.
John Bourn
Comptroller and Auditor General
8 July 1999
National Audit Office
157-197 Buckingham Palace Road
Victoria,
London SW1W 9SP
|
