Crown Prosecution Service Annual Report and Resource Accounts 2005 - 2006

Resource Accounts

Management Commentary

Introduction

The Accounts report the resources that have been consumed working to deliver the Department's aim and objectives. This report has been prepared in accordance with the guidance set out in HM Treasury's Financial Reporting Manual (FReM).

Spending Review 2004

The Government spending plans for the CPS for the three years from 2005-06 to 2007-08, which were announced in July 2004 as part of the 2004 Spending Review represent an average increase in real terms of 3 per cent a year. From 2005-06 onwards, HM Treasury has agreed to switch front line costs, previously classified as administration costs, into programme costs.

The new spending plans require the CPS to:

• Deliver more challenging Public Service Agreement (PSA) targets;
• Complete the rollout of full statutory charging across England and Wales by March 2007;
• Improve the handling of victims and witnesses, promote their needs, ensure that victims' views are represented and enable both victims and witnesses to give evidence effectively; and
• Deliver significant efficiency savings that amount to £34 million in 2007-08. Further details can be found within the body of the Annual Report under the heading: CRIMINAL JUSTICE SYSTEM PERFORMANCE.

Departmental Report

The CPS Departmental Report is presented to Parliament as part of the Law Officers' Departments Departmental Report. The report for 2005-06 was published in May 2006.

The coverage of the report includes the following main elements:

• Progress on delivering public services, including departmental objectives, PSA targets and modernising government;
• Recent developments in the CPS, including reorganisation and other new legislative and working practice initiatives;
• An analysis of expenditure over the previous five years and the expenditure plans for the next three years; and
• CPS performance and achievements.

a) Operating Review

(i) CPS Business Strategy for 2005-08

The CPS Business Strategy for 2005-08 focuses on how to deliver the PSA targets which represent the Government's key objectives in criminal justice, and the basis on which funding for the Service is provided.

The CPS Vision to become a world class prosecution service and supporting business strategy have been developed with regard to a number of business drivers and changes across the CJS and to wider Civil Service reforms.

The Business Strategy sets out a challenging reform agenda for the CPS over the three years to 2008. The changes set out in the Strategy are part of the wider reform of the CJS and are essential if the CPS is to play its full part in a more efficient and effective CJS and become more accountable to local communities.

The planned changes, which are described in detail in the body of the Annual Report, will mean a more confident, strong and independent CPS that is better equipped to bring more offenders to justice and to prevent offenders profiting from their criminality. It will mean that people will have more confidence and trust in the CPS and in the CJS as a whole.

(ii) Future Factors

CSR2007

The Government has commenced a Comprehensive Spending Review 2007 (CSR2007) which will determine spending plans and performance targets for all departments for financial years 2008-09 to 2010-11. CSR2007 will deliver a long term and fundamental review of government expenditure and new Departmental Expenditure Limits are expected to be announced in summer 2007.

To lay the groundwork for the CSR, the Government is taking forward a programme of work involving:

• An examination of the key long-term trends and challenges that will shape the next decade - including demographic and socio-economic change, globalisation, climate and environmental change, global uncertainty and technological change;
• A national debate to build a shared understanding of how the UK and public services need to respond to these challenges;
• Detailed studies of key areas where cross-cutting, innovative policy responses are required to meet these long-term challenges;
• An ambitious and far-reaching value-for-money programme to release the resources needed to address the challenges, involving both further development of the efficiency areas developed in the Gershon review, and a set of zero-based reviews of departments' baseline expenditure to assess its effectiveness in delivering the Government's long-term objectives; and
• A more strategic approach to asset management and investment decisions, ensuring the UK is equipped with the infrastucture needed to support both public service delivery and the productivity and flexibility of the wider economy.

(iii) Summary of Performance

The CPS has made substantial progress in its reform programme in 2005-06 and in working to achieve the SR2004 PSA targets. Full details of performance and achievements during the year and comparisons with achievements in previous years can be found in the Annual Report under the heading: CRIMINAL JUSTICE SYSTEM PERFORMANCE.

The CPS's Business Strategy for 2005-08 together with the CPS Business Plan for 2006-07 focus on how the PSA targets will be delivered and are available on the CPS website: www.cps.gov.uk.

(iv) Sustainability

Environmental Matters

The key CPS objectives to incorporate sustainable development are discussed in the body of the Annual Report under the headings: Sustainable Development and Social and Community Issues. The CPS, along with the other Law Officers' Departments, have agreed the Law Officers' Departments Sustainable Development Action plan which can be found on the CPS website: www.cps.gov.uk

b) Financial Review

The CPS net Request for Resources (RfR), as voted by Parliament, for the period to 31 March 2006 was £614 million. Our outturn on expenditure as shown in the 2005-06 Accounts, Statement of Parliamentary Supply, was £602 million.

As part of the 2000 Spending Review plans, the Treasury created a criminal justice reserve which set aside funding to provide for unforeseen pressures and trilaterally agreed new initiatives. The Attorney General, the Home Secretary and the Lord Chancellor agreed to allocate £76 million from the reserve in 2004-05 to the CPS to continue the reform of the Service. The investment has enabled the Service to direct additional resources to the more serious cases, progress the implementation of the charging initiative, bring more offences to justice, provide better support for victims and to implement the recommendations of Speaking up For Justice. The reserve became part of CPS baseline funding from 2005-06.

Note 2 of the Accounts analyses expenditure within the Departmental Expenditure Limit (DEL) by the Department's two functions, Administration and Crown prosecutions and legal services.

Administration represents the costs of running the Department and includes only those costs not attributed to front line services directly associated with the prosecution of criminal cases. Administration includes staff salaries, other staff related expenditure, accommodation and related costs for administrative staff based in CPS Headquarters. Overall the CPS administration outturn was £54 million compared to net provision of £58 million. The underspend of £4 million reflects decisions to retain reserves to ease resource pressures in 2006-07.

Crown prosecutions and legal services cover the direct and indirect costs of taking cases to court. As well as the cost of front line staff salaries, the expenditure is associated with the costs of the more serious cases, which are heard in the Crown Court and comprise the costs of employing barristers as advocates, reimbursing the costs of prosecution witnesses who attend court, and a number of other less significant costs associated with the prosecution process.

Expenditure on Crown prosecutions and legal services was £548 million compared with provision of £556 million representing an underspend of £8 million. The underspend is accounted for by deferment of some accommodation projects and the balance of discrete funding for the No Witness No Justice project. This latter funding is ring-fenced and managed tri-laterally by the CPS, the Home Office and the Department for Constitutional Affairs (DCA). Over £34 million of CPS provision for Programme Costs is provided by way of costs awarded against defendants and collected by the magistrates' courts on our behalf.

Within the overall expenditure position, expenditure on fees paid to counsel was £10 million higher than originally planned for the year. The additional expenditure was offset by a reduction in expenditure on other areas of the Service.

The CPS and DCA use versions of a graduated fee scheme to calculate counsel fees in the majority of Crown Court cases. The concept of broad parity has created some upward pressure on the fees the CPS pays for the longer, more complex cases that have been historically outside the graduated fee scheme. Over 40% of Crown Court cases involved indictable-only offences - the most serious cases of all - compared with 33% in 2000-01 and only 18.2% in 1991-92. There are further reasons for the increase in costs, the extension of recovery of criminal assets, the conclusion of some extremely large cases and the increased use of information technology have all meant longer and more complex cases.

From October 2005 the graduated fee scheme was extended to include Crown Court cases that had cracked on the day of trial, cases where the defendant gave a guilty plea and cases that were expected to last between 25 and 40 days in court. We have taken further measures to help us manage these cost pressures and details are given in the body of the Annual Report on page 30.

Capital expenditure in the CPS is focused on improving the Department's estate and office environment and investment in IT through the PFI arrangement with LogicaCMG.

In all, the Department spent a total of £4 million on the purchase of fixed assets and outturn was £3 million less than the budget.

The Department's net cash requirement outturn was £611 million against an estimate of £623 million. The difference is equivalent to the unspent resource position and the explanation given above also applies here.

During 2005-06 the debtors increased by £7 million from £46 million to £53 million and debtor days from 480 to 503 days. Debtors effectively represent the outstanding value of costs awards due to the CPS that are collected by the magistrates' courts on our behalf. Repayment arrangements agreed with defendants by the courts mean that collection can occur over an extended period of time. The position is exacerbated by the fact that the courts cannot write off doubtful debts save for in very exceptional circumstances.

In the same period creditors reduced from £82 million to £67 million and creditor days from 99 days to 66 days as a result of improvements in the systems and controls used in the department. This represents a 33% improvement in payment performance by value and further efficiency improvements are planned in 2006-07.

Management

Ken Macdonald QC was appointed the Director of Public Prosecutions in November 2003. The Chief Executive supports the Director. Richard Foster was appointed as Chief Executive on 7 January 2002. The Chief Executive has responsibility for finance, human resources, performance management, IT and business and administrative processes, allowing the Director to concentrate on prosecution and legal processes. The Remuneration Report provides detail of service contracts and salary and pension entitlements for senior officials of the department.

Following a review of the Service's governance arrangements in 2004-05 a smaller, more strategic Board was formed, supported by a range of committees with more Chief Crown Prosecutors (CCPs) and Area Business Managers (ABMs) engaged in decision-making and shaping the CPS. This arrangement reflects the differing sized Areas and the diversity of the CCP and ABM cadres whilst garnering the knowledge of the CPS's Non- Executive Directors (NEDs) who sit on the Board and a variety of committees. The committee structure was finalised during 2005-06 following a review to ensure systems in place were providing effective support to the Board.

The CPS Board supports the Director and Chief Executive. The objectives of the Board are to provide leadership, set direction and review progress. Individual members are corporately responsible for decisions taken by the Board.

CPS Board

The members of the CPS Board at 31 March 2006 and their attendance during 2005-06 are as follows:

Board Member	Title	Attendance
Ken Macdonald QC	Director of Public Prosecutions	6
Richard Foster	Chief Executive	6
John Graham	Director, Finance	6
Philip Geering	Director, Policy	6
Peter Lewis	Director, Business Development	6
Claire Hamon	Director, Business Information Systems	6
Angela O'Connor	Director, Human Resources	6
Séamus Taylor	Director, Equality and Diversity	3
Dru Sharpling	CCP, London	2*
Jim England	CCP,West Mercia	4
Neil Franklin	CCP,West Yorkshire	6
Portia Ragnauth	CCP, Durham	6
Deborah King	ABM, Merseyside	6
Anjali Arya	Non-Executive Director	2
Philip Oliver	Non-Executive Director	4
Judith Hunt	Non-Executive Director	4**
Moira Wallace / Jane Furniss	Chief Executive, OCJR	4***
Gary Cox	Secretariat	6

* Dru Sharpling was seconded to the Prime Minister's Delivery Unit from February to April 2006

** Judith Hunt left the Board in December 2005

*** Moira Wallace left her role as Chief Executive in December 2005; the role was performed by Jane Furniss from January to April 2006

Membership of the Board comprises: The Director, Chief Executive, the Headquarters' functional Directors, the Director of Equality and Diversity, the CCP for London and three other CCPs and one ABM. The Board meets bi-monthly. Their positions will be refreshed after a period of approximately 18 - 24 months at the invitation of the Director in consultation with the Chief Executive. This is to ensure that the CCP and ABM members are representative of the differing sized Areas and are drawn from a diverse background. Three NEDs currently sit on the board. A recruitment exercise has replaced two of the 2005-06 NEDs who left after their terms of appointment expired.

In April and October each year CCPs, ABMs and key managers in Headquarters meet together at conference to debate strategic issues and key operational problems.

The appointment and termination of staff who are members of the CPS Board, excluding the NEDs who are not employed by the CPS, is undertaken in accordance with the Civil Service Management Code. Where appropriate their remuneration, details of which can be found in the Remuneration Report, is determined by reference to the Senior Salaries Review Body. CPS Board members do not hold any company directorships or have any significant interests that conflict with their management responsibilities.

The role of the Board is to:

• Provide leadership and strategic direction, taking key strategic decisions in driving forward CPS delivery and reform;
• Agree, lead and drive change to deliver the Service's business strategy;
• Build organisational capacity through effective use of our people, resources and information technology;
• Set standards and values for independence, impartiality and fairness, equality of opportunity and diversity;
• Ensure the Service delivers high quality casework and advocacy;
• Promote a culture of openness, transparency and continuous improvement;
• Mainstream equality and diversity in all CPS business;
• Deliver the CPS contribution to PSA and other Government targets and objectives;
• Build effective partnerships with CJS Departments and agencies to make the maximum contribution to CJS delivery and reform;
• Safeguard and enhance the Service's reputation; and
• Ensure a proper framework for effective corporate governance.

Examples of business covered by the Board include:

• Agreeing the >invest< programme;
• Monitoring progress on the Advocacy Strategy;
• Agreeing Equality and Diversity Strategy and Performance;
• Police Reform; and
• Reviewing a stocktake of Victims and Witnesses.

The Board is supported by seven Committees. The Committees are responsible for managing key strategic issues delegated to them by the Board and assuring the Board about the delivery of those issues.

Policy, Strategy & Diversity (PSD)

To support the CPS Board on leadership, strategic direction and the corporate business strategy.

PSD Members	Attendance
Ken Macdonald QC	4
Richard Crowley	3
Elizabeth Howe	5
Chris Woolley	5
Susan Stovell	4
Richard Foster	4
Philip Geering	5
Chris Newell	4
Claire Hamon	2
Peter Lewis	1
Séamus Taylor	5
Judith Hunt	2*

*Judith Hunt left the CPS in December 2005

Work undertaken

• Reviewed CPS victim and witness portfolio, agreeing priorities;
• Provided guidance on the CPS position in relation to key legislative issues;
• Considered the new Equality and Diversity policy and strategy and recommended them to the CPS Board for adoption; and
• Endorsed the CPS Race Equality Scheme 2005-06.

Delivery & Change Committee (DCC)

To provide assurance to the CPS Board that the Service is building effective partnerships in the CJS to deliver PSA and other targets and that the Service's overall change programme will deliver the CPS business strategy.

DCC Members	Attendance
Richard Foster	5
Claire Hamon	3
Jean Ashton	7
Peter Lewis	1
Roger Coe-Salazar	5
Philip Oliver	2
Pam Teare / Sue Cunningham	6
Séamus Taylor	4
John Graham	7
Clare Toogood	7
Nick Hawkins	6
Judith Walker	6
Angela O'Connor	5

Work undertaken

• Managed the CPS Change Programme, decided on priorities between the different elements of the programme and coordinated and monitored the delivery of programme benefits, with a specific focus on some of the main elements of the change programme (charging, advocacy and police reform);
• Determined the corporate risks and developed and monitored suitable counter-measures to manage those risks; and
• Monitored overall departmental performance and reported to the Board (via the quarterly high-level performance report) on performance against targets, delivery of the change programme and the management of corporate risks.

Finance

To support the Board on the effective use of resources to deliver the Service's business strategy and PSA targets and to develop a culture of continuous operational improvement.

Finance Members	Attendance
David Blundell	7
John Graham	7
Gary Cox	6
Paul Staff	6
Chris Day	6
Gail Pessol	6
Karen Sawitzki	6
Lesley Burton	5
Peter Kelly	7
Peter Tidey	6
Richard Newcombe	7
Steve Przybylski	5
Philip Oliver	3

Work undertaken

• Delivered the efficiency plan and identified further efficiencies to free up resources that could be directed to key front line/prosecution activities. This includes the financial benefit realisation plans for key projects;
• Managed financial risks including ensuring that Areas and Directorates are adequately funded together with the expenditure pressures from Counsel fees, future pay settlements and from budget overspends;
• Began preparation for the 2007 comprehensive spending review which includes ensuring that the CPS meets its commitments from SR 2004; and
• Key funding decisions taken on; Advocacy Strategy, Case Auditors, Legal Trainee Scheme, and budget allocations.

People & Equality

To provide assurance to the CPS Board that the people strategies and policies support delivery of the business strategy and PSA targets and setting standards and values for impartiality, fairness, equality of opportunity and diversity.

People & Equality Members	Attendance
Nicola Reasbeck	10
Angela O'Connor	9
Séamus Taylor	10
Phillip Geering	6
Edwina Sherwood	9
Anjali Arya	6
Ian Edmundson	9
Lesley Watt	11
Peter Lewis	3
Angela Garbett	8
Karen Wright	9
Barry Hughes	9
Steve Pople	4

Work undertaken

• Agreed the Workforce Strategy;
• Reviewed Pay and grading proposals and flexible working;
• Agreed revised performance management strategy;
• Reviewed and agreed the Equality and Diversity Complaints Procedure;
• Agreed the Race Equality Scheme 2005-08; and
• Agreed the CPS Diversity Delivery Plan for 2005-08.

Information & Communication Technology (ICT)

To provide assurance to the CPS Board that ICT strategies and policies support delivery of the business strategy and PSA targets; provides value for money; and makes the maximum contribution to joined-up IT across the CJS.

ICT Members	Attendance
John Holt	9
Chris Yule	3*
Iain Everett	7
Helen Phillips	9
John Graham	8
Claire Hamon	8
Gail Lamb	8
Peter Lewis	6
Angela O'Connor	5
Neil Copling	8
Terry Bellinger	4**
Judith Hunt	4
John Suffolk	1***

* Retired

** Meetings not attended due to long-term absence

*** Due to attend quarterly

Work undertaken

• Managed all aspects of ICT change activity with particular emphasis on cross-CJS projects;
• Ensured the realisation of business benefits of the COMPASS business case, successfully completing OGC Gateway level 5;
• Monitored CMS and WMS usage statistics per area;
• Ensured ICT provision across the CPS estate delivered value for money, monitored through the development of Area usage reports; and
• Oversaw the development of an IS/IT strategy for 2006-09.

Professional Standards

To provide assurance to the CPS Board that the CPS is delivering independent, high quality casework and advocacy.

Professional Standards Members	Attendance
Chris Newell	5
David Archer	4
Bob Capstick	4
Sarah Jane Gallagher	5
Charles Ingham	4
John Revell	3
Rob Turnball	4
Sandie Hebblethwaite	1*
Harry Ireland	2
Anjali Arya	2
Philip Geering	3
Peter Lewis	2

* Meetings not attended due to long-term absence

Work Undertaken

• Reviewed legal guidance policy developments for the Service and determined priorities for updating guidance material;
• Monitored overall ethical and professional standards for legal training and determined the standards for CPS staff engaged in managing large and complex cases; and
• Reviewed and advised on proposals for identifying and promulgating good practice in the CPS.

Audit Committee

To provide objective advice, support and assurance to the Accounting Officer and Additional Accounting Officer on CPS corporate governance, risk management and control systems and on the activity and findings of External Auditors.

Audit Member	Attendance
Anjali Arya	3*
Philip Oliver	1*
Baljit Ubhey	3
Linda Fox	4
Peter Lewis	3
David Judd	4

* Anjali Arya replaced Philip Oliver as chair of this committee.

Work Undertaken

• Reviewed and approved the annual audit plan; the Head of Internal Audit's Annual Report to the Accounting Officers and the CPS Board; and the Statement on Internal Control;
• Reviewed and considered NAO observations on the annual accounts and continually reviewed progress against the Internal Audit Plan and all major developments and departmental initiatives that impact on internal control, risk management or corporate governance;
• Requested explanations from departmental management in respect of actions that have impacted upon the control, risk and corporate governance environment; and
• Reviewed and directed internal/external audit cooperation for the next year ended 31 March 2007.

In line with good practice, a review of the effectiveness of the Governance arrangements was undertaken between October 2005 and January 2006. This review tested the arrangements and evaluated the extent to which they comply with HM Treasury's Code of Good Corporate Governance.

The main findings show that the introduction of a smaller, more strategic decision making Board has been a success. There are some recommendations for improving the administration between the Board and committees and between the committees themselves. The structure complies with the Code of Good Corporate Governance and no major decisions on prosecution policies, new initiatives, human resources, ICT or investment decisions are made without going through the appropriate committee or Board arrangements.

The recommendations from the review will be implemented in 2006-07. The committee structure will be further reviewed in 2006-07 once the impact of police reform is known.

Pensions

The Accounting Policy Note 1 describes the CPS policy on how pension liabilities are treated and the accounting treatment is detailed in Note 8 and in the Remuneration Report.

Equal Opportunities

The CPS has a strong commitment and increasingly positive reputation on equal opportunities. The Service reviewed and refreshed its policy commitments on equal opportunities in 2005 and its refined policy statement states:

"We are committed to taking account of the diversity of the population we serve and the staff we employ, promoting equality and opportunity for everyone. The Service recognises the challenge of institutional discrimination. We will work to eradicate it. We will work to ensure that prosecution decisions are free from bias or discrimination and that victims, witnesses and defendants are treated fairly, consistently and with respect. We will provide services in a manner that is appropriate to the individual. We are committed to achieving equality and respecting diversity in employment. We will work to build an inclusive workforce, which at all levels, reflects the communities we serve, where all staff are motivated and with no unjustifiable differences in employees' experiences."

An Equal and Diverse Prosecution Service

The CPS has moved into a second phase in its work to further equality and diversity - it has moved on from a focus on raising awareness of the issues to a focus on outcomes. From April 2005 onwards the Service introduced equalities outcome measures into its performance review system and report on achievements on a quarterly basis. The Service strives to improve its reputation on equality and diversity issues and in the past year its work has been positively recognised through a Commission for Racial Equality-Law Society Award for best large public sector employer of solicitors on race equality.

The CPS is committed to further progress on equality and diversity in employment and has put a Diversity Delivery Plan in place which sets out what we will do to achieve senior workforce representation targets by 2008.

Employee Consultation and Providing Information to Employees

The CPS has continued in its strategy of communicating to staff both formally and informally. The main focus for the promulgation of business information is via a newsletter 'Inform' which is published weekly, in an online format. This information is supplemented by a bi-monthly publication of 'CPS News', which also goes to an audience beyond the CPS. Some Areas and HQ Directorates produce similar publications providing staff with news and information from a more local perspective.

Staff are informed about items of change via team meetings and by newsletters circulated by individual project owners. Informal and formal consultations take place with the Trade Unions over changes that will affect staff. The Human Resources (HR) Directorate also keep the unions informed of HR policy changes and other initiatives that may impact upon their members.

The CPS intranet home page provides a portal to a number of themed areas as well as an online bulletin board, which is used to discuss a variety of business and social subjects. Other business information is provided both on the intranet and in paper format. Documents such as the Personnel Management Manual, provide information on HR Policy procedures and are maintained in both formats, but are gradually being replaced by a series of booklets and online guides, which are published as policy is reviewed. Other manuals and standard forms are also published on the intranet together with a specialist micro site for the >invest< programme, which is a comprehensive performance management and development initiative.

Payment of Suppliers and Witnesses

The CPS is committed to paying bills in accordance with agreed contractual conditions, or, where no such conditions exist, within 30 days of receipt of goods or services or the presentation of a valid invoice, whichever is the later. The CPS also seeks to pay all expenses to prosecution witnesses within five working days of receipt of a correctly completed claim form.

In 2005-06 the CPS settled 90.31% of undisputed invoices within 30 days of receipt and 83.43% of witness claims within five days. The CPS paid £82.20 with respect to interest due under the Late Payment of Commercial Debts (Interest) Act 1998.

Auditors

This year's Resource Accounts have been audited by the National Audit Office on behalf of the Comptroller and Auditor General. No further audit services were received aside from that of Statutory Audit by the NAO.

The cost of audit work was £82,000, which is solely related to audit services and is a notional cost (see note 10).

As far as the Accounting Officer is aware, there is no relevant audit information of which National Audit Office are unaware, and the Accounting Officer has taken all the steps that he ought to have taken to make himself aware of any relevant audit information and to establish that the entity's auditors are aware of that information.

Ken Macdonald QC

Accounting Officer

26 June 2006

Statement of Accounting Officer's Responsibilities

Under the Government Resources and Accounts Act 2000, HM Treasury has directed the Crown Prosecution Service to prepare for each financial year resource accounts detailing the resources acquired, held or disposed of during the year and the use of resources by the department during the year. The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Crown Prosecution Service and of its net resource outturn, resources applied to objectives, recognised gains and losses and cash flows for the financial year.

In preparing the accounts, the Accounting Officer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:

• observe the Accounts Direction issued by HM Treasury, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;
• make judgements and estimates on a reasonable basis;
• state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the accounts; and
• prepare the accounts on a going concern basis.

HM Treasury has appointed the Director of Public Prosecutions as Accounting Officer of the department, and the Chief Executive as an Additional Accounting Officer, with responsibility for preparing the department's accounts and for transmitting them to the Comptroller and Auditor General. The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the department's assets, are set out in the Accounting Officers' Memorandum issued by HM Treasury and published in Government Accounting.

Statement on Internal Control

Scope of responsibility

As Accounting Officer, I have responsibility for maintaining a sound system of internal control that supports the achievement of CPS policies, aims and objectives, whilst safeguarding the public funds and departmental assets for which I am personally responsible, in accordance with the responsibilities assigned to me in Government Accounting.

I am supported in managing the CPS and its key risks by a Chief Executive as additional Accounting Officer, the CPS Board, seven Board committees and six Headquarters Directors. The CPS is organised into geographical Areas, each headed by a Chief Crown Prosecutor (CCP) with a direct line of accountability to me for legal decisions and casework, and, in the first instance, to the Chief Executive for the delivery of CPS objectives and PSA targets, and for managing local risks.

The CPS is an independent part of the criminal justice system under ministerial superintendence by the Attorney General. I regularly meet the Attorney General to discuss progress, the issues and the risks of key criminal justice policy initiatives.

The purpose of the system of internal control

The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve 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 and prioritise the risks to the achievement of departmental policies, aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place in the CPS for the year ended 31 March 2006 and up to the date of approval of the annual report and accounts, and accords with Treasury guidance.

Capacity to handle risk

The CPS Board is responsible for ensuring that appropriate risk management arrangements exist and for ensuring that corporate risks are properly managed. The Delivery and Change Committee (DCC) assists the Board. The role of the DCC is to monitor the progress and effectiveness of all major business change projects and the implementation of the Service's risk management development programme, and to consider regular reports on the management of key corporate risks.

A Risk Management Champion, and a Risk Improvement Manager who is responsible for advising on embedding risk management across the Service, supported the Board during 2005-06 and provided update reports to the Board, the DCC and Audit Committee.

Board level involvement in identifying, assessing and reviewing the progress of management and corporate risks is provided by the Board members sitting on the DCC. The Board also approved the CPS corporate risk tolerance - the amount of risk the Department is prepared to carry.

All corporate risk owners are Headquarters Directors. With the Chief Executive, I personally take part in a quarterly round of performance review meetings with Areas. The frequency of review is determined by a risk-based assessment. These include consideration of any key challenges or risks across 15 key indicators and business change projects plus a range of occasional thematic topics. For 2005-06, this included Area procedures for identifying and assessing their business risks.

The CPS risk management framework is contained in a written policy statement and a practical risk management guide. These were updated and enhanced in 2005-06, reflecting current HM Treasury and Office of Government Commerce standards.

Risk management guidance is provided at the start of each business planning round. In 2005-06, the Service promoted risk training for all senior managers and delivered full risk training days and/or risk awareness seminars to 15 Areas. The CPS Centre of Excellence also delivered a series of project management seminars that focused on managing business change risks.

Support and best practice guidance is available from the Risk Improvement Manager, the Centre of Excellence and a network of Area Business Manager (ABM) mentors, allowing Areas access to practical help and advice on managing their risks. In December 2005, risk awareness guidance available on the CPS intranet was upgraded by the provision of a risk website as part of a delivery skills suite that included change, programme and project management guidance.

The risk and control framework

All risk management activity is aligned to the corporate aims, objectives, priorities and PSA commitments. Risk management is applied to strategic corporate risks, operational risks and key business change programmes. On behalf of the Board, the DCC oversees the portfolio of business change projects to consider the level of risk assumed, and to advise on the balance of risk and potential benefits of new projects. For 2005-06 the focus for corporate and Area risks was the delivery of the PSA targets and the strategic business changes that underpin effective delivery. The priority corporate risk areas were:

• Change management arrangements and the effective delivery of business benefits and efficiency gains;
• The governance arrangements underpinning effective delivery of the PSA targets and business change commitments;
• Strategic management capacity and capability required to sustain delivery of the PSA targets and business change commitments;
• Maintaining capability to deliver quality core business (business as usual);
• Partnership or key stakeholder performance or relations;
• Development and anticipation of changes to government criminal justice policy.

Risk identification and analysis is linked to departmental strategic planning, business planning and investment/project appraisal procedures. Corporate, Area and HQ Directorate Business plans are constructed in tandem with the relevant risk registers. Corporate and operational business risk owners are responsible for ensuring proper review and re-assessment of the level of risk. For the corporate risks, the DCC are responsible for identifying the risks to be managed corporately and updating the corporate risk register at formal quarterly reviews.

The CPS Board receives quarterly performance and risk highlight reports, and separate reports of any risks escalated by the DCC as not being managed effectively. No corporate risks were escalated to the Board in 2005-06.

In 2005-06 the DCC reviewed the progress of the actions planned to manage the CPS corporate risks. The Board and DCC have exercised fully their governance role in overseeing work of the programme boards responsible for the key change initiatives including Charging, Case Management System, No Witness: No Justice as well as the progress of managing the key risks and issues identified within the programme management regime. I am satisfied that the necessary risk management actions were addressed properly at operational and project level.

Managers and staff at all levels have a responsibility to identify, evaluate, manage or report risks. The Director, Chief Executive and the Board encourage innovation and taking opportunities to further the interests of the CPS and the achievement of its objectives. The Board has set the CPS risk tolerance range and the acceptable parameters for risk taking by managers and these are outlined in the CPS risk policy and strategy documents.

The Board requires Areas and HQ Directorates to maintain:

• A risk register detailing risk priorities by likelihood and impact and showing ownership;
• A risk management action plan;
• Evidence of regular review and monitoring.

All Area risk registers were reviewed at the start of the year, and a further sample analysed mid year to identify trends and common themes. No issues were escalated to the corporate risk register.

The CPS capacity to handle risk is under continuing review by DCC and the Audit Committee. The Risk Improvement Manager provides half yearly reports on progress against the CPS risk management development strategy. The CPS risk handling capacity was also reviewed formally twice in the year: to inform the report on progress of the government's risk management development programme to the Chief Secretary to the Treasury, and an internal audit review of the level of embedding of risk into CPS business. The key areas for improvement are:

• Deeper embedding of risk - promotion of corporate risk owner involvement in reviewing and updating risks; development of the risk and performance intranet site; and a programme of Quality Assurance and promotional visits to operational managers by the Risk Improvement Manager; the delivery of formal risk training sessions and risk awareness development seminars;
• Demonstrating improved risk handling and better delivery of planned outcomes - integrating risk management into Area operational quarterly performance review, and regular monitoring by CPS Board, Audit Committee and the DCC; and
• Managing risks with partners - reviews of existing arrangements against HM Treasury best practice guidance; working with the Office for Criminal Justice Reform on risks to the delivery of criminal justice PSA targets, and Criminal Justice Information Technology programme on risks to the development of joint information and communications technology; and, seeking to establish an effective criminal justice system risk management forum.

I am satisfied that, although some continuing improvements are desirable to the application of our risk management framework, our risk management arrangements meet the necessary governance standards. The Board has agreed a development programme for embedding risk management in CPS that includes milestones and targets up to 2008.

Review of effectiveness

As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review of the effectiveness of the system of internal control is informed by the work of the internal auditors and the executive managers within the department who have responsibility for the development and maintenance of the internal control framework, and comments made by the external auditors in their management letter and other reports. I have been advised on the implications of the result of my review of the effectiveness of the system of internal control by the Board, the Audit Committee and the DCC, and a plan to address weaknesses and ensure continuous improvement of the system is in place.

Board committees have clear responsibility and strategic oversight in those functional areas which are key to good internal control. The Board committees are:

• Policy, Strategy and Diversity;
• Delivery and Change;
• Finance;
• People and Equality;
• Information Communication Technology;
• Professional Standards; and
• Audit.

In the year, the Board commissioned a review of the CPS governance structure against the principles set out in Code of Practice on Corporate Governance. This was the first annual review of its governance arrangements. The CPS aims to conform to all relevant key aspects of the code and has, or will implement in 2006-07, improvements to ensure that:

• Board members notify and register with the secretariat any issues on which they might have a conflict of interest (code principle 2.12);
• The Board and committees maintain a balance of skills and experience appropriate to the needs of CPS business and are fully cognisant of their roles to provide corporate leadership to the organization as a whole (code principles 3.1-3.6);
• Independent non-executive Board members are identified in the annual report (code principle 4.2);
• The terms of reference of the Audit Committee and an annual report on its work are published (code provision 5.3).

The Department has an internal audit function that operates to the Government Internal Audit Standards guidance. They submit regular reports to the Audit Committee, including a report from the Head of Internal Audit that provides an independent opinion on the adequacy and effectiveness of the Department's system of internal control and includes recommendations for improvement to the systems of internal control.

In accordance with Code of Good Practice on Corporate Governance, the Audit Committee has prepared its first annual report on the work of discharging its responsibilities: "the Audit Committee's role is to support the Accounting Officers and CPS Board in monitoring [the effectiveness of] the corporate governance, control and risk management arrangements in the CPS. The committee had four quorate meetings during the past twelve months during which it reviewed and approved the annual audit plan; the Head of Internal Audit's Annual Report to the Accounting Officers and the CPS Board; and the Statement on Internal Control. In addition the Audit Committee has reviewed and considered NAO observations on the annual accounts and continually reviewed progress against the Internal Audit Plan and all major developments and departmental initiatives that impact on internal control, risk management or corporate governance. It has, when appropriate, requested explanations from departmental management in respect of actions that have impacted upon the control, risk and corporate governance environment. The Audit Committee has also reviewed and directed internal/external audit cooperation for the next year ended 31 March [2007]".

The committee is considering how to develop the arrangements for preparing and publishing its annual report for 2006-07.

The DCC is responsible for:

• Reviewing the effectiveness of departmental planning and risk management arrangements;
• Monitoring progress of the department's risk management development plan;
• Reviewing progress of the actions planned to manage the CPS corporate risks; and
• Overseeing the departmental change portfolio.

At the end of the calendar year each CCP and HQ Director completes a certificate of assurance. The certificates include a statement on the level of assurance achieved throughout the year by the Area/Directorate against key aspects of the business. They specifically provide an assurance on the effectiveness of local systems to identify and manage the principal risks to the delivery of the PSA targets. All certificates are validated against HM Crown Prosecution Service Inspectorate reports and other performance information.

CPS operates a quarterly performance review programme: Area CCP and Business Managers comment on performance against 15 key measures and occasional thematic/topical criteria that for 2005- 06 included local risk management arrangements and the content of their assurance certificates. Action plans for performance improvement are agreed with me, the Chief Executive and the Director of Business Development. For 2006-07 this process will be extended to all managers, including HQ Directors, directly accountable to me and the Chief Executive.

Independent review of business efficiency and effectiveness in the Areas is carried out by HM Crown Prosecution Service Inspectorate. In 2005-06 it undertook a programme of follow up inspection reviews of Area casework and management systems and published reports of Operational Performance Assessment reviews undertaken in all 42 Areas. HM Crown Prosecution Service Inspectorate also carries out joint thematic inspections with other independent Criminal Justice inspectorates.

Significant internal control issues

I have no significant internal control issues to report for 2005- 06 and all previously reported issues have been cleared.

Ken Macdonald QC

Accounting Officer

26 June 2006

The Certificate and Report of the Comptroller and Auditor General to the House of Commons

I certify that I have audited the financial statements of the Crown Prosecution Service for the year ended 31 March 2006 under the Government Resources and Accounts Act 2000. These comprise the Statement of Parliamentary Supply, the Operating Cost Statement and Statement of Recognised Gains and Losses, the Balance Sheet, the Cashflow Statement and the Statement of Operating Costs by Departmental Aim and Objectives and the related notes. These financial statements have been prepared under the accounting policies set out within them.

Respective responsibilities of the Accounting Officer and auditor

The Accounting Officer is responsible for preparing the Annual Report and the financial statements in accordance with the Government Resources and Accounts Act 2000 and HM Treasury directions made thereunder and for ensuring the regularity of financial transactions. These responsibilities are set out in the Statement of Accounting Officer's Responsibilities.

My responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements, and with International Standards on Auditing (UK and Ireland).

I report to you 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 HM Treasury directions issued under the Government Resources and Accounts Act 2000. I also report 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 to you if, in my opinion, the Annual Report is not consistent with the financial statements, if the Department 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 HM Treasury regarding remuneration and other transactions is not disclosed.

I review whether the statement on pages 46 to 49 reflect the Department's compliance with HM Treasury's guidance on the Statement on Internal Control, and I report if it does not. I am not required to consider whether the Accounting Officer's statements on internal control cover all risks and controls, or to form an opinion on the effectiveness of the Department's corporate governance procedures or its risk and control procedures.

I read the other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises only the Annual Report, including the unaudited part of the Remuneration Report and the Management Commentary. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the financial statements. My responsibilities do not extend to any other information.

Basis of audit opinion

I conducted my audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. My audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of financial transactions 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 judgments made by the Accounting Officer in the preparation of the financial statements, and of whether the accounting policies are most appropriate to the Department'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 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 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

In my opinion:

• the financial statements give a true and fair view, in accordance with the Government Resources and Accounts Act 2000 and directions made thereunder by HM Treasury, of the state of the Department's affairs as at 31 March 2006 and the net cash requirement, net resource outturn, resources applied to objectives, recognised gains and losses and cashflows for the year then ended;
• the financial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with HM Treasury directions issued under the Government Resources and Accounts Act 2000; and
• 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 have no observations to make on these financial statements.

John Bourn

Comptroller and Auditor General

National Audit Office 157-197 Buckingham Palace Road
Victoria
London SW1W 9SP

30 June 2006

Statement of Parliamentary Supply

Summary of Resource Outturn 2005-06

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Note	2005-06 Estimate: Gross expenditure	2005-06 Estimate: A in A	2005-06 Estimate: Net Total	2005-06 Outturn: Gross expenditure	2005-06 Outturn: A in A	2005-06 Outturn: £000 Net Total	2005-06 £000 Net total outturn compared with Estimate: saving/ (excess)	2004-05 £000 Outturn: Net Total
Request for resources 1	2	649,798	36,227	613,571	638,243	36,227	602,016	11,555	568,513
Total resources	3	649,798	36,227	613,571	638,243	36,227	602,016	11,555	568,513
Non-operating cost A in A		-	-	-	-	-	-	-	-

Net cash requirement 2005-06

Description	Note	2005-06 Estimate	2005-06 Outturn	2005-06 £000 Net total outturn compared with Estimate: saving/ (excess)	2004-05 £000 Outturn
Net cash requirement	4	623,220	611,367	11,853	562,613

Summary of income payable to the Consolidated Fund

In addition to appropriations in aid, the following income relates to the Department and is payable to the Consolidated Fund

	Note	Forecast 2005-06 £000 Income	Forecast 2005-06 £000 Receipts	Outturn 2005-06 £000 Income	Outturn 2005-06 £000 Receipts
Total	5	-	-	2,000	2,893

Explanations of variances between Estimate and outturn are given in Note 2 and in the Management Commentary.

The notes on pages 57 to 74 form part of these accounts.

Operating Cost Statement for the year ended 31 March 2006 (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Note	2005-06 Staff Costs	2005-06 Other Costs	2005-06 Income	2005-06	restated 2004-05
Administration costs
Staff costs	8	29,837				33,306
Other administration costs	9		23,808			27,515
Operating income	11			(146)		(277)
Programme costs
Staff costs	8	299,004
Other programme costs	10		285,594
Less income	11			(37,631)
Totals		328,841	309,402	(37,777)
Net operating cost	3				600,466	565,363
Net resource outturn					602,016	568,513

All income and expenditure are derived from continuing operations.

Statement of Recognised Gains and Losses for the year ended 31 March 2006 (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Note	2005-06	2004-05
Net gain on revaluation of tangible fixed assets	19	576	3,157
Recognised gains for the financial year		576	3,157

The notes on pages 57 to 74 form part of these accounts.

Balance Sheet as at 31 March 2006 (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Note	2006	2006	2005	2005
Fixed assets:
Tangible assets	12		25,923		27,733
Intangible assets	13		946		-
Debtors falling due after more than one year	14		3,864		4,513
Current assets:
Debtors	14	52,551		46,035
Cash at bank and in hand	15	14,543		25,615
		67,094		71,650
Creditors (amounts falling due within one year)	16	(66,931)		(82,342)
Net current assets / (liabilities)			163		(10,692)
Total assets less current liabilities			30,896		21,554
Provisions for liabilities and charges	17		(10,231)		(11,075)
			20,665		10,479
Taxpayers' equity:
General fund	18		16,403		6,334
Revaluation reserve	19		4,262		4,145
			20,665		10,479

Ken Macdonald QC

Accounting Officer

26 June 2006

The notes on pages 57 to 74 form part of these accounts.

Cash Flow Statement

Cash Flow Statement for year ended 31 March 2006 (figures in £thousands)

Description	Note	2005-06	2004-05
Net cash outflow from operating activities	20(a)	(604,618)	(550,220)
Capital expenditure and financial investment	20(b)	(3,856)	(7,042)
Payments of amounts due to the Consolidated Fund		(5,175)	(2,700)
Financing	20(d)	602,577	579,742
Increase/(decrease) in cash in the period	20(e)	(11,072)	19,780

The notes on pages 57 to 74 form part of these accounts.

Statement of Operating Costs by Departmental Aim and Objectives

Statement of Operating Costs by Departmental Aim and Objectives for the year ended 31 March 2006 (figures in £thousands)

Aim:

To deliver a high quality prosecution service that brings offenders to justice, helps reduce both crime and the fear of crime and thereby promotes public confidence in the rule of law, through the consistent, fair and independent review of cases and through their fair, thorough and firm presentation at court.

Description	2005-06 Gross	2005-06 Income	2005-06 Net	2004-05 Gross	2004-05 Income	2004-05 Net
Objective	638,243	(37,777)	600,466	600,213	(34,850)	565,363
Net operating costs	638,243	(37,777)	600,466	600,213	(34,850)	565,363

The Department's objective was as follows:

To ensure the effective delivery of justice.

See Note 21

The notes on pages 57 to 74 form part of these accounts.

Notes to the Departmental Resource Accounts

1. Statement of Accounting Policies
2. Analysis of net resource outturn by section
3. Reconciliation of outturn to net operating cost and against Administration Budget
4. Reconciliation of resources to net cash requirement
5. Analysis of income payable to the Consolidated Fund
6. Reconciliation of income recorded within the Operating Cost Statement to operating income payable to the Consolidated Fund
7. Non-operating income - Excess A in A
8. Staff numbers and related costs
9. Other Administration Costs
10. Programme Costs
11. Income
12. Tangible fixed assets
13. Intangible fixed assets
14. Debtors
15. Cash at bank and in hand
16. Creditors
17. Provisions for liabilities and charges
18. General Fund
19. Reserves
20. Notes to the Cash Flow Statement
21. Notes to the Statement of Operating Costs by Departmental Aim and Objective
22. Capital Commitments
23. Commitments under leases
24. Other Financial Commitments
25. Commitments under PFI contracts
26. Financial Instruments
27. Contingent Liabilities disclosed under FRS 12
28. Contingent Liabilities not required to be disclosed under FRS 12 but included for parliamentary reporting and accountability
29. Losses and Special Payments
30. Related-party transactions
31. Third-party assets

• Departmental Remuneration Report

1. Statement of Accounting Policies

The financial statements have been prepared in accordance with the 2005-06 Government Financial Reporting Manual (FReM) issued by HM Treasury. The accounting policies contained in the FReM follow UK generally accepted accounting practice for companies (UK GAAP) to the extent that it is meaningful and appropriate to the public sector.

In addition to the primary statements prepared under UK GAAP, the FReM also requires the Department to prepare two additional primary statements. The Statement of Parliamentary Supply and supporting notes show outturn against Estimate in terms of the net resource requirement and the net cash requirement. The Statement of Operating Cost by Departmental Aim and Objectives and supporting notes analyse the Department's income and expenditure by the objectives agreed with Ministers.

Where the FReM permits a choice of accounting policy, the accounting policy which has been judged to be the most appropriate to the particular circumstances of the department for the purpose of giving a true and fair view has been selected.

The Department's accounting policies have been applied consistently in dealing with items considered material in relation to the accounts.

1.1 Accounting Convention

These accounts have been prepared under the historical cost convention modified to account for the revaluation of fixed assets at their value to the business by reference to their current costs.

1.2 Basis of Consolidation

The CPS has no agencies or other bodies that may form part of a CPS departmental group.

1.3 Fixed Assets

Tangible Fixed Assets

Tangible fixed assets are stated at the lower of replacement cost and recoverable amount. With effect from 1 April 2002 all expenditure on tangible fixed assets of £500 or over is capitalised. From 1 April 2004 this includes leasehold improvements. On initial recognition they are measured at cost including any costs such as installation directly attributable to bringing them into working condition.

All tangible fixed assets are restated to current value each year. Land and buildings are restated to current value using professional valuations in accordance with FRS15 every five years and in the intervening years by the use of published indices appropriate to the type of land or building. The Investment Property Databank supplies the indices used.

Title to the freehold land and buildings shown in the accounts is held as follows:

a) property on the departmental estate, title to which is held by the CPS;

b) property held by the Department of Environment, Food and Rural Affairs in the name of the Secretary of State.

Other tangible fixed assets are restated to current value annually by indexation up to the year-end using Price Index Numbers for Current Cost Accounting, published by the Office for National Statistics.

Costs of bought-in services incurred in preparation for the implementation of IT projects are capitalised. Internal costs incurred on the same projects are not capitalised where the work can only be carried out by in-house staff.

Intangible Fixed Assets

Most software licences used in the business are paid for on an annual basis and their cost is charged to the Operating Cost Statement over the period to which the licences relate. However, during 2005-06 the CPS has purchased certain licences for use over an extended period of time. These have been capitalised as intangible fixed assets, following the same conventions and principles as those applied to tangible fixed assets.

1.4 Depreciation

Tangible Fixed Assets

Tangible fixed assets are depreciated at rates calculated to write them down to estimated residual value on a straight-line basis over their estimated useful lives. No depreciation is provided on freehold land since it has an unlimited useful life. Asset lives are normally in the following ranges:

• Freehold buildings: 20 to 50 years
• Furniture and fittings: 3 to 10 years
• Information technology: 4 years
• Transport equipment: 3 to 5 years

Leasehold improvements are written off over the shorter of:

1. the remaining life of the property lease;
2. 10 years; or
3. where it has been established that a break clause in the lease is likely to be exercised by the Department, the period to the first possible date of exercise of the relevant break clause.

Intangible Fixed Assets

Intangible fixed assets are depreciated at rates calculated to write them down to estimated residual value on a straight-line basis over their estimated useful lives, normally 7 years.

1.5 Operating Income

Operating income is income which relates directly to the operating activities of the Department, and consists of administration and programme income. It includes not only income appropriated in aid of the Estimate but also income to the Consolidated Fund, which in accordance with FReM is treated as operating income. Operating income is stated net of VAT.

Administration Income

Administration income is income associated with support to front-line functions. This relates to the recovery of salaries for staff seconded to other Government Departments or Local Criminal Justice Boards and reimbursement of expenditure under the Government's Access to Work scheme. It includes not only income appropriated in aid of the Estimate but also income due to the Consolidated Fund, which in accordance with the FReM is treated as operating income.

Programme Income

Programme income is direct income associated with delivery of front-line functions. The principal element relates to costs awarded to the CPS. The CPS receives awards of costs made against convicted defendants at the discretion of the judge or magistrates. Magistrates' courts are responsible for recording, enforcing and collecting these costs, forwarding collected monies to the CPS and, under delegated authority, for writing-off awards where the amount outstanding is less than £100.

Bad debts are provided for as a percentage of programme debtors.

In order to account for cost awards, the CPS uses returns submitted by the courts in respect of cash collected, transfers to and from other courts, amounts written off and cost awards outstanding. The costs reflect the cost of the prosecution but for administrative purposes are recorded against programme costs only. Cost award income is included in the objective in the Statement of Resources by Departmental Aim and Objectives.

Programme income also includes rental income from other Government Departments in jointly occupied buildings, commercial sub-tenants and Non-Departmental Public Bodies; but it also includes other income such as recovery of salaries for staff seconded to other Government Departments or Local Criminal Justice Boards and reimbursement of expenditure under the Government's Access to Work scheme. Rental income received from other Government Departments is netted off against expenditure in accordance with FReM.

1.6 Administration and Programme Expenditure

The Operating Cost Statement is analysed between administration and programme income and expenditure. The classification of expenditure and income as administration or as programme follows the definition of administration costs set out in the Consolidated Budgeting guidance issued by HM Treasury. Costs are stated inclusive of VAT.

Administration Costs

Administration costs reflect the costs of running the department. These include both administrative costs and associated operating income. Income is analysed in the notes between that which, under the administrative cost-control regime, is allowed to be offset against gross administrative costs in determining the outturn against the administration cost limit, and that operating income which is not.

Programme Costs

Programme costs reflect non-administration costs being the direct cost and associated overheads of prosecution including the employment of counsel and compensation paid to witnesses for costs incurred through their attendance at court. Where a Prosecution case is expected to last 40 days or less (25 days prior to October 2005), payments are made to counsel using a set fee structure, with a target of payment within 20 days of receipt of a valid claim. Cases expected to last in excess of 40 days (or where three trial counsel are instructed) are excluded from this system and payments to counsel for these cases may take considerable time to negotiate. It is not possible to ascertain the actual amount owed on these cases at year-end until some months later. In view of this the Department estimates such counsel fees outstanding for inclusion in these accounts.

As stated in the Management Commentary and in the Accounting Policy note above, income and expenditure in these Accounts are analysed across the Department's two functions, Programme (the direct costs of Crown prosecutions and legal services) and Administration (the costs of running the Department), as defined in the Consolidated Budgeting guidance issued by HM Treasury. From 1 April 2005 these definitions have changed, and as a result the format and content of certain Notes to the Accounts have changed accordingly. Comparative figures in the Operating Cost Statement and Notes 2, 3, 9, 10 and 21 have been amended to reflect the current guidance. However in Notes 6 and 11 concerning transactions with the Consolidated Fund, restatement has not taken place since the guidance followed at the time the figures were originally prepared remains valid for these Notes.

1.7 Capital Charge

A charge, reflecting the cost of capital utilised by the Department, is included in operating costs. The charge is calculated at the real rate set by HM Treasury (currently 3.5%) on the average carrying amount of all assets less liabilities, except for:

(a) cash balances with the Office of the Paymaster General and donated assets where the charge is nil; and

(b) liabilities for amounts to be surrendered to the Consolidated Fund for which no credit against the charge is allowed.

1.8 Pensions

Past and present employees are covered by the provisions of the Principal Civil Service Pension Scheme (PCSPS). This is a defined benefit scheme and is unfunded and non-contributory except in respect of dependants' benefits. The CPS recognises the expected cost of providing pensions on a systematic and rational basis over the period during which it benefits from employees' services by payment to the PCSPS of amounts calculated on an accruing basis. Liability for payment of future benefits is a charge on the PCSPS. With effect from 1 October 2002 new employees have the option to join either the PCSPS scheme or a Partnership Pension Account. The latter is a defined contribution scheme where the Department recognises the contributions payable for the year.

1.9 Operating Leases

Rentals due under operating leases are charged to the Operating Cost Statement over the lease term on a straight-line basis, or on the basis of actual rentals payable where this fairly reflects the usage. Future payments, disclosed at Note 23, "Commitments under Leases", are not discounted.

1.10 Private Finance Initiative (PFI) Transactions

The CPS signed a contract entering into a PFI transaction on 31 December 2001 for a 10 year period commencing 1 April 2002. This has been accounted for in accordance with Technical Note No.1 (Revised), entitled How to account for PFI Transactions, as required by the FReM. The balance of risks and rewards of ownership of the PFI property are borne by the PFI operator, therefore the PFI payments are recorded as an operating cost. The CPS transferred all IT assets to the PFI operator with effect from 1 April 2002. A prepayment for their fair value is recognised and amortised over the life of the PFI contract.

1.11 Provisions

The Department provides for legal or constructive obligations, which are of uncertain timing or amount at the balance sheet date on the basis of the best estimate of the expenditure required to settle the obligation. Where the effect of the time value of money is significant, the estimated risk-adjusted cash flows are discounted using the real rate set by HM Treasury (currently 2.2%).

1.12 Contingent Liabilities

In addition to contingent liabilities disclosed in accordance with FRS 12, the Department discloses for parliamentary reporting and accountability purposes certain contingent liabilities where the likelihood of a transfer of economic benefit is remote. These comprise:

• items over £250,000 (or lower, where required by specific statute) that do not arise in the normal course of business and which are reported to Parliament by departmental Minute prior to the Department entering into the arrangement;
• all items (whether or not they arise in the normal course of business) over £250,000 (or lower, where required by specific statute or where material in the context of resource accounts), which are required by the FReM to be noted in the resource accounts.

1.13 Value Added Tax

Most of the activities of the Department are outside the scope of VAT and, in general output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged, the amounts are stated net of VAT.

2. Analysis of net resource outturn by section (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	2005-06 Outturn Admin	2005-06 Outturn Other current	2005-06 Outturn Gross resource expenditure	2005-06 Outturn A in A	2005-06 Outturn Net Total	2005-06 Estimate Net Total	2005-06 Net Total outturn compared with Estimate	restated 2004-05 Prior-year outturn
Request for Resources 1:
Administration	53,645	-	53,645	(124)	53,521	57,538	4,017	58,583
Crown prosecutions and legal services	-	584,598	584,598	(36,103)	548,495	556,033	7,538	509,930
Total	53,645	584,598	638,243	(36,227)	602,016	613,571	11,555	568,513
Resource Outturn	53,645	584,598	638,243	(36,227)	602,016	613,571	11,555	568,513

Explanation of the variation between Estimate and outturn (net total resources):

(i) Net total outturn was £11.555 million less than the Estimate, representing 1.88% of net provision. In setting future expenditure plans the CPS maintains a 1% contingency. The remaining difference reflects the deferral of accommodation moves and some slippage in operational projects.

Detailed explanations of the variances are given in the Management Commentary.

3. Reconciliation of outturn to net operating cost and against Administration Budget (figures in £thousands)

3(a) Reconciliation of net resource outturn to net operating cost

Description	Note	2005-06 Outturn	2005-06 Supply Estimate	2005-06 Outturn compared with Estimate	2004-05 Outturn
Net Resource Outturn	2	602,016	613,571	11,555	568,513
Non-supply income (CFERs)	5	1,550	-	1,550	3,150
Net operating cost		600,466	613,571	13,105	565,363

3(b) Outturn against final Administration Budget (figures in £thousands)

Description	2005-06 Budget	2005-06 Outturn	Restated 2004-05 Outturn
Gross Administration Budget	57,838	53,623	60,083
Less Income allowable against the Administration Budget	(300)	(124)	(2,238)
Net outturn against final Administration Budget	57,538	53,499	57,845

4. Reconciliation of resources to net cash requirement (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Note	Estimate	Outturn	Net total outturn compared with estimate: saving/(excess)
Resource Outturn	2	613,571	602,016	11,555
Capital: Acquisition of fixed assets	12 and 20	7,006	3,856	3,150
Capital: Investments	-	-	-	-
Non-operating A in A: Proceeds of fixed asset disposals		-	-	-
Accruals adjustments: Non-cash items	9 and 10	(8,530)	(7,606)	(924)
Accruals adjustments: Changes in working capital other than cash		9,500	10,655	(1,155)
Accruals adjustments: Changes in creditors falling due after more than one year		-	-	-
Accruals adjustments: Use of provision	17	1,673	2,446	(773)
Net cash requirement		623,220	611,367	11,853

5. Analysis of income payable to the Consolidated Fund (figures in £thousands)

Analysis of income payable to the Consolidated Fund.

In addition to appropriations in aid, the following income relates to the Department and is payable to the Consolidated Fund.

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Note	Forecast 2005-06 Income	Forecast 2005-06 Receipts	Outturn 2005-06 Income	Outturn 2005-06 Receipts
Operating income and receipts - excess A in A	6	-	-	1,364	2,688
Non-operating income and receipts - excess A in A	7	-	-	450	-
Subtotal		-	-	1,814	2,688
Other operating income and receipts not classified as A in A	6	-	-	186	205
Other non-operating income and receipts not classified as A in A		-	-	-	-
Other amounts collectable on behalf of the Consolidated Fund		-	-	-	-
Total income payable to the Consolidated Fund		-	-	2,000	2,893

6. Reconciliation of income recorded within the Operating Cost Statement to operating income payable to the Consolidated Fund (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	2005-06	2004-05
Operating income Administration	146	3,573
Operating income Administration Netted-off gross expenditure in sub-head	-	(829)
Operating income Programme	38,491	32,106
Operating income Programme Netted-off gross expenditure in sub-head	(860)	-
Operating income Total	37,777	34,850
Income authorised to be appropriated-in-aid Administration	124	2,238
Income authorised to be appropriated-in-aid Programme	36,103	29,462
Income authorised to be appropriated-in-aid Total	36,227	31,700
Operating income payable to the Consolidated Fund Administration	22	506
Operating income payable to the Consolidated Fund Programme	1,528	2,644
Operating income payable to the Consolidated Fund Total	1,550	3,150

7. Non-operating income - Excess A in A (figures in £thousands)

Description	2005-06	2004-05
Proceeds on disposal of fixed assets	450	-
Non-operating income - excess A in A	450	-

Sale proceeds for the disposal of Winchway House, Haverfordwest.

8. Staff numbers and related costs (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Staff costs comprise:	2005-06 Total	2005-06 Permanently employed staff	2005-06 Others	2004-05
Wages and salaries	261,575	242,221	19,354	247,875
Social security costs	20,156	20,156	-	18,210
Other pension costs	47,110	47,110	-	32,293
Sub Total	328,841	309,487	19,354	298,378
Less recoveries in respect of outward secondments	(229)	(229)	-	(259)
Total net costs	328,612	309,258	19,354	298,119

The Principal Civil Service Pension Scheme (PCSPS) is an unfunded multi-employer defined benefit scheme. The Crown Prosecution Service is unable to identify its share of the underlying assets and liabilities. The Scheme Actuary (Hewitt Bacon Woodrow) 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 2005-06, employers' contributions of £47,024,672 were payable to the PCSPS (2004-05: £32,235,707) at one of four rates in the range 16.2 to 24.6 per cent of pensionable pay, based on salary bands (the rates in 2004-05 were between 12 and 18.5 per cent). The Scheme Actuary reviews employer contributions every four years following a full scheme valuation. From 2006-07, the salary bands will be revised and the rates will be in a range between 17.1 and 25.5 per cent.

The contribution rates are set to meet the cost of the benefits accruing during 2005-06 to be paid when the member retires, and not the benefits paid during this period to existing pensioners.

Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. Employers' contributions of £79,106 (2004-05 £52,200) were paid to one or more of a panel of three appointed stakeholder pension providers. Employer contributions are age-related and range from 3 to 12.5 per cent (2004-05: 3 to 12.5 per cent) of pensionable pay. Employers also match employee contributions up to 3 per cent of pensionable pay. In addition, employer contributions of £5,822, 0.8 per cent (2004-05: £5,193, 0.8 per cent) 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 ill-health retirement of these employees. Contributions due to the partnership pension providers at the balance sheet date were £8,761. Contributions prepaid at that date were £Nil.

16 individuals (2004-05: 19 individuals) retired early on ill-health grounds; the total additional accrued pension liabilities in the year amounted to £58,473 (2004-05: £44,632).

Average number of persons employed

The average number of whole-time equivalent persons employed during the year was as follows. There were no staff engaged wholly on capital projects.

Objective	2005-06 Number Total	2005-06 Number Permanent staff	2005-06 Number Others	2004-05 Number
To ensure the effective delivery of justice	8,384	8,120	264	8,132
Total	8,384	8,120	264	8,132

9. Other Administration Costs (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Note	2005-06 £000 Items	2005-06 £000 Totals	restated 2004-05 £000 Items	restated 2004-05 £000 Totals
Rentals under operating leases: Hire of office equipment		51		21
Rentals under operating leases: Other operating leases		6,450		8,021
Rentals under operating leases: Subtotal			6,501		8,042
PFI service charges:< Off-balance sheet contracts	25		1,084		1,263
Non cash items: Cost of capital charge			(199)		(232)
Other expenditure: Accommodation and associated costs		3,564		4,773
Other expenditure: Communications		375		795
Other expenditure: Training		2,048		2,144
Other expenditure: Travel and subsistence		1,956		1,962
Other expenditure: Printing and stationery		1,423		1,414
Other expenditure: Postage and carriage		396		174
Other expenditure: Other expenditure		6,660		7,180
Other expenditure: Subtotal			16,422		18,442
Total			23,808		27,515

10. Programme Costs (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Note	2005-06 Items	2005-06 Totals	restated 2004-05 Items	restated 2004-05 Totals
Rentals under operating leases: Hire of office equipment		501		2,403
Rentals under operating leases: Other operating leases		17,595		19,343
Rentals under operating leases: Subtotal			18,096		21,746
PFI service charges: Off-balance sheet contracts	25		47,426		39,578
Non cash items: Depreciation		5,358		3,272
Non cash items: Loss on disposal of fixed assets		25		4
Non cash items: Loss on revaluation		24		87
Non cash items: Cost of capital charge Civil Estate		201		164
Non cash items: Cost of capital charge Other items		625		609
Non cash items: Change in bad debt allowance		(112)		1,460
Non cash items: Auditors' remuneration (Note a)		82		77
Non cash items: Provisions: Provided in year	17	1,636		2,821
Non cash items: Provisions: Unrequired provision written back	17	(618)
Non cash items: Provisions: Unwinding of discount on provisions	17	584		304
Non cash items: Subtotal			7,805		8,798
Other expenditure: Accommodation and associated costs		17,844		15,204
Other expenditure: Communications		6,104		5,023
Other expenditure: Training		1,828		1,719
Other expenditure: Travel and subsistence		4,783		4,598
Other expenditure: Printing and stationery		6,471		3,560
Other expenditure: Postage and carriage		4,092		2,897
Other expenditure: Advocate fees		145,896		149,300
Other expenditure: Costs awarded to CPS written off	29	209		169
Other expenditure: Witness expenses		13,794		13,680
Other expenditure: Other expenditure		11,246		8,048
Other expenditure: Subtotal			212,267		204,198
Total			285,594		274,320
Less: programme income	6		(37,631)		(32,106)
Total			247,963		242,214

Note a - There has been no auditors' remuneration for non-audit work.

11. Income (figures in £thousands)

Description	2005-06 Total	2004-05 Total
Administration income: Consolidated Fund extra receipts	22	506
Administration income: Other	124	585
Programme income: Costs awarded to the CPS	34,420	32,106
Programme income: Rental receivable from external tenants	2,239	1,653
Programme income: Rental receivable from other departments	860	829
Programme income: Netted-off gross expenditure in sub-head	(860)	(829)
Programme income: Consolidated Fund extra receipts	164	-
Programme income: Other	808	-
Total	37,777	34,850

12. Tangible fixed assets (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Freehold Land and Buildings	Leasehold Improvements	Furniture and Fittings	Information Technology	Total
Cost or valuation: At 1 April 2005	5,775	1,116	30,842	1,752	39,485
Cost or valuation: Additions	-	487	2,333	90	2,910
Cost or valuation: Disposals	(566)	-	(3,900)	-	(4,466)
Cost or valuation: Revaluation	666	-	(6)	(20)	640
Total valuation at 31 March 2006	5,875	1,603	29,269	1,822	38,569
Depreciation: at 1 April 2005	-	27	11,200	525	11,752
Depreciation: Charged in year	200	224	3,834	571	4,829
Depreciation: Disposals	(29)	-	(3,900)	-	(3,929)
Depreciation: Revaluation	7	-	2	(15)	(6)
Depreciation: At 31 March 2006	178	251	11,136	1,081	12,646
Net book value at 31 March 2006	5,697	1,352	18,133	741	25,923
Net book value at 31 March 2005	5,775	1,089	19,642	1,227	27,733

Freehold land and buildings were valued at 31 March 2005 at £5,775,000 on the basis of existing use value by an external firm of Chartered Surveyors, Donaldsons. The valuations were undertaken in accordance with the UK Practice Statement 1.3 of the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Standards published 1 May 2003.

The Accounting Officer is not aware of any material changes in the carrying value of freehold land and buildings and therefore there have been no interim valuations, other than indexation, since 31 March 2005. Other tangible assets are revalued on the basis of latest available indices.

]The majority of IT assets in use in the business are held under a PFI contract as detailed in Note 1.10 and 25.

13. Intangible fixed assets (figures in £thousands)

Intangible fixed assets comprise software licences.	2005-06	2004-05
Cost or valuation: At 1 April 2005	-	-
Cost or valuation: Additions	946	-
Cost or valuation: Disposals	-	-
Cost or valuation: Revaluation	-	-
Cost or valuation: At 31 March 2006	946	-
Amortisation: At 1 April 2005	-	-
Amortisation: Charged in year	-	-
Amortisation: Disposals	-	-
Amortisation: Revaluation	-	-
Amortisation: At 31 March 2006	-	-
Net book value at 31 March 2006	946	-
Net book value at 31 March 2005	-	-

14. Debtors (figures in £thousands)

14 (a) Analysis by type

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Amounts falling due within one year	2005-06	2004-05
Trade debtors (Note a)	34,543	31,024
Deposits and advances	427	423
Other debtors (Note b)	829	203
Prepayments: PFI	751	751
Prepayments: Other	11,188	9,774
Accrued income	4,813	3,860
Amounts due from the Consolidated Fund in respect of supply	-	-
Total	52,551	46,035

Amounts falling due after more than one year	2005-06	2004-05
Prepayments: PFI	3,755	4,506
Prepayments: Other	109	7
Total	56,415	50,548

Note a - Included within debtors is £1,769k (2004-05: £2,644k) representing excess Appropriations in Aid that will be due to the Consolidated Fund once the debts are collected.

Note b - Included within other debtors is £Nil (2004-05: £19k) representing unexpected receipts due to the Consolidated Fund once the debts are collected.

14(b) Intra-Government Balances (figures in £thousands)

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Amounts falling due within one year 2005-06	Amounts falling due within one year 2004-05	Amounts falling due after more than one year 2005-06	Amounts falling due after more than one year 2004-05
Balances with other central government bodies	1,141	421	-	-
Balances with local authorities	2,100	2,496	79	-
Balances with NHS Trusts	-	-	-	-
Balances with public corporations and trading funds	-	-	-	-
Intra-government balances	3,241	2,917	79	-
Balances with bodies external to government	49,310	43,118	3,785	4,513
Total debtors at 31 March	52,551	46,035	3,864	4,513

15. Cash at bank and in hand (figures in £thousands)

Description	2005-06	2004-05
Balance at 1 April	25,615	5,835
Net change in cash balances	(11,072)	19,780
Balance at 31 March	14,543	25,615
The following balance at 31 March was held at: Office of HM Paymaster General	14,486	25,487
The following balance at 31 March was held at: Commercial banks and cash in hand	57	128
Balance at 31 March	14,543	25,615

16. Creditors (figures in £thousands)

16(a) Analysis by type

Amounts falling due within one year:	2005-06	2004-05
VAT	33	21
Other taxation and social security	6,822	6,391
Trade creditors	11,990	12,777
Other creditors	4,505	3,241
Accruals and deferred income	27,269	31,634
Subtotal	50,619	54,064
Amounts issued from the Consolidated Fund for supply but not spent at year end	11,853	20,643
Consolidated Fund extra receipts due to be paid to the Consolidated Fund: received	2,690	4,972
Consolidated Fund extra receipts due to be paid to the Consolidated Fund: receivable	1,769	2,663
Total	66,931	82,342

16(b) Intra-Government Balances

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

Description	Amounts falling due within one year 2005-06	Amounts falling due within one year 2004-05	Amounts falling due after more than one year 2005-06	Amounts falling due after more than one year 2004-05
Balances with other central government bodies	27,841	38,059	-	-
Balances with local authorities	262	-	-	-
Balances with NHS Trusts	-	-	-	-
Balances with public corporations and trading funds	-	-	-	-
Intra-government balances	28,103	38,059	-	-
Balances with bodies external to government	38,828	44,283	-	-
Total creditors at 31 March	66,931	82,342	-	-

17. Provisions for liabilities and charges (figures in £thousands)

Description	Early departure costs
Balance at 1 April 2005	11,075
Provided in the year	1,636
Provisions utilised in the year	(2,446)
Write back of unrequired provision	(618)
Unwinding of discount	584
Balance at 31 March 2006	10,231

The CPS meets the additional costs of benefits beyond the normal PCSPS benefits in respect of employees who retire early by paying the required amounts annually to the PCSPS over the period between early departure and normal retirement date. The CPS provides for this in full when the early retirement programme becomes binding on the CPS by establishing a provision for the estimated payments discounted by the HM Treasury discount rate of 2.2 per cent in real terms.

18. General Fund (figures in £thousands)

The General Fund represents the total assets less liabilities of the entity, to the extent that the total is not represented by other reserves and financing items.

The authoritative version of this table can be found in the PDF version of this annual report. There may be information contained in the layout of the data that can not be rendered in this web page.

	Note	2005-06 Items	2005-06 Totals	2004-05 Items	2004-05 Totals
Balance at 1 April			6,334		11,467
Net Parliamentary funding: Drawn Down		602,577		579,742
Net Parliamentary funding: Deemed		20,643		3,514
Subtotal			623,220		583,256
Year end adjustment: Supply Creditor - current year			(11,853)		(20,643)
Net Transfer from Operating Activities: Net operating cost for the year		(600,466)		(565,363)
Net Transfer from Operating Activities: CFERs repayable to Consolidated Fund	6	(1,550)		(3,150)
Net Transfer from Non-operating Activities: CFERs repayable to Consolidated Fund	7	(450)		-
Subtotal			(602,466)		(568,513)
Non Cash Charges: Cost of capital charge	9 and 10	627		541
Non Cash Charges: Auditors' remuneration		82		77
Subtotal			709		618
Transfer from revaluation reserve	19		459		149
Balance at 31 March			16,403		6,334

19. Reserves (figures in £thousands)

The revaluation reserve reflects the unrealised element of the cumulative balance of indexation and revaluation adjustments (excluding donated assets).

Description	2005-06	2004-05
Balance at 1 April	4,145	1,137
Arising on revaluation during the year (net)	576	3,157
Transferred to general fund in respect of realised element of revaluation reserve	(459)	(149)
Balance at 31 March	4,262	4,145

20. Notes to the Cash Flow Statement (figures in £thousands)

20(a) Reconciliation of operating cost to operating cash flows

Description	Note	2005-06	2004-05
Net operating cost		(600,466)	(565,363)
Adjustments for non-cash transactions	9 and 10	7,606	7,107
(Increase) in debtors		(5,867)	(285)
Increase/(decrease) in creditors falling due within one year		(3,445)	11,485
Use of provisions	17	(2,446)	(3,164)
Net cash outflow from operating activities		(604,618)	(550,220)

20(b) Analysis of capital expenditure and financial investment

Description	Note	2005-06	2004-05
Tangible fixed asset additions	12	(2,910)	(7,042)
Intangible fixed asset additions	13	(946)	-
Net cash outflow from investing activities		(3,856)	(7,042)

20(c) Analysis of capital expenditure and financial investment by Request for Resources

Description	Capital expenditure	Loans, etc.	A in A	Net Total
Request for resources 1	(3,856)	-	-	(3,856)
Total 2005-06	(3,856)	-	-	(3,856)
Total 2004-05	(7,042)	-	-	(7,042)

20(d) Analysis of financing

Description	Note	2005-06	2004-05
From the Consolidated Fund (Supply) - current year	18	(602,577)	(579,742)
Advances from the Contingencies Fund		(12,000)	-
Repayments to the Contingencies Fund		12,000	-
Net financing		(602,577)	(579,742)

20(e) Reconciliation of Net Cash Requirement to (increase)/decrease in cash

Description	Note	2005-06	2004-05
Net cash requirement		611,367	562,613
From the Consolidated Fund (Supply) - current year	18	(602,577)	(579,742)
Amounts due to the Consolidation Fund - received in a prior year and paid over		4,972	2,321
Amounts due to the Consolidation Fund - received in a prior year and not paid over		(2,690)	(4,972)
(Increase)/decrease in cash		11,072	(19,780)

21. Notes to the Statement of Operating Costs by Departmental Aim and Objective (figures in £thousands)

Other current expenditures were as follows:

Objective	2005-06	restated 2004-05
To ensure the effective delivery of justice	247,963	242,214
Total	247,963	242,214

This expenditure represents programme costs which form part of the net operating costs disclosed in the Statement of Operating Costs by Departmental Aim and Objectives.

Capital Employed by Departmental Aim and Objective at 31 March 2006 (figures in £thousands)

The CPS's capital is employed exclusively for programme purposes.

Aim: To deliver a high quality prosecution service that brings offenders to justice, helps reduce both crime and the fear of crime and thereby promotes public confidence in the rule of law, through the consistent, fair and independent review of cases and through their fair, thorough and firm presentation at court.

Objective	2005-06 Capital employed	2004-05 Capital employed
To ensure the effective delivery of justice	20,665	10,479
Total	20,665	10,479

22. Capital Commitments (figures in £thousands)

Description	2005-06	2004-05
Contracted capital commitments at 31 March 2006 for which no provision has been made	106	50

23. Commitments under leases (figures in £thousands)

Operating Leases

Commitments under operating leases to pay rentals during the year following the year of these accounts are given in the table below, analysed according to the period in which the lease expires.

Obligations under operating leases comprise:	2005-06 Land and buildings	2005-06 Other	2004-05 Land and buildings	2004-05 Other
Expiry within 1 year	1,969	16	1,793	4,356
Expiry after 1 year but not more than 5 years	10,674	1,959	3,339	2,498
Expiry thereafter	12,941	2,881	19,399	-
Total	25,584	4,856	24,531	6,854

24. Other Financial Commitments (figures in £thousands)

The Department has entered into a contract, only cancellable at a significant cost, for the delivery and support of the department's new finance system. Implementation was completed during the current year, and the payments for system support to which the Department is committed during the year following the year of these accounts, analysed by the period during which the commitment expires are as follows.

Description	2005-06	2004-05
Expiry within 1 year	-	-
Expiry within 2 to 5 years	656	1,119
Expiry thereafter	-	-
Total	656	1,119

25. Commitments under PFI contracts (figures in £thousands)

The Department has entered into the following PFI contract.

Off balance sheet

Information, Communications and Technology (ICT) managed service

The Department's ICT service is provided through a managed service contract with a term of 10 years from 1 April 2002 to 31 March 2012. The contract is extendable for a further five years. The estimated capital value of the contract is £21.7m (2004-05: £21m). Under the terms of the contract CPS ICT assets were transferred to the contractor with effect from 1 April 2002. A prepayment was established for the fair value of the ICT assets transferred (£7,510,233.28) and the assets were impaired to a nil value as at 31 March 2002.

Charge to the Operating Cost Statement and future commitments

The total amount charged in the Operating Cost Statement in respect of off-balance sheet PFI transactions was £48,510,539 (2004-05: £40,840,684); and the payments to which the Department is committed during the year following the year of these accounts, analysed by the period during which the commitment expires, is as follows.

Description	2005-06	2004-05
Expiry within 1 year	-	-
Expiry within 2 to 5 years	-	-
Expiry within 6 to 10 years	41,946	42,330
Total	41,946	42,330

The contract covering the managed service allows for a number of improvements and enhancements to systems over the lifetime of the project. As such changes are successfully introduced there will necessarily be increases in the charges levied by the Service Provider. These increases will only be recognised in the accounts once the relevant changes have been properly tested and fully accepted as fit for purpose by the CPS.

26. Financial Instruments

FRS 13, Derivatives and Other Financial Instruments, requires disclosure of the role which financial instruments have had during the period in creating or changing the risks an entity faces in undertaking its activities. Because of the largely non-trading nature of its activities and the way in which government departments are financed, the CPS is not exposed to the degree of financial risk faced by business entities. Moreover, financial instruments play a much more limited role in creating or changing risk than would be typical of the listed companies to which FRS 13 mainly applies. The Department has no power to borrow or invest surplus funds and financial assets and liabilities are generated by day-to-day operational activities and are not held to change the risks facing the Department in undertaking its activities.

Liquidity risk

The Department's net revenue resource and capital requirements are financed by resources voted annually by Parliament. The CPS is not therefore exposed to liquidity risks.

Interest-rate and Foreign currency risk

The Department has no material deposits, and all material assets and liabilities are denominated in sterling, so it is not exposed to interest rate or currency risk.

Fair values (figures in £thousands)

Set out below is a comparison by category of book values and fair values of the Department's financial assets and liabilities as at 31 March 2006.

Primary financial instruments:	Book Value	Fair Value	Basis of fair valuation
Financial assets: Cash at bank and in hand	14,543	14,543
Financial liabilities: Provisions	(10,231)	(10,231)	Note a

Note a - Fair value is not significantly different from book value since, in the calculation of book value, the expected cash flows have been discounted by the real rate set by HM Treasury (currently 2.2 per cent).

27. Contingent Liabilities disclosed under FRS 12

As at 31 March 2006 the CPS was involved in 11 Employment Tribunal cases. Three cases have subsequently been withdrawn, and one further case dismissed. It is not possible to estimate the financial effect of the remaining seven claims. The CPS was also involved in 18 personal injury claims. Two claims have subsequently settled at a cost of £36,803. Nine cases are in the process of negotiation; these may result in settlements totalling £181,250. It is not possible to estimate the financial effect of the remaining seven claims. In addition, the CPS was also involved in negotiation of costs relating to dilapidation charges. Six claims are expected to be submitted by Landlords, four of which may result in settlements totalling £557,342. It is not possible to estimate the financial effect of the remaining two cases.

Included in the contingent liabilities is one claim which exceeds £250,000. This is a dilapidation claim of £271,136.

28. Contingent Liabilities not required to be disclosed under FRS 12 but included for parliamentary reporting and accountability

There were no contingent liabilities of this nature at the year-end.

29. Losses and Special Payments (figures in £thousands)

Included within the Operating Cost Statement are losses and special payments as follows:

Losses Statement	2005-06	2004-05
Total (2,104 cases)	290	253

These losses include 1,879 cases relating to costs awarded to the CPS totalling £209k (Note 10) of which the Magistrates' Courts, who are responsible for collecting costs awarded to the CPS, wrote off 1,742 cases with a value of £75k under their delegated powers, and the CPS authorised a further write off of £134k comprising 137 cases.

Special Payments	2005-06	2004-05
Total (31 cases)	397	354

30. Related-party transactions

The CPS has close working relationships with all agencies within the criminal justice system and particularly the Courts, their ultimate controlling party being the Department for Constitutional Affairs (see Note 1.5). The Courts are regarded as related parties with which the department has had material transactions, being mainly costs awarded by the Courts to the CPS (see Note 11) less amounts written off (see Note 10).

In response to the recommendations of the Glidewell review the CPS and the Police have combined the administration of case files through the collocation of Criminal Justice Units. In addition the CPS has had a number of transactions with other Government bodies.

During 2004-05 the CPS carried out a review of its Equality and Diversity Complaints procedure. Having followed the necessary procedures for competitive tendering as laid down by the Office of Government Commerce, the contract for this review was awarded to Anjali Arya Consultancy. Anjali Arya is a non-executive Director of the CPS and chair of the Audit Committee. As at 31 March 2006, Anjali Arya Consultancy had been paid a fee of £5,287.50 for completion of the project started in 2004-05 (2004-05 £19,153.44). None of the remaining Board members, key managerial staff or other related parties has undertaken any material transactions with the CPS during the year.

31. Third-party assets

There are no third-party assets as at the balance sheet date.

Departmental Remuneration Report

The Remuneration Committee comprises:

Richard Foster (Chief Executive)
Angela O'Connor (Director, Human Resources)
Mark Burch (Head of Pay and Performance Management)
Anjali Arya (non-executive director)

The remuneration of senior civil servants is set by the Prime Minister following independent advice from the Review Body on Senior Salaries. (SSRB)

The SSRB also advises the Prime Minister from time to time on the pay and pensions of Members of Parliament and their allowances; on Peers' allowances; and on the pay, pensions and allowances of Ministers and others whose pay is determined by the Ministerial and Other Salaries Act 1975.

In reaching its recommendations, the SSRB is to have regard to the following considerations:

• the need to recruit, retain and motivate suitably able and qualified people to exercise their different responsibilities;
• regional/local variations in labour markets and their effects on the recruitment and retention of staff;
• Government policies for improving the public services including the requirement on departments to meet the output targets for the delivery of departmental services;
• the funds available to departments as set out in the Government's departmental expenditure limits;
• the Government's inflation target.

The SSRB takes account of the evidence it receives about wider economic considerations and the affordability of its recommendations.

Further information about the work of the SSRB can be found at www.ome.uk.com.

In addition, the Remuneration Committee is tasked with considering the relative contributions of the Department's senior employees within each pay band. Paying due regard to completed performance reports, consistency and scope of objectives and the effects of external factors, the committee will then consider individual merit awards in line with Cabinet Office guidance. If implemented, such merit awards will be in addition to the minimum progression of all SCS pay bands implemented in line with the recommendations of the SSRB (2.5% with effect from 1 April 2005).

Service Contracts

Civil Service appointments are made in accordance with the Civil Service Commissioners' Recruitment Code, 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.

The DPP, Ken Macdonald QC, was appointed by the Cabinet Office for a period of three years under a contract dated 1 November 2003 which has an unexpired term of six months; compensation for early termination is payable in accordance with the relevant provisions of the Civil Service Compensation Scheme (CSCS) and the DPP may retire early on medical grounds with benefits provided under the terms of his pension scheme. His contract has recently been extended for a period of two years and will run from 1 November 2006 until 31 October 2008.

Claire Hamon, Director Business Information Systems, serves under a contract dated 3 January 2006 which has an unexpired term of three years eight months. The contract stipulates a notice period of three months; compensation for early termination is payable in accordance with the relevant provisions of the CSCS, and she may retire early on medical grounds receiving payment of relevant ill health retirement benefits.

All other officials covered by this report hold appointments, which are open-ended until they reach the normal retiring age of 60. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the CSCS.

Further information about the work of the Civil Service Commissioners can be found at www.civilservicecommissioners.gov.uk.

The remuneration of all directors, non-executive directors and staff employed in the CPS is paid entirely in cash.

Salary and Pension Entitlements

The following sections provide details of the remuneration and pensions interests of the most senior officials of the department.

Remuneration (figures in £thousands)

Officials	Post held	Date joined or left Board (if applicable)	2005-06 Salary	2004-05 Salary
Ken Macdonald	Director of Public Prosecutions		175 - 180	170 - 175
Richard Foster	Chief Executive		140 - 145	125 - 130
Claire Hamon	Director Business Information Systems		130 - 135	110 - 115
John Graham Director	Finance		95 - 100	90 - 95
Angela O'Connor	Director Human Resources		110 - 115	(a)
Séamus Taylor	Director of Equality and Diversity		80 - 85	75 - 80
Peter Lewis	Director Business Development Directorate		120 - 125	105 - 110
Philip Geering	Director Policy		95 - 100	90 - 95
Dru Sharpling	CCP, London		125 - 130	115 - 120
Jim England	CCP,West Mercia	(from 1 Apr 04)	85 - 90	80 - 85
Portia Ragnauth	CCP, Durham	(from 1 Apr 04)	70 - 75	70 - 75
Neil Franklin	CCP,West Yorkshire	(from 16 Sep 04)	95 - 100	50 - 55 (fye 90 - 95)
Deborah King	ABM, Merseyside	(from 16 Sep 04)	55 - 60	30 - 35 (fye 55 - 60)
David Farmer	CCP, Cumbria	(to 15 Sep 04)		30 - 35 (fye 75 - 80)
Robert Turnbull	CCP, North Yorkshire	(to 15 Sep 04)		30 - 35 (fye 75 - 80)
Ed Baltrami	CCP,Thames Valley	(to 15 Sep 04)		30 - 35 (fye 70 - 75)
Chris Newell	Director Casework	(to 15 Sep 04)		45 - 50 (fye 105 - 110)
Sue Cunningham	Head of Corporate Communications Division	(to 15 Sep 04)		30 - 35 (fye 65 - 70)
Garry Patten	Serious and Organised Crime Agency	(from 7 Oct 03 to 15 Sep 04)		45 - 50 (fye 95 - 100)
David Archer	CCP,Avon & Somerset	(to 15 Sep 04)		35 - 40 (fye 80 - 85)
Richard Crowley	CCP, Cambridgeshire	(to 15 Sep 04)		(a)
Martin Howard	CCP, Leicestershire	(to 15 Sep 04)		35 - 40 (fye 80 - 85)
Elizabeth Howe	CCP, Kent	(to 15 Sep 04)		35 - 40 (fye 80 - 85)
Judith Hunt (c)	Non-executive Director	(to 31 Dec 2005)
Anjali Arya (c)	Non-executive Director
Philip Oliver (c)	Non-executive Director

(a) Did not refuse to consent but was not able to confirm the data was accurate and as such was not in a position to give the informed consent.

(b) There were no benefits in kind provided by the Department to any employees, including members of the CPS Board.

(c) Non-executive Directors received a fee of £10,650 as remuneration for sitting on the Board during 2005-06. Expenses are paid.

fye = full year equivalent salary

Salary

"Salary" includes gross salary, performance pay or bonuses, overtime, reserved rights to London weighting or London allowances, recruitment and retention allowances, private office allowances and any other allowance to the extent that it is subject to UK taxation.

This report is based on payments made by the Department and thus recorded in these accounts.

Benefits in Kind

The monetary value of benefits in kind covers any benefits provided by the employer and treated by HM Revenue & Customs as a taxable emolument.

Pension Benefits

Civil Service Pensions

Pension benefits are provided through the Civil Service pension arrangements. From 1 October 2002, civil servants 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 Parliament each year. Pensions payable under classic, premium and classic plus are increased annually in line with changes in the Retail Price Index. New entrants after 1 October 2002 may choose between membership of premium or joining a good quality "money purchase" stakeholder arrangement with a significant employer contribution (partnership pension account).

Employee contributions are set at the rate of 1.5 per cent of pensionable earnings for classic and 3.5 per cent for premium and classic plus. Benefits in classic accrue at the rate of 1/80th of 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 give up (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 in the same way as in classic.

The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 3 per cent and 12.5 per cent (depending on the age of the member) into a stakeholder pension product chosen by the employee from a selection of approved products. The employee does not have to contribute but where they do make contributions, the employer will match these up to a limit of 3 per cent of pensionable salary (in addition to the employer's basic contribution). Employers also contribute a further 0.8 per cent of pensionable salary to cover the cost of centrally provided risk benefit cover (death in service and ill-health retirement).

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

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 contingent spouse's pension payable from the scheme. A CETV is a payment made 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 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 arrangements and for which the CS Vote has received a transfer payment commensurate with the additional pension liabilities being assumed. They also include any additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries.

Please note that the factors used to calculate the CETV were revised on 1 April 2005 on the advice of the Scheme Actuary. The CETV figure for 31 March 2005 has been restated using the new factors so that it is calculated on the same basis as the CETV figure for 31 March 2006.

Real Increase in CETV

This reflects the increase in CETV effectively funded by the employer. It takes account of 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.

Pension for the Director of Public Prosecutions

Pension benefits are provided through two pension schemes which have the DPP as its only member, and were laid before Parliament on 15 June 2006. The Schemes are unfunded and the costs of benefits will be met by monies voted by Parliament each year. The pensions will be increased annually in line with the changes in the Retail Prices Index.

The two pension schemes provide benefits which broadly match the benefits provided under the Judicial Pension Scheme. The principal scheme is a registered scheme and provides benefits up to the earnings cap. The supplementary scheme provides benefits on earnings above the cap and is not a registered scheme. The normal retirement age for the scheme is 65.

Employee contributions are set at the rate of 3% of pensionable earnings up to the earnings cap. Benefits accrue at the rate of 1/40th of pensionable salary for each year of service. In addition, a lump sum equivalent to 2.25 years' pension is payable on retirement.

Pension benefits: (figures in £thousands)

Officials	Accrued pension at age 60 as at 31 March 2006 and related lump sum	Real increase in pension and related lump sum at age 60	CETV at 31 March 2006	CETV at 31 March 2005	Real increase in CETV
Ken Macdonald Director of Public Prosecutions	pension 10 - 15 lump sum 25 - 30	pension 2.5 - 5 lump sum 7.5 - 10	174	70	69
Richard Foster Chief Executive	pension 55 - 60 lump sum 170 - 175	pension 2.5 - 5 lump sum 7.5 - 10	1,280	988	49
Claire Hamon Director Business Information Systems	pension 5 - 10 lump sum n/a	pension 0 - 2.5 lump sum n/a	68	33	18
John Graham Director Finance	pension 35 - 40 lump sum 105 - 110	pension 0 - 2.5 lump sum 2.5 - 5	756	583	29
Angela O'Connor Director Human Resources	pension 25 - 30 lump sum 85 - 90	pension 2.5 - 5 lump sum 10 - 12.5	479	317	57
Séamus Taylor (a) Director of Equality and Diversity	pension 0 - 5 lump sum n/a	pension 2.5 - 5 lump sum n/a	38	n/a	35
Peter Lewis Director Business Development Directorate	pension 35 - 40 lump sum 110 - 115	pension 5 - 7.5 lump sum 15 - 17.5	683	458	86
Philip Geering Director Policy	pension 20 - 25 lump sum 70 - 75	pension 0 - 2.5 lump sum 5 - 7.5	354	239	29
Dru Sharpling CCP, London	pension 5 - 10 lump sum 15 - 20	pension 0 - 2.5 lump sum 2.5 - 5	91	51	23
Jim England CCP, West Mercia (from 1 Apr 04)	pension 20 - 25 lump sum 70 - 75	pension 0 - 2.5 lump sum 2.5 - 5	395	278	24
Portia Ragnauth CCP, Durham (from 1 Apr 04)	pension 15 - 20 lump sum 55 - 60	pension 0 - 2.5 lump sum 5 - 7.5	309	209	23
Neil Franklin CCP, West Yorkshire (from 16 Sep 04)	pension 30 - 35 lump sum 100 - 105	pension 0 -2.5 lump sum 5 - 7.5	772	595	50
Deborah King ABM, Merseyside (from 16 Sep 04)	pension 20 - 25 lump sum 70 - 75	pension 0 - 2.5 lump sum 2.5 - 5	481	367	19

(a) Does not include transferred membership entitlements of previous PCSPS and Local Authority pension schemes, which are in the process of being calculated by the Department for Work and Pensions.

Ken Macdonald QC

Accounting Officer

26 June 2006