The Crown Prosecution Service
Annual Report and Accounts 2023–2024

Statement of Cash Flows
for the year ended 31 March 2024

The notes below form part of these accounts.

1. Accounting Policies

Basis of accounting

The Trust Statement is prepared in accordance with the accounts direction issued by HM Treasury in accordance with section 2(3) of the Exchequer and Audit Departments Act 1921. The Trust Statement is prepared in accordance with the 2023-24 FReM issued by HM Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Where the FReM permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the CPS for the purpose of giving a true and fair view has been selected. The particular policies adopted by the CPS are described below. They have been applied consistently in dealing with items that are considered material to the accounts. The income and associated expenditure contained in this statement are those flows of funds which the CPS handles on behalf of the Consolidated Fund and Treasury where it is acting as an agent rather than principal.

Accounting convention

These accounts have been prepared under the historical cost convention.

Revenue recognition

Receipts from DPA are recognised at the point that settlement is confirmed by the Courts. DPA cost awards, where they are payable to the Consolidated Fund are also recognised at the point that settlement is confirmed by the Courts. Due to the uncertainty of the DPA process and a lack of historic data to indicate the probability of a DPA being agreed the CPS does not classify DPAs in progress as contingent assets. For the purposes of the accounting treatment DPA’s are recognised at the point that the agreement is approved.

Where a DPA includes a significant financing component which is either explicitly stated in the agreement or implied by the payment terms agreed, the amount of revenue recognised reflects the present value of the receipts, discounted using the discount rate for financial instruments set by HM Treasury.

Receivables

Receivables are shown net of impairments in accordance with the requirements of IFRS 9. See Areas of judgement and key sources of estimation uncertainty for further details.

Expenditure

The notional audit fee for the Trust Statement is included within operating costs note 3 of the CPS accounts. Expenditure included in the Trust Statement is estimated value of impairments as a result of the application of IFRS 9.

Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand, and short-term highly liquid deposits with a maturity period of three months or less.

Foreign exchange

The presentational currency used for the financial statements is sterling.

Areas of judgement and key sources of estimation uncertainty

The CPS estimates the expected credit loss in respect of receivables from Deferred Prosecution Agreements. In the absence of historic data on the cash shortfalls of other Deferred Prosecution Agreements, the expected credit loss is estimated with reference to the likelihood of default for companies based on rates published by credit rating agencies. An assessment is undertaken to evaluate whether there is any other information available which would influence whether there have been any changes since the most recent credit rating of the organisation that mean that the most recent credit rating would no longer be an appropriate indicator of likelihood of default. Additionally, consideration is given as to whether there are any factors detailed within the Deferred Prosecution Agreement which could result in a substantial change in the likelihood of cash shortfalls occurring. The expected credit loss is then estimated based on suitable default rates and where more than one default rate or application of default rate(s) would be appropriate, an average of these estimates is used. A 10% change to the default rates used in 2023-24 results in a £507k impact on the expected credit loss.

2. Revenue

3. Receivables

 3.1 Change to impairments