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Annual Reports and Accounts 2020/21 (2)

Last updated on 23 Jul 2021

Our 2020/21 annual report explains what we do, what we’ve achieved and some of the challenges we face. It also includes information about our finances which demonstrate how we have spent the public money we are trusted with.

Annual Reports and Accounts 2020/21

Read the first part of the Annual Report which includes the performance report, performance analysis, and accountability report.

You can also download the full accessible PDF version.

The certificate of the Comptroller and Auditor General to the Houses of Parliament

Opinion on financial statements

I certify that I have audited the financial statements of the Health Research Authority for the year ended 31 March 2021 under the Care Act 2014. The financial statements comprise: Statements of Comprehensive Net Expenditure, Financial Position, Cash Flows, Changes in Taxpayers’ Equity; and the related notes, including the significant accounting policies. These financial statements have been prepared under the accounting policies set out within them. The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards as interpreted by HM Treasury’s Government Financial Reporting Manual.

I have also audited the information in the Accountability Report that is described in that report as having been audited.

In my opinion, the financial statements:

  • give a true and fair view of the state of the Health Research Authority’s affairs as at 31 March 2021 and of the Health Research Authority’s net expenditure for the year then ended;
  • have been properly prepared in accordance with the Care Act 2014 and Secretary of State directions issued thereunder.

Opinion on regularity

In my opinion, in all material respects, the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Basis for opinions

I conducted my audit in accordance with International Standards on Auditing (ISAs) (UK), applicable law and Practice Note 10 ‘Audit of Financial Statements of Public Sector Entities in the United Kingdom’. My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my certificate.

Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2019. I have also elected to apply the ethical standards relevant to listed entities. I am independent of the Health Research Authority in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern

In auditing the financial statements, I have concluded that the Health Research Authority’s use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Health Research Authority’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

My responsibilities and the responsibilities of the Accounting Officer with respect to going concern are described in the relevant sections of this certificate.

The going concern basis of accounting for the Health Research Authority is adopted in consideration of the requirements set out in HM Treasury’s Government Financial Reporting Manual, which requires entities to adopt the going concern basis of accounting in the preparation of the financial statements where it anticipated that the services which they provide will continue into the future.

Other Information

The other information comprises information included in the annual report, but does not include the parts of the Accountability Report described in that report as having been audited, the financial statements and my auditor’s certificate thereon. The Accounting Officer is responsible for the other information. My opinion on the financial statements does not cover the other information and except to the extent otherwise explicitly stated in my certificate, I do not express any form of assurance conclusion thereon. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.

I have nothing to report in this regard.

Opinion on other matters

In my opinion, based on the work undertaken in the course of the audit:

  • the parts of the Accountability Report to be audited have been properly prepared in accordance with Secretary of State directions made under the Care Act 2014; and
  • the information given in the Chief Executive’s Introduction; Performance and Accountability Reports for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which I report by exception

In the light of the knowledge and understanding of the Health Research Authority and its environment obtained in the course of the audit, I have not identified material misstatements in the Chief Executive’s Introduction; Performance and Accountability Reports. I have nothing to report in respect of the following matters which I report to you if, in my opinion:

  • adequate accounting records have not been kept or returns adequate for my audit have not been received from branches not visited by my staff; or
  • the financial statements and the parts of the Accountability Report to be audited are not in agreement with the accounting records and returns; or
  • certain disclosures of remuneration specified by HM Treasury’s Government Financial Reporting Manual are not made; or
  • I have not received all of the information and explanations I require for my audit; or
  • the Governance Statement does not reflect compliance with HM Treasury’s guidance.

Responsibilities of the Accounting Officer for the financial statements

As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Accounting Officer, is responsible for:

  • the preparation of the financial statements in accordance with the applicable financial reporting framework and for being satisfied that they give a true and fair view;
  • internal controls as the Accounting Officer determines is necessary to enable the preparation of financial statement to be free from material misstatement, whether due to fraud or error.
  • assessing the Health Research Authority’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Accounting Officer anticipates that the services provided by the Health Research Authority will not continue to be provided in the future.

Auditor’s responsibilities for the audit of the financial statements

My responsibility is to audit, certify and report on the financial statements in accordance with the Care Act 2014.

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a certificate that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulation, including fraud.

My procedures included the following:

  • Inquiring of management, the Health Research Authority’s head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the Health Research Authority’s policies and procedures relating to:
  • identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
  • detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
  • the internal controls established to mitigate risks related to fraud or non- compliance with laws and regulations including the Health Research Authority’s controls relating to the Care Act 2014 and Managing Public Money.
  • discussing among the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, I identified potential for fraud in the following areas: revenue recognition and posting of unusual journals;
  • obtaining an understanding of the Health Research Authority’s framework of authority as well as other legal and regulatory frameworks that the Health Research Authority operates in, focusing on those laws and regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations of the Health Research Authority.

The key laws and regulations I considered in this context included the Care Act 2014, Managing Public Money, employment, taxation and pensions legislation;

  • reviewing the Health Research Authority’s accounting policies; and
  • using analytical procedures to identify any unusual or unexpected relationships and transactions.

In addition to the above, my procedures to respond to identified risks included the following:

  • reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations discussed above;
  • enquiring of management, the Audit and Risk Committee concerning actual and potential litigation and claims;
  • reading minutes of meetings of those charged with governance and the Board; and
  • in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

I also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and significant component audit teams and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website. This description forms part of my certificate.

In addition, I am required to obtain evidence sufficient to give reasonable assurance that the income and expenditure reported in the financial statements have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

Report

I have no observations to make on these financial statements.

Gareth Davies

Comptroller and Auditor General 5 July 2021

National Audit Office

157-197 Buckingham Palace Road Victoria

London SW1W 9SP

Statement of comprehensive net expenditure for the year ended 31 March 2021

Item Notes Year to end 31 March 2021 (£’000) Year to end 31 March 2020
£’000
Expenditure: staff costs 4 10,404 9,443
Expenditure: Amortisation and depreciation 4 1,218 373
Other expenditure 4 4,898 5,000
Total of expenditure None 16,520 14,816
Income from activities 5 (321) (286)
Net Expenditure for the period None 16,199 14,530

Statement of financial position as at 31 March 2021

Item Notes As at 31 March 2021 (£’000) As at 31 March 2020 (£’000)
Non current assets: Information technology assets 6.1 350 229
Non current assets: Intangible assets 6.2 5,166 4,504
Total non-current assets None 5,516 4,733 4,733
Current assets: Trade and other receivables 7 249 278
Current assets: Cash and cash equivalents 8 5,191 3,463
Total current assets None 5,440 3,741
Total assets None 10,956 8,474
Current liabilities: Trade and other payables 9 2,659 2,707
Current liabilities: Other liabilities 9 431 322
Total current liabilities None 3,090 3,029
Assets less liabilities None 7,866 5,445
Taxpayers' equity: General fund None 7,866 5,445
Total taxpayers' equity None 7,866 5,445

The notes on pages 62 to 75 form part of these accounts.

The financial statements on pages 58 to 61 were signed on behalf of the Health Research Authority by: Matthew Westmore, Chief Executive, Health Research Authority 2 July 2021

Statement of cash flows for the year ended 31 March 2021

Item Notes Year to 31 March 2021 (£’000) Year to 31 March 2020 (£’000)
Cash flows from operating activities: Net expenditure for the period after interest None (16,199) (14,530)
Cash flows from operating activities: Adjustments non cash transactions 4 1,218 764
Cash flows from operating activities: (Increase) / decrease in trade and other receivables 7 29 (2)
Cash flows from operating activities: Increase in trade payables 9 203 849
Cash flows from operating activities: Loss on disposal of property, plant & equipment None 21 3
Net cash (outflow) from operating activities None (14,728) (12,916)
Cash flows from investing activities: Purchase of plant, property and equipment 6.1 & 9 (72) (97)
Cash flows from investing activities: Purchase of intangible assets 6.2 & 9 (2,092) (2,073)
Net cash (outflow) from investing activities None (2,164) (2,073)
Cash flows from financing activities: Net Parliamentary funding None 18,620 16,557
Net financing None 18,620 16,557
Net increase / (decrease) in cash and cash equivalents None 1,728 1,471
Cash and cash equivalents at the beginning of the period None 3,463 1,992
Cash and cash equivalents at the end of the period 8 5,191 3,463

The notes on pages 62 to 75 form part of these accounts.

Statement of changes in taxpayers’ equity for the year ended 31 March 2021

Item General fund (£’000) Total reserves (£’000)
Balance as at 31 March 2019 3,026 3,026
Balance as at 31 March 2019: Net expenditure to 31 March 2020 (14,530) (14,530)
Balance as at 31 March 2019: Total recognised income and expenditure for the year (14,530) (14,530)
Balance as at 31 March 2019: Parliamentary funding for resources to 31 March 2020 16,949 16,949
Balance as at 31 March 2019: Total parliamentary funding from Department of Health and Social Care 16,949 16,949
Balance as at 31 March 2020 5,445 5,445
Balance as at 31 March 2020: Net expenditure to 31 March 2021 (16,199) (16,199)
Balance as at 31 March 2020: Total recognised income and expenditure for the year (16,199) (16,199)
Balance as at 31 March 2020: Parliamentary funding for resources to 31 March 2021 18,620 18,620
Balance as at 31 March 2020: Total parliamentary funding from Department of Health and Social Care 18,620 18,620
Balance as at 31 March 2021 7,866 7,866

The notes on pages 62 to 75 form part of these accounts.

Notes to the Accounts

1. Accounting policies

These financial statements have been prepared in line with directions issued by the Secretary of State, under the Care Act 2014 and in accordance with the Government Financial Reporting Manual (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 Health Research Authority has been selected for the purpose of giving a true and fair view. The particular policies adopted by the Health Research Authority are described below. They have been applied consistently in dealing with items considered material in relation to the accounts. There have been no revisions of estimation techniques.

Accruals are estimated based on available documentation, advice from management and from information gained from similar previous events and are the best estimate at the date of these financial statements.

Asset useful economic lives are reviewed at least annually. The basis for estimating useful economic life include experience of previous similar assets, the condition and performance of the asset and the knowledge of technological advances and obsolescence.

1.1 Going concern

The Department of Health and Social Care (DHSC) has confirmed funding of HRA will continue and next year’s funding has been agreed and there is a strong presumption for the continued provision of the HRA’s services as detailed in the Care Act 2014 for a minimum period of 12 months from the date the annual accounts are authorised for issue. It is therefore considered appropriate to prepare the 2020/21 financial statements on a going concern basis.

1.2 Accounting conventions

This account is prepared under the historical cost convention. This is in accordance with directions issued by the Secretary of State for Health and Social Care and approved by HM Treasury.

1.3 Income

Operating income is income which relates directly to the operating activities of the authority. It principally comprises fees and charges for services provided to the Devolved Administrations, as well as income from the government apprenticeship fund and other NHS and non NHS organisations.

Where income is derived from contracts with customers, it is accounted for under IFRS 15. The FReM expands the definition of a contract to include legislation and regulations which enables an entity to receive cash or another financial asset that is not classified as a tax by the Office of National Statistics (ONS). Revenue in respect of services provided is recognised when (or as) performance obligations are satisfied by transferring promised services to the customer, and is measured at the amount of the transaction price allocated to that performance obligation. Where revenue received or receivable relates to a performance obligation that is to be satisfied in a future period, the income is deferred and recognised as a contract liability.

The value of the benefit received when the HRA accesses funds from the Government’s apprenticeship service are recognised as income in accordance with IAS 20, Accounting for Government Grants. Where these funds are paid directly to an accredited training provider, non-cash income and a corresponding non- cash training expense are recognised, both equal to the cost of the training funded.

1.4 Taxation

The Authority is not liable to pay corporation tax. Expenditure is shown net of recoverable VAT. Irrecoverable VAT is charged to the most appropriate expenditure heading or capitalised if it relates to an asset.

1.5 Tangible assets – property, plant and equipment

a) Capitalisation

Tangible assets which are capable of being used for more than one year are capitalised when:

  • individually have a cost equal to or greater than £5,000; or
  • collectively have a cost of at least £5,000 and an individual cost of more than £250, where the assets are functionally interdependent, they have broadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control
  • second hand IT assets are capitalised at cost, which represents market value, and may be below the thresholds for capitalising new IT assets.

a) Valuation

Tangible assets are capitalised initially at cost. They are carried on the Statement of Financial Position at cost net of depreciation and impairment, or at depreciated replacement cost where materially different.

These assets have not been revalued in the accounts due to their low value and short economic life.

b) Depreciation

The HRA Information Technology Assets comprise of video conference equipment, which make up the Tangible Information Technology, and laptops. Furniture and Fittings comprise of airconditioning units at our offices. The expected useful life of the assets are assessed as being different due to the changes in technology advancements and so are depreciated over different economic lives as follows:

Asset Years
Tangible Information Technology 5
Laptops 4
Furniture & Fittings 4

Assets held under construction are laptops held but not built to specification nor distributed to staff.

a) Assets under construction

Assets are held under construction where the assets have not been built to specification and distributed to staff for their use.

1.6 Intangible assets

a) Capitalisation

Intangible assets are capitalised initially at cost.

b) Valuation

Intangible assets are carried in the Statement of Financial Position at cost net of

amortisation and impairment, or at amortised replacement cost where materially different. These assets have not been revalued in the accounts due to their short economic life.

c) Amortisation

All intangible assets, with the exception of those under construction, are amortised over their expected useful economic life.

Amortisation is charged on each individual component of intangible assets.

The HRA Intangible assets comprise of software licences for the e-learning system and the licence fee for the current IRAS system. The development expenditure relating to the HRA Research Information Systems are currently grouped under Information Technology. The estimated lives of these assets have been assessed and are set out below. They are amortised on a straight line basis over the estimated life of the asset.

Purchased computer software licences are amortised over the shorter of the term of the licence and their useful economic lives.

Intangible asset Years
Software licences 3 - 5
Bespoke software licence 3 - 7
Intangible information technology 5 - 7

a) Assets under the course of construction

Assets are held under construction where development work has been undertaken but further work is required to bring the assets into use.

b) Impairment

An annual review is undertaken of all assets to consider any changes in the useful economic life. Impairments that arise from a clear consumption of economic benefits or of service potential in the asset are charged to operating expenses.

1.7 Significant accounting policies and material judgements

Estimates and the underlying assumptions are reviewed annually by the organisation’s senior management based on historical experience and other factors considered relevant. Revisions to accounting estimates are recognised in the period of the revision and future periods if the revision affects both current and future periods.

Expenditure relating to the replacement of the NEW IRAS system, has been reviewed in order to estimate the amount that relates to the capital project. This review forms the basis for the accounting treatment of the costs and will vary depending on the nature of the expenditure. In house programme management costs have been capitalised 100% while the system is under construction.

1.8 Cash and cash equivalents

Cash is the balance held with the Government Banking Service. The HRA does not hold any petty cash.

1.9 Employee benefits

Short term employee benefits

Salaries, wages and employment-related payments are recognised in the period in which the service is received from employees.

The cost of leave earned but not taken by employees at the end of the period is recognised in the financial statements to the extent that employees are permitted to carry forward leave into the following period and employee records support this.

Retirement benefit costs

Past and present employees are covered by the provisions of the two NHS Pensions Schemes.

The schemes are an unfunded, defined benefit scheme that covers NHS employers, General Practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The schemes are not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities.

Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period.

The contributions are charged to operating expenses as they become due.

For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs is charged to expenditure at the time the Authority commits itself to the retirement, regardless of the method of payment.

The schemes are subject to a full actuarial valuation every four years and an accounting valuation every year.

1.10 Leases

Operating leases as the lessee

Leases are classified as finance leases when substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. All HRA leases are assessed to be operating leases.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Lease incentives are recognised initially as a liability and subsequently as a reduction of rentals on a straight-line basis over the lease term.

Where arrangements are in place that imply a lease arrangement the costs have been charged as an expense on a straight-line basis and disclosed as part of note 11.

Contingent rentals are recognised as an expense in the period in which they are incurred.

Operating leases as the lessor

Rental income from operating leases is recognised as income on a straight- line basis over the term of the lease.

1.11 Financial instruments

Financial assets and financial liabilities recognition

Financial assets and financial liabilities arise where the Health Research Authority is party to the contractual provisions of a financial instrument, and as a result has a legal right to receive or a legal obligation to pay cash or another financial instrument. This definition of a contract includes legislation and regulations which give rise to arrangements that in all other respects would be a financial instrument and do not give rise to transactions classified as tax by ONS.

This includes the purchase or sale of non financial items, such as goods and services, which are entered into in accordance with normal requirements of the Health Research Authority and are recognised when, and to the extent which, performance occurs, i.e. when receipt or delivery of the goods or services is made.

The Authority’s receivables comprise of cash at bank, NHS and Non NHS receivables, prepayments, accrued income and other receivables.

The Authority’s financial liabilities comprise: NHS Payables, other payables and accruals.

1.11.1 Classification and measurement

After initial recognition, financial assets and financial liabilities are measured at amortised cost. These are assets and liabilities which are held with the objective of collecting contractual cash flows and where cash flows are solely payments of principal and interest. This includes cash equivalents, contract and other receivables, trade and other payables and rights and obligations under lease arrangements.

1.11.2 Impairment of financial assets

For all financial assets measured at amortised cost including lease receivables, contract receivables and contract assets the Authority recognises an allowance for expected credit losses.

The Authority adopts the simplified approach to impairment for contract and other receivables, contract assets and lease receivables, measuring expected losses as at an amount equal to lifetime expected losses.

1.11.3 De-recognition

Financial assets are de-recognised when the contractual rights to receive cash flows from the assets have expired or the Authority has transferred substantially all the risks and rewards of ownership.

Financial Liabilities are de-recognised when the obligation is discharged, cancelled or expires.

1.12 IFRS disclosure

IFRS’s, amendments and interpretations in issue but not yet effective or adopted.

The following is a list of changes to IFRS that have been issued but which were not effective in the reporting period.

IFRS 16 Leases

IFRS 16 Leases will replace IAS 17 Leases, IFRIC 4 Determining whether an arrangement contains a lease and other interpretations and is applicable in the public sector for periods beginning 1 April 2022. The standard provides a single accounting model for lessees, recognising a right of use asset and obligation in the statement of financial position for most leases: some leases are exempt through application of practical expedients explained below. For lessors, the distinction between operating and finance leases will remain and the accounting will be largely unchanged.

IFRS 16 changes the definition of a lease compared to IAS 17 and IFRIC 4. The HRA will apply this definition to new leases only and will grandfather its assessments made under the old standards of whether existing contracts contain a lease.

On transition to IFRS 16 on 1 April 2022, the HRA will apply the standard retrospectively with the cumulative effect of initially applying the standard recognised in the general fund at that date. For existing operating leases with a remaining lease term of more than 12 months and an underlying asset value of at least £5,000, a lease liability will be recognised equal to the value of remaining lease payments discounted on transition at the HRA’s incremental borrowing rate. The HRA’s incremental borrowing rate will be a rate defined by HM Treasury. Currently this rate is 0.91% but this may change between now and adoption of the standard. The related right of use asset will be measured equal to the lease liability adjusted for any prepaid or accrued lease payments. No adjustments will be made on 1 April 2022 for existing finance leases.

For leases commencing in 2022/23, the HRA will not recognise a right of use asset or lease liability for short term leases (less than or equal to 12 months) or for leases of low value assets (less than £5,000). Right of use assets will be subsequently measured on a basis consistent with owned assets and depreciated over the length of the lease term.

HM Treasury revised the implementation date for IFRS 16 in the UK public sector to 1 April 2022. Due to the need to reassess lease calculations, together with uncertainty on expected leasing activity in from April 2022 and beyond, a quantification of the expected impact of applying the standard in 2022/23 is currently impracticable. However, the HRA does expect this standard to have a material impact on non-current assets, liabilities and depreciation.

IFRS17 Insurance Contracts – unlikely to have a material impact on the HRA financial statements.

2. Analysis of net expenditure by segment

The Health Research Authority currently reports the financial information to the Board as one segment and therefore no segmental analysis is disclosed.

3. Staff numbers and related costs

The tables for the staff numbers and staff costs and other related costs are included on page 44 within the staff report of the Remuneration report section.

4. Expenditure

The Health Research Authority costs all relate to administration costs:

Item Notes Year to 31 March 2021 (£’000) Year to 31 March 2020
(£’000)
Non-executive members' remuneration None 91 90
Other salaries and wages None 8,077 7,319
Social security costs None 783 685
Pension costs None 1,453 1,286
Redundancies and notice not worked None 0 63
Total staff costs None 10,404 9,443
Supplies and services - general None 258 371
Establishment expenses None 386 1,131
Transport and moveable plant None 0 6
Premises and fixed plant None 4,144 3,387
Auditors' remuneration: (*) audit fees None 41 40
Miscellaneous None 48 62
Loss on disposal of assets None 21 3
Total other expenditure None 4,898 5,000
Capital: Depreciation 6.1 68 52
Amortisation 6.2 1,150 321
Total depreciation and amortisation None 1,218 373
Total expenditure None 16,520 14,816

(*) The Audit Fee for the period to the 31 March 2021 is £41,000 (period to 31 March 2020 £40,000).

The Authority did not make any payments to External Auditors for non audit work.

4.1 Better Payment Practice Code – measure of compliance

Item 2020-21
Number
2019-20
Number
Total Non-NHS trade invoices paid in the year 1,537 3,395
Total Non-NHS trade invoices paid within target 1,395 2,901
Percentage of Non-NHS trade invoices paid within target 90.8% 85.4%
Total NHS trade invoices in the year 103 168
Total NHS trade invoices paid within target 99 153
Percentage of NHS trade invoices paid within target 96.1% 91.1%
Item 2020-21 Value (£000) 2019-20 Value (£000)
Total Non-NHS trade invoices paid in the year 5,838 5,509
Total Non-NHS trade invoices paid within target 5,820 5,371
Percentage of Non-NHS trade invoices paid within target 99.7% 97.5%
Total NHS trade invoices in the year 1,399 1,314
Total NHS trade invoices paid within target 1,399 1,306
Percentage of NHS trade invoices paid within target 100.0% 99.4%

5. Operating revenue

Administration Year to 31 March 2021 (£’000) Year to 31 March 2020
(£’000)
Fees & charges to external customers 35 46
Income received from Scottish Parliament 144 98
Income received from National Assembly for Wales 88 61
Income received from Northern Ireland Assembly 50 34
Income received from other Departments 4 47
Total Administration revenue 321 286

The Health Research Authority has reviewed the income to identify any contracts which are within the scope of IFRS15. The majority of the revenue is received from the Devolved Administrations on a cross charging arrangement using the Barnett Formula, and so is outside of scope. The remainder of the revenue either did not fall within the scope or had all of the performance obligations delivered by the end of the reporting date.

6. Non-current assets

6.1 Tangible assets – property, plant and equipment
Item Information Technology
(£’000)
Furniture & Fittings
(£’000)
Assets under construction
(£’000)
Total
(£’000)
Cost or Valuation at 1 April 2020 265 0 97 362
Additions - purchased 54 41 115 210
Transfers 77 0 (77) 0
Disposals (87) 0 0 (87)
Gross cost as at Year to 31 March 2021 309 41 135 485
Accumulated depreciation at 1 April 2020 133 0 0 133
Depreciation:: charged during the year 68 0 0 68
Depreciation on disposal (66) 0 0 (66)
Accumulated depreciation as at Year to 31 March 2021 135 0 0 135
Net book value as at Year to 31 March 2020 132 0 97 229
Net book value as at Year to 31 March 2021 174 41 135 350

The disposal relates to older model laptops which were no longer supported by our third party IT infrastructure provider.

Item Information Technology
(£’000)
Furniture & Fittings
(£’000)
Assets under construction
(£’000)
Total (£’000)
Cost or Valuation at 1 April 2019 268 0 0 268
Additions - purchased 0 0 97 97
Disposals (3) 0 0 (3)
Gross cost as at Year to 31 March 2020 265 0 97 362
Accumulated depreciation at 1 April 2019 82 0 0 82
Depreciation: Charged during the year 52 0 0 52
Disposals (1) 0 0 (1)
Accumulated depreciation as at Year to 31 March 2020 133 133 0 0 133
Net book value at 31 March 2019 186 0 0 186
Net book value as at Year to 31 March 2020 132 0 97 229

6.2 Intangible assets

Item Assets under construction
(£’000)
Software licences
(£’000)
Information technology
(£’000)
Total
(£’000)
Gross Cost at 1 April 2020 265 591 7,321 8,177
Additions - purchased 237 0 1,575 1,812
Transfers (265) 0 265 0
Gross cost as at Year to 31 March 2021 237 591 9,161 9,989
Accumulated amortisation at 1 April 2020 0 574 3,099 3,673
Amortisation: Charged during the year 0 17 1,133 1,150
Accumulated amortisation as at Year to 31 March 2021 0 0 591 4,232 4,823
Net book value as at Year to 31 March 2020 265 17 4,222 4,504
Net book value as at Year to 31 March 2021 237 0 4,929 5,166
Item Assets under construction
(£’000)
Software licences
(£’000)
Information technology
(£’000)
Total (£’000)
Gross Cost at 1 April 2019 1,500 591 4,013 6,104
Additions - purchased 265 0 1,808 2,073
Transfers (1,500) 0 1,500 0
Gross cost as at Year to 31 March 2020 265 591 7,321 8,177
Accumulated amortisation at 1 April 2019 0 557 2,795 3,352
Amortisation: Charged during the year 0 17 304 321
Accumulated amortisation as at Year to 31 March 2020 0 574 3,099 3,673
Net book value as at 31 March 19 1,500 34 1,218 2,752
Net book value as at Year to 31 March 2020 265 17 4,222 4,504

7. Trade receivables

Amount falling due within one year

Item As at 31 March 2021 (£’000) As at 31 March 2020
(£’000)
Trade Receivables NHS 0 46
Trade Receivables Non NHS 1 30
Other receivables 114 80
Accrued income and prepayments 134 122
Trade and other receivables 249 278

8. Cash and Cash equivalents

Item Year to 31 March 2021 (£’000) Year to 31 March 2020 (£’000)
Opening balance 3,463 1,992
Net change in period 1,728 1,471
Total 5,191 3,463
Held with office of Government Banking Service 5,191 3,463
Balance at year end 5,191 3,463

9. Trade payables and other current liabilities

Amounts falling due within one year

Item As at 31 March 2021 (£’000) As at 31 March 2020 (£’000)
Trade payables 434 235
Accruals and deferred income 1,572 1,677
Capital payables 653 795
Trade and other payables 2,659 2,707
Other taxation and social security 270 193
Other Current Liabilities 161 129
Other Current Liabilities 431 322
Total Trade Payables and other current liabilities 3,090 3,029

10. Capital Commitments

At 31 March 2021, the HRA had no capital commitments (31 March 2020: £387,852).

11. Commitments under leases

Operating leases

The Health Research Authority have leases for offices in London, Nottingham, Bristol,

Manchester and Newcastle. Total future minimum lease payments under these operating leases are given in the table below. During the latter months of 2020/21, the HRA moved into new government premises in London, and the future rental costs for the period of the lease are included within this note. At a similar time, the HRA also moved into new premises in Bristol, however as at 31 March 2021, the new leases had not been signed and so no future payments for this lease are included within this note. The HRA will be moving into new premises in Nottingham during 2021/22, and as at 31 March 2021, the new lease had not been signed, and so this note includes the remaining commitment in relation to the existing lease for Nottingham, but not commitments in relation to the new lease.

Obligations under operating leases comprise: Year to 31 March 2021 (£’000) Year to 31 March 2020 (£’000)
Buildings: Not later than one year 219 414
Buildings: Later than one year and not later than five years 634 406
Buildings: Later than five years 589 0
Total 1,442 820
Operating Lease Income

The HRA entered into a lease with HS2 from the 26 April 2019 relating to the rental of floor space within the area occupied by the HRA at the Manchester Office. The end date of the lease is 11 June 2022.

Income under operating leases comprise: Year to 31 March 2021 (£’000) Year to 31 March 2020 (£’000)
Buildings: Not later than one year 7 7
Buildings: Later than one year and not later than five years 1 9
Total 8 16

12. Other financial commitments

The Health Research Authority entered into a 5 year contract on the 1st July 2017 with SBS for the provision of financial and accounting and payroll services. The annual cost of the contract is £163,078 and the contract expires on the 30th June 2022. At 31 March 2021, the HRA exercised the option to extend the contract for the provision of the maintenance and helpdesk for the HARP and IRAS systems, which are key to the delivery of the HRA’s statutory obligations, for a further 2 years. This is to support the transition across to the new IRAS system being developed.

Item Year to 31 March 2021 (£’000) Year to 31 March 2020 (£’000)
Not later than one year 976 932
Later than one year and not later than five years 346 260
Total 1,322 1,192

13. Losses and special payments

The details of the Health Research Authority losses and special payments can be found on page 51 in the Parliamentary Accountability and Audit report section of the annual report.

14. Contingent assets

During 2018-19 the HRA submitted a case to HMRC to recover the VAT on the development costs of the new IRAS system. During 2020-21, the HRA received a positive decision from HMRC but it related directly to one supplier. During 2020-21 the HRA submitted a further case to HMRC to recover the VAT on the development costs of the new IRAS system for any third party providers we use. As at the 31 March 2021 a decision had not been received from HMRC.

15. Related party transactions

The Health Research Authority is an NDPB established by order of the Secretary of State for Health and Social Care.

The Department of Health and Social Care is regarded as a controlling related party. During the year the Health Research Authority has had a significant number of material transactions with the Department, and with other entities for which the Department is regarded as the parent Department.

The Health Research Authority has considered materiality in line with the group accounting manual guidelines for agreeing creditor and debtor balances (£500k) and for income and expenditure balances the same threshold has been used (£500k).

No Board Member, key manager or other related parties has undertaken any material transactions with the Health Research Authority during the year.

16. Events after the reporting period

The Accounting Officer authorised these financial statements for issue on 5 July 2021.

17. Financial instruments

Financial risk management

Financial reporting standard IFRS 7 requires disclosure of the role that financial instruments have had during the period in creating or changing the risks a body faces in undertaking its activities. As the cash requirements of the Authority are met through Parliamentary Funding, financial instruments play a more limited role in creating risk that would apply to a non-public sector body. The majority of financial instruments relate to contracts to buy non-financial items in line with the Health Research Authority ‘s expected purchase and usage requirements and the Health Research Authority is therefore exposed to little credit, liquidity or market risk.

Financial assets

The Health Research Authority operates primarily within the NHS market and receives the majority of its income from DHSC and Devolved Administrations. IFRS 9 requires the HRA to adopt a lifetime credit loss model to it’s financial assets. The HRA has applied this model to its trade receivables (excluding NHS receivables) and assessed its credit loss value as at the 31st March 2021 to be £nil (31 March 2020 £480).

Financial liabilities

The Health Research Authority operates within both the NHS and non-NHS market for the supplies of goods and services. The organisations financial liabilities mainly consist of these short term trade creditors and accruals relating to the purchase of non financial items. The exposure to financial liability risk is therefore minimal.

The aged creditor report for NHS and non-NHS payables at the reporting date was:

Item £000
Not past due 688
Past due 0-30 days 0
Past due 31-120 days 0
More than 121 days 4
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