§ Baroness Howells of St Davidsasked Her Majesty's Government:
What impact the adoption of the accounting requirements of Financial Reporting Standard (FRS) 15 have had on London Underground Ltd's Annual Accounts for 1999–2000. [HL4230]
§ The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty)The accounts of London Underground Ltd are prepared in accordance with the Companies Act 1985, which requires compliance with all accounting standards. Financial Reporting Standard (FRS) 15, issued by the Accounting Standards Board, became mandatory for accounting periods ending on or after 23 March 2000 and has consequently been adopted by London Underground in its accounts for the year ended 31 March 2000.
FRS15 sets out the principles of accounting for tangible fixed assets. As well as imposing stricter rules on the allocation of overheads to capital projects, the standard requires that expenditure previously treated as renewals must now either be charged to cost of operations, or capitalised as an addition to fixed assets.
The revised accounting policies have reduced London Underground Ltd's gross operating margin for 1999–2000 to £153.6 million (from £293.6m*), and increased its operating loss before grants to £145.2 million (from £101.2m*). These are, however, purely accounting changes. Neither affects the amount of cash available, or Government grant paid, to London Underground Ltd.
* the amounts reported in the accounts of London Regional Transport, prepared in accordance with the LRT Act 1984, and published as part of the LT Annual Report 1999–2000, Improving London's transport. document on 28 June 2000.