In a report to parliament on the agency’s first set of accounts as a trading fund, Sir John said he had taken the step because of the Ordnance Survey’s decision not to value the National Topographic Database – the definitive computerised map of Great Britain.
The OS had refused to value the database as a tangible fixed asset, arguing that it was intellectual property and therefore intangible. Under FRS 10 ‘Goodwill and Intangible Assets’, such assets need not be accounted for on the balance sheet.
But comptroller and auditor general Sir John believed that, unlike intangible fixed assets such as trade marks, brands or patents, the database was in fact ‘an accurate representation of a physical reality’.
In a statement, the NAO said that it should be accounted for as a tangible fixed asset, capitalised in line with financial reporting standard 15 on tangible fixed assets.
The NAO said, according to advice from Valuation Consulting Ltd, the database should be valued at a minimum of pounds 50m.
By not valuing the database, the NAO said that OS’ accounts distorted the return on capital used.
Sir John said: ‘The failure by the Ordnance Survey to recognise the database as a tangible fixed asset means that the Agency’s accounts do not provide parliament with a true and fair view of publicly owned assets under the Agency’s stewardship.’
He also criticised the OS for not moving towards resource accounting, which would force the agency to pay attention to the valuation of assets in line with commercial practice.
‘It is surprising to find an important body like the Ordnance Survey seeking to turn its back on the thrust of the new approach,’ Sir John said.
David Willey, the OS’ director of business strategy and finance, hit back, saying: ‘We are not aware that any other government database is treated in this way, and our advisers are unaware of any in the private sector.’
The OS was supported by its financial adviser, Deloitte & Touche.
Andy Simmonds, D&T’s technical partner, said: ‘There is no doubt the database is an asset, but current accounting practice says it should not be on the balance sheet, mainly because no accountant can be sure of its value.’
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