ARA 2020 to 2021: Financial statements

Published: 20 January 2022

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Part 3: Financial statements

The financial statements are prepared in accordance with the Financial Reporting Manual 2020/21, published by HM Treasury, and comprise:

• Statement of Comprehensive Net Expenditure
• Statement of Financial Position
• Statement of Cash Flows
• Statement of Changes in Taxpayers’ Equity
• Notes to the financial statements

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Statement of Comprehensive Net Expenditure

for the year ended 31 March 2021

The Statement of Comprehensive Net Expenditure is a statement of CQC’s performance, summarising income and expenditure for the year.

ARA 2020 to 2021: Statement of Comprehensive Net Expenditure

Notes 1 to 21 in Notes to the Financial Statements form part of these financial statements.

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Statement of Financial Position

as at 31 March 2021

A snapshot of CQC’s assets and liabilities as at the end of the financial year.

ARA 2020 to 2021: Statement of Financial Position

Notes 1 to 21 in Notes to the Financial Statements form part of these financial statements.

Ian Trenholm
Chief Executive
10 January 2022

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Statement of Cash Flows

for the year ended 31 March 2021

The movements in cash during the year.

ARA 2020 to 2021: Statement of Cash Flows

Notes 1 to 21 in Notes to the Financial Statements form part of these financial statements.

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Statement of Changes in Taxpayers’ Equity

The movements to reserves in the year.

ARA 2020 to 2021: Statement of Changes in Taxpayers’ Equity

• £24,653k (£24,841k in 2019/20) funded non-chargeable activities
• £nil (£nil in 2019/20) funded chargeable activities
• £4,753k (£10,876k in 2019/20) funded capital expenditure; and
• £2,322k (£661k in 2019/20) funded LGPS pension cessation charges.

Notes 1 to 21 in Notes to the Financial Statements form part of these financial statements.

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Notes to the financial statements

for the year ended 31 March 2021

Additional details to the numbers included within the four financial statements.

1. Statement of accounting policies

These financial statements have been prepared in a form directed by the Secretary of State and in accordance with the Financial Reporting Manual (FReM) 2020 to 2021, issued by HM Treasury, and the DHSC Group Accounting Manual (GAM) 2020 to 2021. The accounting policies contained in the FReM and GAM follow International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context. Where the FReM or GAM permits a choice of accounting policy, the accounting policy that is judged to be most appropriate to the particular circumstances of CQC for the purpose of giving a true and fair view has been selected. The particular policies adopted are described below. These have been applied consistently in dealing with items considered material in relation to the accounts.

Accounting policies are unchanged compared with those in the 2019 2020 financial statements, and no new accounting standards have been adopted in year.

The financial statements are presented in £ sterling and all values are rounded to the nearest thousand except where indicated otherwise in accordance with the FReM.

1.1 Going concern

CQC’s annual report and accounts have been prepared on a going concern basis. The main source of funding for CQC is income from fees charged to registered providers. The associated credit risk is managed through the management of receivables and regular cash flow reporting, see note 8. In addition, grant-in-aid funding is drawn from DHSC to fund non-chargeable activities and capital expenditure.

1.2 Accounting convention

These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment and intangible assets at fair value to the extent required or permitted under IFRS as set out in accounting policies.

1.3 Critical accounting judgements and key sources of estimation uncertainty

In the application of CQC accounting policies, management is required to make various judgements, estimates and assumptions. These estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from those estimates. The estimates and underlying assumptions are continually reviewed. Throughout 2020/21 CQC experienced an operational impact due to COVID-19 pandemic. If this has impacted our accounting judgements or uncertainty of our estimates, we have provided details in the appropriate note.

Areas of significant judgement include:

• IAS 19 Employee Benefits: the most significant judgements relate to the valuation of CQC’s share of assets and liabilities in 14 local government pension schemes (LGPS). The underlying assumptions are reviewed on an ongoing basis by the fund actuaries. Financial assumptions are based on market expectations at the Statement of Financial Position date and demographic assumptions reflect the best estimate of the likely future timing of future benefit payments. Key assumptions used are detailed in note 5.2. The value of assets and liabilities are sensitive to changes in discounts rates, a sensitivity analysis is found in note 5.10.
• IAS 36 Impairments: management make judgements on whether there are any indications of impairment to the carrying amounts of CQC’s non-current assets (see accounting policy note 1.14, note 6 and note 7).
• IFRS 9 Financial Instruments: the expected credit loss of receivables is determined by probabilities calculated using historic collection data for groups of receivables (see accounting policy note 1.19 and note 9).
• Indexation of non-current assets: annually intangible assets and property, plant and equipment are revalued using indices published by the Office for National Statistics (see accounting policy notes 1.12 and 1.13, note 6 and note 7).

1.4 Operating segments

Net expenditure is analysed in the Operating Segments note (note 2) and is reported in line with management information used within CQC.

1.5 Revenue

Operating income relates directly to the operating activities of CQC and includes revenue from contracts with customers and government’s non-cash apprenticeship training grant.

In the application of IFRS 15 ‘Revenue from Contracts with Customers’, several practical expedients offered in the standard have been employed. These are as follows:

• CQC will not disclose information regarding performance obligations as part of a contract that has an original expected duration of one year or less;
• CQC is to similarly not disclose information where revenue is recognised in line with the practical expedient offered in the standard where the right to consideration corresponds directly with value of the performance completed to date; and
• the FReM has mandated the exercise of the practical expedient offered in the standard that requires CQC to reflect the aggregate effect of all contracts modified before the date of initial application.

The main source of revenue from contracts with customers for CQC is income from annual statutory fees charged to all registered providers of regulated activities in accordance with the Health and Social Care Act 2008 (as amended). This revenue 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. The FReM has adapted the definition of a contract to include legislation, such as the Health and Social Care Act 2008 (as amended), which enables CQC to receive cash from another entity. Statute requires CQC to perform the continual task of maintaining the register of providers of regulated activities over the whole period of registration, and without being registered it is unlawful for a provider to operate. Fees are charged in accordance with the current fees scheme, published with the consent of the Secretary of State for Health, which has been effective from 1 April 2019 and remained unchanged in 2020/21. Fees are invoiced on the anniversary of initial registration. Revenue is recognised equally over the 12-month period of registration that the fee covers as performance obligations are satisfied. In cases of voluntary de-registration, fees are refunded to registered organisations in accordance with the fee rebate scheme detailed on CQC’s website.

Where statutory fees are paid and exceed the value of performance obligations satisfied at the end of the accounting period the income is deferred (note 11).

Payment terms are standard reflecting cross-government principles. Statutory annual fees are payable within 30 days of the invoice date otherwise the provider can opt to pay in equal instalments by direct debit.

The value of the benefit received when CQC 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.

1.6 Employee benefits

1.6.1 Short-term employee benefits

Salaries, wages and employment-related payments, including payments arising from the apprenticeship levy, are recognised in the period in which the service is received from employees, and CQC becomes obligated to pay them. The cost of annual 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.

1.6.2 Retirement benefit costs

NHS pensions
Past and present employees of CQC are covered by the provisions of the NHS Pensions Scheme. The scheme is 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 scheme is not designed to be run in a way that would enable CQC 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 CQC of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period.

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 CQC 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.

Local government pensions
Some employees are members of the Local Government Pension Scheme (LGPS), which is a defined benefit pension scheme that is administered through 14 active pension funds. Employees who were members of the LGPS in a predecessor organisation were permitted to keep their legacy arrangements when their employment transferred to CQC on 1 April 2009. Membership to LGPS is closed to new CQC employees.

Actuarial valuations are carried out at each Statement of Financial Position date. The scheme assets and liabilities attributable to those employees can be identified and are recognised in CQC’s accounts. The assets are measured at fair value, and the liabilities at the present value of the future obligations. Charges recognised in the Statement of Comprehensive Net Expenditure are detailed below:

Charged to staff costs:

• Current service cost – the increase in liabilities because of additional service earned in the year.
• Past service cost – the increase in liabilities arising from current year decisions, the effect of which relates to the years of service earned in earlier years.
• Administration expense – charges representing the cost of administering the fund.
• Gains or losses on settlements and curtailments – the result of actions to relieve the liabilities or events that reduce the expected future service or accrual of benefits of employees.

Charged to other expenditure:

• Net interest cost – the expected increase in the present value of liabilities during the year as they move one year closer to being paid.

Charged to other comprehensive expenditure:

• Actuarial gain or loss on assets and liabilities – the extent to which investment returns achieved in year are different from interest rates used at the start of the year.

Other pension schemes
CQC employees that are not eligible to join the NHS Pensions Scheme are enrolled in the National Employment Savings Trust (NEST). The scheme is accounted for as if it were a defined contribution scheme: the cost to CQC of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period.

1.7 Other expenses

Other operating expenses are recognised when, and to the extent that, the goods or services have been received. They are measured at the fair value of the consideration payable.

1.8 Grants receivable

Grants received, including grant-in-aid received for revenue and capital expenditure is treated as financing and credited to the general reserve.

1.9 Grants payable

Where grant funding is not intended to be directly related to activity undertaken by a grant recipient in a specific period, CQC recognises the expenditure in the period in which the grant is paid. All other grants are accounted for on an accrual’s basis.

1.10 Apprenticeship levy

CQC is required to pay an apprenticeship levy amounting to 0.5% of the total pay bill, less an allowance of £15,000. The levy is recognised as an expense and included as an additional social security cost within the financial statements.

It is expected that apprenticeship funding will be passed directly to training providers. Where a CQC employee receives training funded by the levy, CQC will recognise a non-cash expense in the period in which the training occurs. An additional non-cash income amount, equal to the costs paid directly to the training provider, is also recognised.

1.11 Value added tax

Irrecoverable value added tax (VAT) is charged to the relevant expenditure category or included in the capitalised purchase cost of non-current assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

1.12 Intangible assets

1.12.1 Recognition
Intangible assets are non-monetary assets without physical substance, which are capable of sale separately from the rest of CQC’s business or which arise from contractual or other legal rights.

They are capitalised if:

• it is probable that future economic benefits will flow to, or service potential will be supplied to CQC
• it is expected to be used for more than one financial year
• the cost of the item can be measured reliably, and either:
  • the item has a cost of at least £5,000, or
  • collectively, a number of items have a cost of at least £5,000 and individually have a cost of more than £250, where the assets are functionally interdependent, had broadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control.

Software that is integral to the operating of hardware, for example an operating system, is capitalised as part of the relevant item of property, plant and equipment. Software that is not integral to the operation of hardware, for example application software, is capitalised as an intangible asset.

Expenditure relating to IT software and software developments, including CQC’s website, is capitalised if the asset has a cost of at least £5,000 or considered part of a collective group of interdependent assets with a total cost exceeding £5,000 and has a useful life of more than one year.

General IT software project management costs are not capitalised.

1.12.2 Measurement

Intangible assets are initially recognised at cost. The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the criteria for recognition are initially met. Where no internally generated intangible asset can be recognised, the expenditure is recognised in the period in which it was incurred.

Revaluations are performed with sufficient regularity to ensure that carrying amounts are not materially different from those that would be determined at the end0 of the reporting period. All assets are revalued annually, at the end of the reporting period on 31 March, using the appropriate producer price index (PPI) as published by the Office for National Statistics.

An increase arising on revaluation is taken to the revaluation reserve except when it reverses an impairment for the same asset previously recognised in expenditure, in which case it is credited to expenditure to the extent of the decrease previously charged there. A revaluation decrease that does not result from a loss of economic value or service potential is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset, and thereafter to expenditure. Gains and losses recognised in the revaluation reserve are reported as other comprehensive net expenditure in the Statement of Comprehensive Net Expenditure.

1.13 Property, plant and equipment

1.13.1 Recognition
Expenditure on office refurbishments, furniture and fittings, office equipment, IT equipment and infrastructure is capitalised if:

• it is held for use in delivering services or for administrative purposes
• it is probable that future economic benefits will flow to, or service potential will be supplied to CQC
• it is expected to be used for more than one financial year
• the cost of the item can be measured reliably, and either:
  • the item has cost of at least £5,000, or
  • collectively, a number of items have a cost of at least £5,000 and individually have a cost of more than £250, where the assets are functionally interdependent, had broadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control.

1.13.2 Measurement
All property, plant and equipment is measured initially at cost, representing the cost directly attributable to acquiring the asset and bringing it to the location and in the condition necessary for it to operate in the manner intended by management. Assets that are held for their service potential and are in use are measured subsequently at their current value in existing use.

Revaluations of property, plant and equipment are performed with sufficient regularity to ensure that carrying amounts are not materially different from those that would be determined at the end of the reporting period. Assets are restated at current value each year using the appropriate producer price index (PPI) as published by the Office for National Statistics.

Revaluations and impairments are treated in the same manner as for intangible assets, note 1.12.2.

1.14 Amortisation, depreciation and impairments

Non-current assets are depreciated or amortised from the date that they are brought into use. Assets under development are not amortised.

Depreciation and amortisation is charged to write off the costs or valuation of property, plant and equipment and intangible assets, less any residual value, on a straight-line basis over their estimated useful lives. The estimated useful life is the period over which CQC expects to obtain economic benefits or service potential from the asset. This is specific to CQC and may be shorter than the physical life of the asset itself. Estimated useful lives and residual values are reviewed each year-end, with the effect of any changes recognised on a prospective basis.

At each financial year-end, CQC checks whether there is any indication that its property, plant and equipment or intangible assets have suffered an impairment loss. If there is indication of such an impairment, the recoverable amount of the asset is estimated to determine whether there has been a loss and, if so, its amount. Intangible assets not yet available for use are also tested for impairment annually at the financial year-end.

Impairment losses that arise from a clear consumption of economic benefit are taken to expenditure. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of the recoverable amount but capped at the amount that would have been determined had there been no initial impairment loss. The reversal of the impairment loss is credited to expenditure.

1.15 Leases

CQC applies IAS17 ‘Leases’ and recognises leases as either operating or finance leases. Leases are classified as finance leases when the risks and rewards of ownership are transferred substantially to the lessee; all other leases are operating leases.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. CQC has no finance leases.

1.16 Provisions

Provisions are recognised when CQC has a present legal or constructive obligation as a result of a past event, it is probable that CQC will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at the end of the reporting period, taking into account the risks and uncertainties.

Where a provision is measured using the cash flows estimated to settle the obligation, its carrying amount is the present value of those cash flows using HM Treasury’s discount rates.

Early retirement provisions are discounted using HM Treasury’s pension discount rate of minus 0.95% (2019/20: minus 0.50%) in real terms. All other provisions are subject to three separate discount rates according to the expected timing of cash flows from the Statement of Financial Position date:

• a short-term rate of minus 0.02% (2019 to 2020: 0.51%) for expected cash flows up to and including five years
• a medium-term rate of 0.18% (2019 to 2020: 0.55%) for expected cash flows over five years up to and including 10 years
• a long-term rate of 1.99% (2019 to 2020: 1.99%) for expected cash flows over 10 years.

All percentages are in real terms.

1.17 Contingent liabilities and contingent assets

A contingent liability is:

• a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of CQC, or
• a present obligation that is not recognised because it is not probable that a payment will be required to settle the obligation, or the amount of the obligation cannot be measured sufficiently reliably.

A contingent liability is disclosed unless the possibility of a payment is remote.

A contingent asset is a possible asset that arises from past events and the existence of which will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of CQC. A contingent asset is disclosed where an inflow of economic benefits is probable.

Where the time value of money is material, contingent liabilities and contingent assets are disclosed at their present value.

1.18 Cash and cash equivalents

Cash is cash-in-hand and deposits with any financial institution repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in 3 months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

1.19 Financial assets

Financial assets are recognised when CQC becomes party to the contractual provision of the financial instrument or, in the case of trade receivables, when the goods or services have been delivered. Financial assets are de-recognised when the contractual rights have expired or when the asset has been transferred and CQC has transferred substantially all of the risks and rewards of ownership or has not retained control of the asset.

Financial assets are initially recognised at fair value plus or minus directly attributable transaction costs for financial assets not measured at fair value through profit or loss. Fair value is taken as the transaction price, or otherwise determined by reference to quoted market prices, where possible, or by valuation techniques.

Financial assets are classified into the following categories: financial assets at amortised cost, financial assets at fair value through other comprehensive income, and financial assets at fair value through profit and loss. The classification is determined by the cash flow and business model characteristics of the financial assets, as set out in IFRS 9, and is determined at the time of initial recognition.

CQC’s only financial assets are trade receivables which are measured at amortised cost.

1.19.1 Financial assets at amortised cost
Financial assets measured at amortised cost are those held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and where the cash flows are solely payments of principal and interest. This includes most trade receivables, loans receivable, and other simple debt instruments.

After initial recognition, these financial assets are measured at amortised cost using the effective interest method, less any impairment. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the life of the financial asset to the gross carrying amount of the financial asset.

1.19.2 Impairment
For all contract assets CQC recognises a loss allowance representing the expected credit loss on the financial asset.

CQC adopts the simplified approach to impairment, in accordance with IFRS 9, and measures the loss allowance for any trade receivables at an amount equal to the lifetime expected credit losses.

Expected credit loss allowances of trade receivables are determined by applying a weighted probability of a loss event occurring during the lifetime of the asset. This includes the probability of the whole amount becoming irrecoverable, part of the amount becoming irrecoverable and full recovery. These probabilities are determined by historic recovery for each category of receivables: income from fees by sector and income from other activities.

HM Treasury has ruled that central government bodies may not recognise stage 1 or stage 2 impairments against other government departments, their executive agencies, the Bank of England, Exchequer Funds, and Exchequer Funds’ assets where repayment is ensured by primary legislation. CQC therefore does not recognise loss allowances for stage 1 or stage 2 impairments against these bodies. Additionally, DHSC provides a guarantee of last resort against the debts of its ALBs and NHS bodies (excluding NHS charities), and CQC does not recognise loss allowances for stage 1 or stage 2 impairments against these bodies.

For financial assets that have become credit impaired since initial recognition (stage 3), expected credit losses at the reporting date are measured as the difference between the asset’s gross carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate. Any adjustment is recognised in the Statement of Comprehensive Net Expenditure.

1.20 Financial liabilities

Financial liabilities are recognised in the Statement of Financial Position when CQC becomes party to the contractual provisions of the financial instrument or, in the case of trade payables, when the goods or services have been received. Financial liabilities are de-recognised when the liability has been discharged, that is, the liability has been paid or has expired.

Non-current payables are discounted when the time value of money is considered material. Consequently, the liability for additional pension contributions resulting from the early termination of staff in previous years is discounted by minus 0.95% (2019/20: minus 0.50%). This is the rate for market yields on AA corporate bonds as published by HM Treasury.

1.21 IFRS standards that have been issued but have not yet been adopted

The GAM does not require the following IFRS standards and interpretations to be applied in 2020 to 2021. These standards are still subject to HM Treasury FReM adoption.

• IFRS 16 Leases: the standard is effective from 1 April 2022 as adapted and interpreted by the FReM. CQC currently has commitments under operating leases of approx. £13.8m, which IFRS 16 requires to be recognised on the Statement of Financial Position as right of use assets. Corresponding lease liabilities will also be recognised on transition to the standard as currently interpreted by the FReM. The value of right of use assets that would be presented under IFRS16 on the Statement of Financial Position will not be materially different to the commitments under operating leases disclosed in note 16.
• IFRS 17 Insurance Contracts: application is required for accounting periods beginning on or after 1 January 2023 but has not yet been adopted by the FReM. Early adoption is not therefore permitted. CQC do not expect adoption of the standard to have a material impact on the Financial Statements.

2. Analysis of net expenditure by activities

2.1 Operating segments

IFRS 8 ‘Operating Segments’ requires operating segments to be identified based on internal reports that are regularly reviewed by the Chief Executive. The Board and ET regularly evaluate CQC’s performance using operating segments.

CQC reports performance against each of the operational directorates. These are:

• Adult Social Care (ASC)
• Hospitals
• Primary Medical Services and Integrated Care (PMS)
• Other includes Change, Chief Executive, Digital and Intelligence, Engagement Policy and Strategy, Healthwatch England, and Regulatory Customer and Corporate Operations (RCCO).

Operating income and the Statement of Financial Position by segment is not included as this was not reported to the Board.

	ASC (£000)	Hospitals (£000)	PMS (£000)	Others (£000)	2020/21 total (£000)	Restated 2019/20 total (£000)
Pay costs	41,847	33,673	19,805	77,129	172,454	173,701
Non-pay costs	497	361	229	38,623	39,710	47,402
Total	42,344	34,034	20,034	115,752	212,164	221,103

Other non-pay costs include central organisational costs such as IT, Premises, Training, Legal costs, recruitment, see note 4.2 for additional details of operating expenditure.

2.2 Reconciliation to Statement of Comprehensive Net Expenditure

The reconciliation below details the non-cash adjustments which are not included within the operating segments analysis presented to the Board and ET.

	2020/21 total £000	Restated 2019/20 total £000
Pay costs	172,454	173,701
Non-pay costs	39,710	47,402
Total net expenditure	212,164	221,103
Items not included within operating segments:
Staff costs:
Increase in provision for pension fund deficits	819	1,432
Depreciation, amortisation and impairment charges	8,960	6,928
Provisions	(1,208)	(1)
Other operating expenditure:
Net interest expense on pension scheme assets and liabilities	1,934	1,403
Expected credit loss	259	801
Total operating expenditure	222,928	231,666

2.3 Analysis of net expenditure by funding stream

The table below presents the net position for chargeable and non-chargeable activities by aligning income and funding with their related costs. Chargeable activities are funded by providers through fees. Non-chargeable activities are funded by grant-in-aid and reimbursement for external work.

ARA 2020 to 2021: 2.3 Analysis of net expenditure by funding stream

3. Income

3.1 Revenue from contracts with customers

Income from fees:	2020-2021 total (£000)	2019-2020 total (£000)
NHS Trusts	(57,453)	(56,491)
Adult social care – residential	(65,704)	(67,660)
Adult social care – community	(23,472)	(22,956)
Independent healthcare – hospitals	(3,984)	(3,779)
Independent healthcare – community	(6,884)	(6,914)
Independent healthcare – single specialty	(935)	(868)
Dentists	(8,377)	(7,995)
NHS GP practices	(38,383)	(37,359)
Subtotal: income from fees	(205,192)	(204,022)
Income from other activities	(1,645)	(2,590)
Total revenue from contracts with customers	(206,837)	(206,612)

Income from other activities includes reimbursement for services performed in addition to our regulatory activities. This includes income in relation to the National Guardian Office, jointly funded by CQC NHS England and NHS Improvement, and the provision of inspection services to the Office for Standards in Education, Children’s Services and Skills (Ofsted), the Home Office and Defence Medical Services.

Income of £19,797k has been fully recognised in 2020/21 which was included in contract liabilities at 31 March 2020 (2019/20: £20,619k).

3.2 Other operating income

	2020-2021 total (£000)	2019-2020 total (£000)
Apprenticeship training grant (non-cash)	(56)	(77)
Total other operating income	(56)	(77)

4. Operating expenditure

4.1 Staff costs

	2020-2021 total (£000)	Represented 2019-2020 total (£000)
Wages and salaries	137,259	137,287
Social security costs	13,961	14,319
NHS pension costs	20,912	20,274
LGPS pension costs	4,131	4,805
Other pension costs	68	71
Apprenticeship levy	640	662
Termination benefits	387	220
Less capitalised staff costs	(2,557)	(2,048)
Less recoveries in respect of outward secondments	(1,960)	(1,889)
Increase in provision for pension fund deficits	819	1,432
Total staff costs	173,660	175,133

More detailed disclosure of our staff costs is included in the People Report which is part of the Accountability Report.

4.2 Other operating expenditure

ARA 2020 to 2021: 4.2 Other operating expenditure

5. Pension costs

During the year CQC’s employees were able to participate in one of the following contributory pension schemes:

• NHS Pension Scheme
• Local Government Pension Scheme (LGPS)
• National Employment Savings Trust (NEST).

Both the NHS Pension Scheme, which is the principal pension scheme for staff recruited directly by CQC, and NEST are not designed to run in a way that would allow CQC to identify its share of the underlying scheme assets and liabilities. See note 1.3 in the People Report, page 46, for additional details of the NHS Pension Scheme and NEST.

LGPS is a multi-employer defined benefit scheme, as described in IAS 19 Employee Benefits. Due to legacy arrangements from predecessor organisations CQC has active members in 14 local pension funds that are part of LGPS at 31 March 2021.

Valuations of CQC’s assets and liabilities in each LGPS as at 31 March 2021 have been prepared in accordance with IAS 19. The results relating to each LGPS are disclosed in note 5.1 below. The Statement of Financial Position shows net pension assets totalling £3.9m (31 March 2020: £0.8m) and net pension deficits of £85.8m (31 March 2020: £90.3m) relating to CQC’s membership in the LGPS.

The present value, the related current service cost and past service cost were measured using the projected unit credit method. This means that the current service cost will increase as the members of the scheme approach retirement.

The actuarial assessment of each obligation was carried out at 31 March 2021 by:

• Mercers Ltd. (Avon, Cumbria, Merseyside and Shropshire)
• Hymans Robertson LLP (Cambridgeshire, Cheshire, Greater Manchester, Suffolk and West Sussex)
• Barnett Waddingham (East Sussex and Essex)
• Aon Hewitt (Hampshire, Teesside and West Yorkshire).

5.1 Pension assets and liabilities

The pension assets and liabilities attributable to CQC for each local government defined pension benefit scheme are as follows:

ARA 2020 to 2021: 5.1 Pension assets and liabilities

All assets are held at bid value.

8 employees (2019/20: five) retired early on ill-health grounds during the period. No additional pension costs (2019/20: £nil) were levied on CQC as a result.

For any fund in surplus we are required, in accordance with paragraph 64 of IAS 19 and IFRIC 14 , to consider the impact of an asset ceiling on the recognition of assets in the Statement of Financial Position. An asset ceiling is the limit above which further increases in net pension assets cease to be recognised for accounting purposes. As active membership in each LGPS is low, and closed to new members, a valuation prepared on a cessation basis is prepared to determine the economic benefit that could be achieved from a refund of surplus on exiting the fund. At 31 March 2021, asset ceilings totalling £4,284k were applied to eight funds (31 March 2020: 6) to ensure that any surplus presented is limited to the amount that CQC would expect to receive as a refund.

5.1.1 Effect of the asset ceiling

Changes in the effect of limiting a net defined benefit asset to the asset ceiling, excluding amounts included in interest, is shown below:

	2020-2021 (£000)	2019-2020 (£000)
Opening asset ceiling	3,301	-
Re-measurement of net defined pension asset for changes in asset ceiling	983	3,301
Closing asset ceiling	4,284	3,301

5.2 Actuarial assumptions

5.2.1 Financial assumptions
A summary of the key assumptions used by the actuaries of the pension schemes are as follows:

Key assumptions used:	Teesside Pension Fund (% per annum) 2020-2021	Teesside Pension Fund (% per annum) 2019-2020	Other pension funds (% per annum) 2020-2021	Other pension funds (% per annum) 2019-2020
Discount rate	2.1	2.3	2.0 – 2.1	2.3 – 2.4
Expected rate of salary increases	3.7	3.0	2.9 – 4.2	2.0 – 3.6
Future pension increases	2.7	2.0	2.7 – 2.9	1.9 – 2.2
CPI inflation	2.7	2.0	2.7 – 2.9	1.9 – 2.1

[Note: Assumptions relating to Hampshire in 'Other pension funds' are not included due to the valuation of assets and liabilities being prepared on a cessation basis. The key assumptions used in this valuation were: discount rate 1.3%, expected rate of salary increases 3.1%, future pension increases 3.1% and CPI inflation 3.1%.]

5.2.2 Mortality assumptions
Based on actuarial mortality tables, the average future life expectancies at age 65 are summarised below:

Key assumptions used:	Teesside Pension Fund (% per annum) 2020-2021	Teesside Pension Fund (% per annum) 2019-2020	Other pension funds (% per annum) 2020-2021	Other pension funds (% per annum) 2019-2020
Males, retiring today	21.9	21.8	20.5 – 23.3	20.5 – 23.3
Females, retiring today	23.6	23.5	23.3 – 25.4	23.1 – 25.5
Males, retiring in 20 years	23.3	23.2	21.9 – 24.8	21.9 – 24.7
Females, retiring in 20 years	25.4	25.3	24.7 – 27.4	25.0 – 27.3

[Note: Assumptions relating to Hampshire in column 'Other pension funds (% per annum) 2019-2020' are not included. The key assumptions used in this valuation were; life expectancy of those retiring today were; male 23.1 years, female 25.5 years and those retiring in 20 years were: male 24.8 years, female 27.3 years.]

5.3 Charges to net expenditure

Amounts recognised in the Statement of Comprehensive Net Expenditure in respect of these defined benefit pension schemes are as follows:

	2020-2021 (£000)	2019-2020 (£000) Restated
Current service cost	4,910	5,531
Past service cost	34	745
Administration expenses	83	80
Subtotal: service costs	5,027	6,356
Net interest expense	1,934	1,403
Amount recognised in net expenditure	6,961	7,759

Of the expense for the year, the service costs totalling £4.9m (2019 to 2020: £6.2m) have been included in the Statement of Comprehensive Net Expenditure as staff expenditure. Within note 4.1 £4.1m (2019 to 2020: £4.8m) of this is included within LGPS pension costs and represents the amount paid as contributions during the year. The remaining £0.8m (2019 to 2020: £1.4m) is a non-cash adjustment presented as an increase in provision for pension fund deficits. The net interest expense of £1.9m (2019 to 2020: £1.4m) has been included in other expenditure, note 4.2. The re-measurement of the net defined benefit obligation is included as other comprehensive expenditure in the Statement of Comprehensive Net Expenditure.

5.4 Charges to other comprehensive net expenditure

Amounts recognised in the Statement of Comprehensive Expenditure are as follows:

ARA 2020 to 2021: 5.4 Charges to other comprehensive net expenditure

The cumulative re-measurements recognised in reserves since the date of transition to IFRS on 1 April 2008 to 31 March 2021 is £86m (31 March 2020: £94m).

5.5 Amount recognised in the Statement of Financial Position

The amount included in the Statement of Financial Position arising from CQC’s obligations in respect of its defined benefit schemes is as follows:

	31 March 2021 (£000)	31 March 2020 (£000)
Present value of funded benefit obligations	(514,183)	(447,596)
Fair value of scheme assets	436,698	361,427
Deficit in scheme	(77,485)	(86,169)
Present value of unfunded benefit obligations	(97)	(33)
Re-measurement of net defined benefit pension asset for changes in asset ceiling	(4,284)	(3,301)
Re-measurement of the net defined benefit obligations	(81,866)	(89,503)

5.6 Reconciliation of fair value of scheme liabilities

Movements in the present value of defined benefit obligations were as follows:

	2020/21 £000	2019/20 £000
At 1 April	(447,629)	(479,509)
Current service cost	(4,910)	(5,519)
Administration expenses	(69)	(73)
Interest cost	(10,159)	(11,214)
Contributions from scheme members	(1,132)	(1,181)
Past service costs	(34)	(757)
Re-measurement gains/(losses):
- Actuarial (losses)/gains arising from changes in demographic assumptions	(99)	14,135
- Actuarial (losses)/gains arising from changes in financial assumptions	(75,175)	8,621
- Actuarial gains arising from experience adjustments	5,599	5,740
Benefits paid	14,251	15,432
Settlements – scheme cessation	5,077	6,696
At 31 March	(514,280)	(447,629)

5.7 Reconciliation of fair value of employer assets

Movements in the fair value of the scheme assets were as follows:

	2020 to 2021 (£000)	Represented 2019 to 2020 (£000)
Assets at 1 April	361,427	417,255
Interest income	8,225	9,811
Re-measurement gains: the return on plan assets (excluding amounts included in net interest expense)	78,696	(50,287)
Re-measurement gains: other	30	17
Employer contributions – normal	4,208	4,924
Employer contributions – scheme cessation	2,322	661
Member contributions	1,132	1,181
Benefits paid	(14,251)	(15,432)
Administration expenses	(14)	(7)
Settlements – scheme cessation	(5,077)	(6,696)
Assets at 31 March	436,698	361,427
Re-measurement gains:	(4,284)	(3,301)
Net value of assets at 31 March	432,414	358,126

The cessation charge of £2.3m was funded by DHSC through grant-in-aid in accordance with their guarantee to underwrite any liability as they fall due.

5.8 Fair value of employer assets

The fair value of scheme assets at the Statement of Financial Position date were as follows:

	Quoted assets as at 31 March 2021 (£000)	Unquoted assets as at 31 March 2021 (£000)	Total assets as at 31 March 2021 (£000)	Total assets as at 31 March 2020 (£000)
Equities	306,682	8,155	314,837	241,217
Property	6,641	25,070	31,711	30,749
Government bonds	3,453	1,303	4,756	4,140
Other bonds	5,361	793	6,154	6,287
Cash	29,874	763	30,637	39,071
Other	30,671	17,932	48,603	39,963
Total	382,682	54,016	436,698	361,427

Assets values, particularly equity holdings, are exposed to market risk resulting from the investment activities of each pension fund. Administering authorities manage and control this risk through investment management which aims to minimise the overall reduction in asset values and maximise the opportunity for gains.

5.9 Maturity profile of the defined benefit obligation

The weighted average duration of the defined benefit obligation of the pension schemes is between 12 and 17 years (Teesside: 17 years).

5.10 Sensitivity analysis

The approximate impact of changing the key assumptions on the present value of the funded defined benefit obligation as at 31 March 2021 is set out below. In each case only the assumption specified is altered and all other assumptions remain the same as disclosed in note 5.2.

ARA 2020 to 2021: 5.10 Sensitivity analysis

5.11 Funding arrangements

The funded nature of the LGPS requires participating employers and employees to pay contributions into the fund calculated at a level intended to balance the pension liabilities with investment assets. Information on the framework for calculating contributions to be paid is set out in the LGPS Regulations 2013 and the Funding Strategy Statement of each fund.

Contribution rates for each of the schemes are reviewed at least every three years following a full actuarial valuation. The last triennial actuarial valuation was completed as at 31 March 2019 which set the employer contribution rates for three years from 1 April 2020 to 31 March 2023. Some of the funds have also levied a cash sum in addition to a percentage of payroll costs as part of the deficit recovery plan. Increases to local government pensions in payment and deferred pensions have been linked to annual increases in the consumer price index (CPI), rather than the retail prices index (RPI).

Contribution rates for 2021 to 2022 range between 0% and 49.2% (17.9% for Teesside Pension Fund) with annual cash sums ranging from £14k to £515k (£nil for Teesside Pension Fund). It is estimated that employer contributions for 2021 to 2022 will total £3,736k (Teesside: £2,512k).

When the active membership in any of the funds falls to zero the administering authority will obtain an actuarial valuation of the current and former employees as at the termination date. CQC would be required to pay any cessation deficit that is determined; however, any surplus would be refunded. DHSC have provided a guarantee to meet the pension deficit liability that falls due.

All LGPS are multi-employer defined benefit plans. CQC’s share of the total fund assets is immaterial in all funds except for in the Teesside Pension Fund which at 31 March 2021 was 7% (31 March 2020: 7%).

6. Intangible Assets

ARA 2020 to 2021: 6. Intangible Assets, Table 1

Intangible assets are indexed annually using the appropriate producer price index (PPI) published by the Office for National Statistics.

The gross cost of intangible assets that were fully amortised but still in use at 31 March 2021 is £7,791k.

Research expenditure associated with intangible asset development has been recognised as an expense in note 4 and is categorised by the nature of the spend incurred.

The value of staff costs capitalised within intangible asset additions amounts to £2,557k.

All intangible assets are owned by CQC.

ARA 2020 to 2021: 6. Intangible Assets, Table 2

The gross cost of intangible assets that were fully amortised but still in use at 31 March 2020 was £27,774k.

Research expenditure associated with intangible asset development has been recognised as an expense in note 4 and is categorised by the nature of the spend incurred.

The value of staff costs capitalised within intangible asset additions amounted to £2,048k.

All intangible assets were owned by CQC.

6.1 Movement in revaluation reserve: intangible assets

	2020-2021 (£000)	2019-2020 (£000)
Balance at 1 April	234	172
Net gain on indexation of intangible assets	16	218
Impairments charged to reserve	(42)	(3)
Transfers between reserves for intangible assets	(1)	(153)
Balance at 31 March	207	234

7. Property, plant and equipment

ARA 2020 to 2021: 7. Property, plant and equipment: part 1

All property, plant and equipment are owned by CQC.

Property, plant and equipment are indexed using the appropriate producer price index (PPI) published by the Office for National Statistics.

ARA 2020 to 2021: 7. Property, plant and equipment: part 2

All property, plant and equipment was owned by CQC at 31 March 2020.

7.1 Movement in the revaluation reserve: property, plant and equipment

	2020-2021 (£000)	Restated 2019-2020 (£000)
Balance at 1 April	129	104
Net gain on indexation of property, plant and equipment	14	53
Impairments charged to reserve	(8)	(1)
Transfers between reserves for property, plant and equipment	(8)	(27)
Balance at 31 March	127	129

[Note that during 2020 to 2021 it was discovered that low value items of property, plant and equipment had been erroneously classified as capital expenditure. These errors have been corrected by restating the 2019 to 2020 prior year comparative. This has impacted on the cost or valuation, depreciation and revaluation reserve balances. See note 22 for further details.]

8. Financial instruments

Liquidity risk
The main source of CQC’s cash is fees paid by registered providers which funds our chargeable activities. Additional cash is provided by DHSC as grant-in-aid to fund our non-chargeable activities and capital expenditure. CQC have no borrowings.

CQC manages liquidity risk through regular cash flow forecasting to ensure that enough funds are available to cover working capital requirements. During the year neither the COVID-19 pandemic or the transition period following the United Kingdom’s exit from the European Union have had a material impact on CQC’s liquidity. This risk was mitigated throughout the financial year with regular reporting to the ET and considered as part of our decision making.

Credit risk
Credit risk arises from cash and cash equivalents and receivable balances. CQC monitors its receivables balances closely, particularly the collection of fees, and all undisputed debts that have reached 61 days past due. All overdue receivables are regularly reported by income source, fees by sector and non-fees, to the ET.

Where internal recovery processes have been exhausted, debts are sent to an external debt collection company or recommendation of enforcement action is made against the provider for non-payment of fees under Health & Social Care Act 2008.

Regulation 13 of the CQC (Registration) Regulations 2009 requires that a provider must take all reasonable steps to meet the financial demands of providing safe and appropriate services and have the financial resources needed to provide and continue to provide the services described in the statement of purpose to the required standards. New provider applications must be supported by a statement from an accredited financial specialist such as an accountant or bank. A notice of proposal to refuse a registration application can be based on financial viability due to the inadequacy of financial planning.

In response to the COVID-19 pandemic CQC supported registered providers facing liquidity issues by offering revised payment schedules and paused the active chasing of debt for six months. A hold was also put on any accounts being sent to an external debt collection company during this period. The impact of the pandemic has been closely monitored by management and the ET through regular reporting throughout the financial year.

The maximum exposure to credit risk at the reporting date is the fair value of each of the receivables mentioned above. CQC does not hold any collateral as security.

Market risk
CQC have no material exposure to currency or commodity risk. All material assets and liabilities are denominated in sterling. Except for cash and cash equivalents, CQC have no interest-bearing assets or borrowing subject to variable interest rates. Income and cash flows are largely independent of changes in market interest rates.

8.1 Financial assets

	31 Mar 2021 (£000)	31 Mar 2020 (£000)
Trade and other receivables with DHSC group bodies	3,984	1,708
Trade and other receivables with other bodies	9,247	9,788
Cash at bank and in hand	42,725	46,619
Total	55,956	58,115

8.2 Financial liabilities

	31 Mar 2021 (£000)	31 Mar 2020 (£000)
Trade and other payables with DHSC group bodies	408	1,413
Trade and other payables with other bodies	18,490	22,777
Other financial liabilities	47	63
Total	18,945	24,253

9. Trade receivables and other current assets

ARA 2020 to 2021: 9. Trade receivables and other current assets

There were no amounts falling due after more than one year.

The expected credit loss relating to contract receivables totals £2,636k (31 March 2020: £3,716k) and other receivables totals £145k (31 March 2020: £78k).

Deposits and advances include advance salary payments and staff loans, these total £2k and £12k (31 March 2020: £8k and £104k). Staff can apply for advance payments on salary and loans up to a maximum of £5k for rail season tickets.

9.1 Movement in expected credit loss

	2020-2021 (£000)	2019-2020 (£000)
Balance at 1 April	3,794	3,007
Recognition of expected credit loss allowance	569	752
Changes to expected credit loss allowances	264	704
Provision utilised due to write-off	(1,272)	(6)
Provision reversed as unused (eg settlement of receivable)	(574)	(663)
Balance at 31 March	2,781	3,794

10. Cash and cash equivalents

	2020-2021 (£000)	2019-2020 (£000)
Balance at 1 April	46,619	34,770
Net change in cash and cash equivalent balances	(3,894)	11,849
Balance at end of period	42,725	46,619

The following balances at the end of the period were held at:

	2020-2021 (£000)	2019-2020 (£000)
Government banking service and cash in hand	42,725	46,619
Total balance at end of period	42,725	46,619

11. Trade payables and other current liabilities

ARA 2020 to 2021: 11. Trade payables and other current liabilities

Trade payable days at 31 March 2021 were equivalent to 20 days (31 March 2020: 28 days) purchases, based on the daily average amount invoiced by suppliers during the year. For most suppliers no interest is charged on the trade payables for the first 30 days from the date of the invoice. Thereafter interest is charged on the outstanding balance at various interest rates.

Trade payables falling due after more than one year have been reduced by a discount factor of minus 0.95% per annum (2019/20: minus 0.50%) in accordance with HM Treasury guidance.

12. Provisions for liabilities and charges

ARA 2020 to 2021: 12. Provisions for liabilities and charges

12.1 Analysis of expected timings of discounted cash flows

ARA 2020 to 2021:12.1 Analysis of expected timings of discounted cash flows

Leased property dilapidations are the costs that would be payable on the termination of the leases. A provision totalling £1.4m was released during the year relating to the vacated office space on Buckingham Palace Road, London due to the landlord confirming that CQC was not liable for the cost of any dilapidations.

The legal provision includes expected costs relating to ongoing cases, tribunals and judicial reviews estimated at £0.5m (31 March 2020: £0.4m).

No provisions were recognised in respect of employment termination costs (31 March 2020: £nil).

Provisions falling due up to five years have been discounted by a factor of minus 0.02% (2019 to 2020: 0.51%) and provisions falling due between five and 10 years have been discounted by a factor of 0.18% (2019 to 2020: 0.55%) in accordance with HM Treasury guidance.

13. Reconciliation of movements in the Statement of Cash Flows

13.1 Adjustment for non-cash transactions

	Note	2020-2021 (£000)	Restated 2019-2020 (£000)
Depreciation, amortisation and impairment charges	4.2	8,960	6,928
Increase in provision for pension fund deficit	4.1	819	1,432
Net interest expenses on pension scheme assets and liabilities	4.2	1,934	1,403
Provisions expense	4.2	(1,208)	(1)
Finance expense: Unwinding of discount on provisions	12	7	14
Total adjustment for non-cash transactions	-	10,512	9,776

13.2 Movement in trade and other payables

	Note	2020-2021 (£000)	2019-2020 (£000)
(Decrease)/Increase in trade and other payables	11	(7,253)	4,273
Less decrease/(increase) in capital creditors – intangible assets	11	798	(777)
Less decrease in capital creditors – property, plant and equipment	11	182	1
Total movement in trade and other payables	-	(6,273)	3,497

13.3 Purchase of intangible assets

	Note	2020-2021 (£000)	2019-2020 (£000)
Additions	6	(10,558)	(12,481)
(Decrease)/increase in capital creditors – intangible assets	11	(798)	777
Total purchase of intangible assets	-	(11,356)	(11,704)

13.4 Purchase of property, plant and equipment

	Note	2020-2021 (£000)	Restated 2019-2020 (£000)
Additions	7	(4,064)	(889)
Decrease in capital creditors – property, plant and equipment	11	(182)	(1)
Total purchase of property, plant and equipment	-	(4,246)	(890)

14. Movements on reserves

	General reserve (£000)	Revaluation reserve (£000)	Retained earnings (£000)	Total (£000)
Restated balances at 1 April 2019	(69,617)	276	22,450	(46,891)
(Decrease)/increase in the year	(16,883)	87	3,375	(13,421)
Restated balances at 1 April 2020	(86,500)	363	25,825	(60,312)
Increase/(decrease) in the period	25,699	(29)	(1,936)	23,734
Balance at 31 March 2021	(60,801)	334	23,889	(36,578)

General reserve
The general reserve reflects the total assets less liabilities of CQC which are not assigned to another special purpose reserve. The balance includes CQC’s annual net excess of income or expenditure (see note 2.3) and any actuarial gains or losses arising from the assessment of CQC’s share of assets and liabilities in LGPS pension funds (see note 5.4).

Revaluation reserve
The revaluation reserve is a capital reserve used when an asset has been revalued but for which no cash benefit is received. Revaluations are completed annually to reflect their fair value at the reporting date.

Retained earnings
The retained earnings reserve was initially created during 2016 to 2017 to reflect the recovery of amortisation, depreciation and impairments as an element of the fees charged to providers. £7,968k was transferred into the reserve this year reflects the depreciation, amortisation and impairments relating to assets that support the regulatory functions where costs can be recovered from providers. During the year £9,904k was utilised to fund capital expenditure resulting in a net utilisation of £1,936k.

15. Capital commitments

Contracted capital commitments at 31 March 2021, not otherwise included within these financial statements:

	31 March 2021 (£000)	31 March 2020 (£000)
Intangible assets	1,128	2,755
Property, plant and equipment	126	460
Total	1,254	3,215

16. Commitments under operating leases

Total future minimum lease payments under operating leases are given in the table below for each of the following periods:

Buildings	31 March 2021 (£000)	31 March 2020 (£000)
Not later than one year	2,432	4,476
Later than one year and not later than five years	7,778	4,027
Later than five years	3,596	-
Total	13,806	8,503

Other	31 March 2021 (£000)	31 March 2020 (£000)
Not later than one year	76	44
Later than one year and not later than five years	99	56
Later than five years	-	-
Total	175	100

CQC leases buildings for its own use as office space under memorandum of term occupancy (MOTO) agreements. The obligations include any contingent rent implicit in the agreements.

During the year CQC entered into a 10-year arrangement for a new office space in London which has an annual rental charge of £0.8m payable to DHSC.

There were no future minimum lease payments due under finance leases at the Statement of Financial Position date (31 March 2020: none).

17. Other financial commitments

CQC has entered non-cancellable contracts in addition to operating leases and capital commitments. The total payments to which CQC is committed are as follows:

	31 March 2021 (£000)	Restated 31 March 2020 (£000)
Not later than one year	19,244	10,628
Later than one year and not later than five years	13,464	17,189
Later than five years	-	-
Total	32,708	27,817

18. Contingent liabilities

CQC has the following contingent liabilities:

	31 March 2021 (£000)	31 March 2020 (£000)
Backdated VAT charges	325	616
Employment tribunals and legal advice	463	367
Total	788	983

Due to the nature of the contingent liabilities it is difficult to accurately determine the final amounts due and when they will become payable.

19. Related party transactions

CQC is a non-departmental public body sponsored by DHSC. DHSC is regarded as a related party. During the year CQC has had a significant number of material transactions with DHSC, and with other entities for which DHSC is also regarded as the parent department. The most material transactions during 2020/21 have been with DHSC and NHS Improvement. We also have transactions with all NHS foundation trusts and NHS trusts as each are charged an annual statutory fee as providers of regulated activities.

In addition, CQC had transactions with other government departments and other central and local government bodies. Most of these transactions have been with the NHS Pension Scheme relating to our pension costs, HMRC for social security costs and the Government Property Agency in respect of rent for office space.

No material related party transactions were noted with members of the Board and ET other than remuneration and expenses as disclosed in the remuneration report.

20. Events after the reporting period date

In accordance with IAS 10, events after the reporting period are considered up to the date on which the Financial Statements are authorised for issue.

The following events after the reporting date have resulted in adjustments to the Financial Statements:

• Pension fund cessation: the last member of the Hampshire Pension Fund left CQC in April 2021 resulting in a cessation event. The net deficit presented in note 5.1 has been calculated on a cessation basis.
• HMRC liability: in May 2021 settlement was agreed with HMRC in relation to a social security liability arising from the deemed benefit of colleagues with a dual workplace. The liability presented as part of note 11 reflect the value of the crystallised liability.
• Intangible asset impairment: in May 2021 a review of development work in our change programme resulted in the identification of an impairment arising due to incompatibility with our Registration Platform. This impairment is presented in note 6.

21. Authorised date for issue

CQC’s Annual report and accounts are laid before Parliament. The authorised for issue date is the date of the Comptroller and Auditor General’s audit certificate.

22. Prior period adjustment

During 2020/21 it was discovered that low value items of property, plant and equipment had been erroneously classified as capital expenditure. These errors have been corrected by restating the 2019 to 2020 prior year comparative for property, plant and equipment. The impact of the prior period adjustment is as follows:

• Net Reduction in PPE balance as at 1 April 2019 of £173k, with related adjustments to general reserve and the revaluation reserve;
• Net Reduction in PPE balance as at 31 March 2020 of £278k, with related adjustments to the general reserve, revaluation reserve and retained earnings; and
• Increase in 2019-20 net expenditure of £105k.

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