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Annual Report 2007 - Appendix 1: Notes to the financial statement

For the year ended 31 December 2007

1. State funding
State funding was received from Vote 19 - Office of the Minister for Justice, Equality and Law Reform as follows:

		2007	2006
Subhead:		€	€
C.2 Grant-in-aid		24,288,000	21,913,000
D.2 Asylum Seekers Taskforce - Legal Aid*		8,617,000	7,725,760
		32,905,000	29,638,760

* This funding was provided towards the expenditure incurred on the Refugee Legal Service. See Note 16

(a). Pension scheme
The Legal Aid Board operates a defined benefits superannuation scheme for solicitors. Superannuation entitlements arising under the scheme are paid out of current income and are charged to the Income and Expenditure Account, net of employee superannuation contributions, in the year in which they become payable.

The results set out below are based on an actuarial valuation of the liabilities of the scheme in respect of Legal Aid Board solicitor staff as at 31 December 2007. The valuation was carried out by a qualified independent actuary for the purposes of the accounting standard, Financial Reporting Standard No. 17- Retirement Benefits (FRS 17).

The financial assumptions used to calculate scheme liabilities for the purpose of FRS 17 were as follows:


		At 31/12/07		At 31/12/06		At 31/12/05
Discount rate		5.5%		5.5%		5.5%
Salary increase assumption		4.0%		4.0%		4.0%
Pension increase assumption		4.0%		4.0%		4.0%
Price inflation		2.0%		2.0%		2.0%

On the basis of these assumptions, and using the projected unit method prescribed in FRS17, the value of the accrued liabilities in respect of the Legal Aid Board solicitor staff at 31 December 2007 was estimated at €25.5m (compared with €23.6m as at 31 December 2006).



(b). Net deferred funding for pensions in year		2007	2006
		€	€
Funding recoverable in respect of current year pension costs		3,350,000	2,600,000
State grant applied to pay pensioners		(115,644)	(76,400)
		3,234,356	2,523,600
(c). Analysis of total pension costs charged to expenditure		2007	2006
		€	€
Current service cost		2,000,000	1,500,000
Interest on pension scheme liabilities		1,350,000	1,100,000
Employee contributions		(461,698)	(371,257)
		2,888,302	2,228,743

(d). Deferred funding asset for pensions
The Legal Aid Board recognises these amounts as an asset corresponding to the unfunded deferred liability for pensions on the basis of the set of assumptions described above and a number of past events. These events include the statutory basis for the establishment of the superannuation scheme, and the policy and practice currently in place in relation to funding public service pensions including contributions by employees and the annual estimate process. While there is no formal agreement regarding these specific amounts with the Department of Justice, Equality and Law Reform, the Board has no evidence that this funding policy will not continue to meet such sums in accordance with current practice. The deferred funding asset for pensions as at 31 December 2007 amounted to €25.5m (€23.6m in 2006).



(e). Movement in Net Pension Liability during the financial year		2007	2006
		€	€
Net Pension Liability at 1 January		23,602,600	19,500,000
Current Service Cost		2,000,000	1,500,000
Interest Costs		1,350,000	1,100,000
Actuarial (Gain) / Loss		(1,149,600)	1,579,000
Pensions paid in the year		(345,270)	(76,400)
Net Pension Liability at 31 December		25,457,730	23,602,600

(f). History of experience gains and losses	2007	2006	2005
	€	€	€
Experience (gains) / losses on scheme liabilities
Amount (€)	(1,149,600 )	1,579,000	(820,000)
Percentage of the present value of the scheme liabilities	-4%	7%	-4%
Total amount recognised in STRGL
Amount (€)	(1,149,600)	1,579,000	(820,000)
Percentage of the present value of the scheme liabilities	-4%	7%	-4%

* Sundry receipts primarily consist of rent rebate in respect of Montague Court

		€	€
Balance as at 1 January			1,976,050
Transfer to Income and Expenditure Account
- Income used to purchase fixed assets		502,264
- Amount released on disposal of fixed assets		0
- Income amortised in year in line with depreciation of assets		(564,267)
			(62,003)
Balance as at 31 December			1,914,047

The total staff complement as approved by the Minister at 31 December, 2007 was 384. The number of staff actually employed by the Board at 31 December, 2007 was 383 (2006 - 389) The average number of employees in the Board during the year was 383 (2006 - 387). Employee and related costs were as follows:



	2007	2006
	€	€
Salaries	18,657,649	16,880,964
Cost of agency staff and secondment	57,409	54,281
Employer PRSI	1,398,914	1,240,643
	20,113,972	18,175,887

		2007	2006
		€	€
Counsel fees		4,903,053	6,846,818
Legal fees		740,273	994,311
Private Practitioner Schemes		2,557,013	3,033,894
Other professional fees		576,043	742,700
Other expenses		688,305	685,351
		9,464,686	12,303,074

		2007	2006
		€	€
Stationery, office and training expenses		397,352	472,919
Books and printing		173,875	100,577
Postage and telephone		920,393	894,442
Insurance		178,877	253,897
Travel and subsistence		799,882	781,656
		2,470,379	2,362,296

		Office	Equipment	Premises
	Leases	Furniture	& Computers	Fit Out	Total
	€	€	€	€	€
Cost
Balance as at 01/01/07	2,236,152	1,243,746	6,384,787	2,881,227	12,745,912
Acquisitions	56,025	48,352	250,967	251,297	606,641
Disposals	0	0	0	0	0
Balance as at 31/12/07	2,292,177	1,292,098	6,635,754	3,132,523	13,352,553
Depreciation of fixed assets
Balance as at 01/01/07	1,838,531	1,117,363	5,447,685	2,366,283	10,769,862
Charge in year	132,974	51,798	338,656	225,611	749,039
Disposals	0	0	0	0	0
Balance as at 31/12/07	1,971,505	1,169,161	5,786,341	2,591,894	11,518,901
Net book value as at 31/12/07	320,672	122,937	849,413	540,629	1,833,652
Net book value as at 31/12/06	397,621	126,383	937,102	514,944	1,976,050

		2007	2006
		€	€
Debtors - deposit interest		20,578	103,216
Prepayments
- Rent		121,065	130,183
- Insurance		94,867	115,119
- Salaries		13,116	10,777
- Other		243,367	221,739
		492,994	581,034

		2007	2006
		€	€
Amounts falling due within one year:
Creditors & accruals		8,977,591	7,687,331
		8,977,591	7,687,331

The Legal Aid Board estimates the value of unbilled live cases each year to arrive at the amounts disclosed within the accounts as a provision. The amount is an estimate of the expenditure required to settle any obligation at the balance sheet date.

In estimating the provision, the Board has adopted prudent measurement techniques based on the latest data available. Improved data capture methods have been utilised in the Board's estimate for the current year. No income is anticipated for cases that may recover costs.

		€
Client funds held at 1 January (net of interest)		1,483,257
Add Awards/settlements received during 2007		15,480,401
Less Settlements paid out, including interest allowed and costs recovered		(14,957,196)
Client funds held at 31 December		2,006,462
Interest accruing on client funds held		30,541
Total due to clients		2,037,003

The Board occupies premises at Cahirciveen, Co. Kerry and Mount Street, Dublin and operates out of 34 other centres throughout the country. The Board is committed to pay rent of € 2,477,142 during 2008 in respect of leases expiring as follows:



		€
2008		0
2009-2013		126,297
2014 onwards		2,350,845

			2007	2006
			€	€
(Deficit) / Surplus for year			(1,184,204)	(5,627,477)
Adjustment for non-operating items
	Bank interest receivable		(101,960)	(98,299)
	Movement on capital account		(62,003)	(296,873)
Adjustment for non-cash items
	Depreciation		564,267	1,102,556
	(Increase) / Decrease in debtors		5,402	0
	Increase / (Decrease) in creditors		1,817,233	632,530
			1,038,735	(4,287,563)

		2007	2006
		€	€
Balance at 1 January		3,513,210	4,627,112
Net cash inflow		618,774	(1,113,902)
Balance at 31 December		4,131,984	3,513,210

		2007	2006
		€	€
Expenditure and income relating to the Refugee Legal Service are included in the financial statements as follows:
Salaries and related expenses		5,232,352	4,685,482
Accommodation expenses		1,264,411	1,737,362
Legal fees and professional fees		1,703,146	2,374,057
General administration		889,525	499,304
Fixed assets purchased		115,041	357,174
		9,204,475	9,653,379
Less contributions from legally aided persons and costs recovered		(383,326)	(765,826)
Total net expenditure in the year		8,821,149	8,887,553

Some changes have been made to the presentation of items in the financial statements and the comparative figures
have been restated where necessary on a basis consistent with the current year presentation.

The financial statements were approved by the Board on 23 May 2008.