Best Value Accounting Code of Practice

 

  • The Best Value Accounting Code of Practice (BVACOP) published by the Chartered Institute of Public Finance and Accountancy (CIPFA) in 2002 provides guidance for accounting for social services and defining the cost data for performance indicators.Guidance on using the BVACOP can be obtained from CIPFA at: www.cipfa.org.uk/pt/bestvalue.cfm
  • Section 2 of BVACOP:
    • makes it clear that cost based performance indicators should be expressed or aggregated on the basis of the definition of total cost expressed in gross or net terms depending on the requirements of each performance indicator.
    • defines total cost as including all relevant attributable costs of a service, including support service costs, overheads and capital charges (and the cost of any impairment loss and the amortisation of deferred charges).

      Total cost exists in both gross and net terms. No categories of income are considered to be abatements of expenditure, i.e. you cannot deduct any income from the expenditure figures used in calculating costs, and movements to and from reserves must be excluded from total cost definitions.      Total cost also includes an appropriate share of all support services and other overheads.
      Gross total cost includes all expenditure attributable to the service/activity, including employee costs, expenditure relating to premises and transport, supplies and services, third party payments, transfer payments, support services and capital charges.

BVACOP 2002

  • Overheads should be charged, allocated or apportioned across users and other beneficiaries in accordance with the following seven general principles.
    Table 1: BVACOP recommendations for charging, allocation or apportionment of overheads to service users
Principle Recommendations
Complete recharging of overheads All overheads not defined as unapportionable central overheads or corporate and democratic core costs should be fully recharged to the service expenditure headings as defined by section 3 of BVACOP. Note that corporate and democratic core costs should receive an appropriate allocation of core costs.
Correct recipients The system used must correctly identify who should receive overhead charges.
Transparency Recipients must be clear about what each recharge covers and be provided with sufficient information to enable them to challenge the approach being followed.
Flexibility The recharging arrangements must be sufficiently flexible to allow recharges to be made regularly enough and to the level of detail appropriate to meeting both users' and providers' needs.
Reality Recharging arrangements should result in the distribution of actual costs based on fact. Even if the link cannot be direct, reality should be the main aim.
Predictability/stability Recharges should be as predictable as possible, although there will be practical limitations to this.
Materiality It is unlikely that a simple system will be adequate to meet all other requirements noted above. However, due regard should be given to materiality to minimise the costs involved in running the system.

See costing children's placements.