Financial Review


Key Objectives: • Set budgets for regulatory work and monitor income and expenditure;


• Assist in securing LSB agreement for practice fees; • Provide financial support to meet the Board’s monitoring and supervisory function.


The profit and loss account for 2014 appears opposite. The audited accounts will be published as part of the CILEx Group accounts which will be reported to CILEx members at the Annual General Meeting in July. Budgets for 2014 were agreed by the Board in March 2013 for the purpose of setting the fees for the 2014 Practising Certificates for Fellows and Associate Prosecutors and for inclusion in the CILEx Group budget. The LSB approved the proposed practice fees for 2014 in September 2013 and CILEx approved the budget at the end of that year.


IPS Board received updates on income and expenditure and forecasts for the year during the course of 2014. Budgeted income, expenditure and variances for IPS were reported at each meeting of CILEx Council. The broad structure of income and expenditure remained the same as in previous years. Only direct income relating to authorisation of CILEx Advocates and arising from disciplinary proceedings was included as income. Other income relating to regulatory matters, including practice certificate fees and Fellowship application fees, is received directly into CILEx accounts. Administrative costs are allocated within CILEx Group, including IPS, on a per capita basis so that an increase in staff numbers during the year added to both salary and administrative costs. These costs appear under management charges in the profit and loss account.


At the time budgets were set, it was expected that IPS would begin authorising CILEx members under the new practice rights during 2014. In the event this did not happen because the Parliamentary processes for final approval of the rights and the supporting client protection infrastructure were not completed until the end of the year. This meant related costs and income did not materialise.


Operating expenditure during the year was substantially lower than budget and than in 2013, in part due to reduced expenditure on the applications for practice rights; also investigation and complaints costs fell owing to a reduced case load, absence of any challenges to the rules and because staff handled more of the case presentation work in-house.


Staffing increased during the year to meet the increased workload arising from new arrangements for work based learning and CPD. Staff costs were below the original budget of £650,000 but exceeded the forecast figure of £600,000.


Allowing for exceptional items, net expenditure was £23,600 over budget. This increase, compared with 2013, reflects the increased level of regulatory activity required of IPS as it fulfils the objectives of CILEx to become a full regulator of legal services within the sector.


IPS Board Investigating and complaints expenses Rights application fees Admissions and Licensing expenses Other direct expenses


Bad debts provided Audit fees Professional fees Management charges


2015 will see the development of practitioner authorisation and the start of entity regulation. Budgets for these activities have been developed on the basis that, over time, they will bring income into the CILEx Group which will balance increased expenditure. The Board will be monitoring particularly carefully the income and expenditure for these activities during 2015.


DETAILED PROFIT & LOSS ACCOUNT Year Ended 31 December 2014


2014 £


Revenue Contribution from ILEX Rights of audience Disciplinary fees Total Revenue


Other Operating Expenses IPS Board


Investigating and complaints expenses Rights application fees


Admissions and licencing expenses Other direct expenses Bad debts provided Audit fees


Professional fees Management charges


Profit before tax Taxation


Profit after tax


1,154,328 4,319 6,166


1,164,813


116,944 66,228 18,934 31,858 51,383 -9,251 4,500


18,160 866,057 1,164,813


0 0 0


2013 £


976,451 6,258


16,929 999,638


158,764 114,227 52,917 30,757 17,327 -875


2,800 21,328


602,393 999,638


0 0 0


Professional standards for specialist lawyers 17


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