Abbreviated Company Accounts - LA PLAYA LIMITED

1Accounting Policies

Basis of measurement and preparation of accounts
The accounts have been prepared under the historical cost convention and in accordance with the Financial Reporting Standard for Smaller Entities effective April 2008.

Turnover policy
Turnover represents commission and related income arising from premiums written and from managed service charges.

Tangible assets depreciation policy
Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value, of each asset over its expected useful life, as follows:
Furniture and equipment – 33% reducing balance

Other accounting policies
Insurance debtors and creditors
Insurance brokers usually act as agents in placing the insurable risks of their clients with insurers and as such, generally are not liable as principals for amounts arising from such transactions. Notwithstanding these legal relationships, debtors and creditors arising from insurance broking transactions are shown as assets and liabilities. This recognises that the insurance broker is entitled to retain the investment income on any cash flows arising from these transactions.

Debtors and creditors arising from a transaction between client and insurers are recorded simultaneously. Consequently, there is a high correlation between the totals reported in respect of insurance broking debtors and creditors.
The position of the insurance broker as agent means that generally the credit risk is borne by the principals. There can be circumstances where the insurance broker acquires credit risk through statute, or through the act or omission of the insurance broker or one of the principals. There is much legal uncertainty surrounding the circumstances and the extent of such exposures and consequently they cannot be reasonably measured. However, the total of insurance broking debtors appearing in the balance sheet is not an indication of credit risk.
It is normal practice for insurance brokers to settle accounts with other intermediaries, clients, insurers and market settlement bureaux on a net basis. Thus, large changes in both insurance broking debtors and creditors can result from comparatively small cash settlements. For this reason, the totals of insurance broking debtors and creditors give no indication of future cash flows.
The legal status of this practice of net settlement is uncertain and in the event of insolvency it is generally abandoned. Financial Reporting Standard No. 5 – Reporting the Substance of Transactions requires that the offset of assets and liabilities should be recognised where and only, where, the offset would survive the insolvency of the other party. Accordingly, only such offsets have been recognised in calculating insurance broking debtors and creditors.

Tangible fixed assets and depreciation
Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost, less estimated residual value, of each asset over its expected useful life, as follows:
Furniture and equipment – 33% reducing balance

3Fixed assets Investments
Fixed Asset Investments relate to La Playa's share holdings in the following organisations:
Investment in La Playa Financial Management LLP £116,000
Investment in La Playa LLC £2.50
Investment in Markham Private Clients Ltd £10
La Playa also holds some Fine Art investments totalling £9,424