Treasury needs more manpower and accounting clarity claim MPs

MPs have warned that the Treasury may not have enough staff to deal with the financial crisis.

The Treasury Select Committee made the claim in a no-holds barred report on an administration and expenditure in the Chancellor's departments.

The study said: 'The economic situation is placing ever increasing demands on the Treasury group. We question whether continued staff reductions will leave the group able to deliver all that is expected of it.'

The panel also called for the Treasury to work out how it would treat banking bailouts after the department conceded that it hit some major sticking points in taking Northern Rock under its wing.

'Northern Rock was taken into temporary public ownership on 17 February 2008 and
the Treasury Resource accounts were published on 16 July 2008, suggesting that it took five months for HM Treasury to identify an accounting treatment of Northern Rock which the National Audit Office would accept as true and fair.'

'It is already apparent that the Treasury Group’s 2008–09 Resource Accounts will throw up a number of equally complex accounting issues: the treatment of the government’s revised equity stake in Northern Rock; the transactions with Abbey Santander and Bradford & Bingley; and its investment in the part-nationalised banks.

'Louise Tulett, HM Treasury’s Director of Finance, Procurement and Operations, told
us that the accounting treatment of the Treasury’s transactions with Abbey Santander and Bradford and Bingley had not yet been agreed with the NAO.

' From this we must infer that the treatment of the part-nationalisation of the banks also remains to be addressed. The nationalising transactions of 2008–09 raise some complex accounting questions for the Treasury.

To ensure Parliament receives the Treasury's 2008–09 Annual Report and Accounts before the summer adjournment, the panel recommended that the department engages early with the National Audit Office to hammer out an appr opriate accounting treatments for the transactions surrounding the nationalised and part-nationalised banks.

The cross-party panel, chaired by John McFall MP, has grilled some of the profession's leading figures as the financial crisis unfolded.

FRC chief Paul Boyle, IASB chair Sir David Tweedie and PwC's head of assurance Richard Sexton have all come under the committee's spotlight.