It also showed that £1,58bn had been allocated to the ‘core’ authority on a going concern basis anticipating government grants which had not actually been paid.
A foreword to the report and accounts for 31 March 2003 – approved by comptroller and auditor general Sir John Bourn – stated parliamentary controls prevented grants being paid until liabilities fell due, but asserted the liabilities were underpinned by the agreed spending plans of the Department of Transport.
Bourn’s report said that the authority’s directors ‘have assessed that there is no reason to believe that the Department of Transport’s future sponsorship of the authority and future parliamentary approval of funding to allow the authority to meet its liabilities will not be forthcoming’.
He concluded this was ‘appropriate’.
Funding for £1.58bn was received during April. The accounts include those of Network Rail which Bourn ruled in 2002 must be incorporated in the balance sheet where it is treated as “a quasi subsidiary”, with its assets valued at £12.7bn compared with a current replacement cost estimated at more than £70bn, with a pre-tax loss of £290m.
SRA’s foreword also revealed that the authority agreed to combine the roles of chairman and chief executive – Richard Bowker – in order to strengthen its management structure and improve the speed and cohesion of decision-making – contrary to the guidance of the Turnbull code on corporate governance.
To build in compensatory checks, an investment and procurement committee has been set up by the board in addition to the audit committee and nominations and remuneration committee – a senior independent director has been elected to represent the independent membership of the board.
There is also an annual review of Bowker’s performance and there are occasional meetings of the non-executive board members.
Bowker admitted that the system of internal control needed to be strengthened, and said that he had initiated action plans and that there are now effective processes to ensure risks are identified and addressed.
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