Resource accounting gets green light

The ruling Commons Liaison Committee has accepted Treasury assurances that most defects are being put right and has given permission to proceed with the introduction of commercial-style resource accounts from next April.

Its decision followed the government’s victory in the Lords, by a hairbreath 137 to 131, reversing an earlier combined Tory and Liberal Democrat attempt to give the comptroller and auditor general the right to information held by any body dealing with government departments.

The Government Resources and Accounts Bill had already completed all its stages with disagreement on this issue between the Commons and the Lords.

A further government defeat – with no more time to bat the issue back and forth – could have delayed the reform by at least another year.

Instead the government has set up a review headed by Lord Sharman into the issue of accountability and conceded that the C&AG acts on behalf of the House of Commons and not the Treasury.

The Liaison Committee – made up of the chairmen of all the Commons select committees – accepted a Treasury memorandum which warned ‘that, far from being a “safe” option, further delay would involve significantly greater risk to the successful implementation of Resource Accounting and Budgeting that proceeding in accordance with the planned timetable.’

The Treasury set a July deadline for the decision, claiming most of the issues that caused the comptroller and auditor general to issue qualifications on the ‘dry run’ 1998/90 accounts were:

  • A carry-over from cash-based appropriation accounts
  • ‘Real’ issues such as inadequate asset registers, which would persist whether the reform were delayed or not
  • The result of resource accounts being wider-ranging and taking in additional material.

The Treasury insisted: ‘If RAB was not implemented as planned, the underlying reasons for the qualifications would not go away.’

The Treasury itself received ‘an adverse audit opinion’ from the National Audit Office and the Cabinet Office received a ‘disclaimer audit opinion’.

Other major departments that ‘failed’ included the Department of Health, Ministry of Defence, the Department of the Environment, Transport and the Regions, the Home Office and the Ministry of Agriculture.

The Liaison Committee acted after seeking approval from all other committees, including the Public Accounts Committee which in June cross-examined Andrew Likierman, head of the Government Accountancy Service on the dry run disqualifications.

PAC Chairman David Davis submitted a note saying they had not yet agreed a report ‘but are minded to agree the transition to resource-based Supply in 2001-2.’

The PAC accepted the risk outlined by the NAO that the failing departments may not be able to resolve all their problems in time.

The Treasury memorandum claimed more than half of the failings would be resolved in the 1999-2000 accounts and claimed that by 2001-2 ‘the level of qualification is expected to be no higher than at present in cash-based appropriation accounts.’

Related reading