RegulationAccounting StandardsMPs want government’s accounts to be more meaningful

MPs want government's accounts to be more meaningful

Public Accounts Committee describes Whole of Government Accounts as "elaborate", and must be made more useful

MPs want government’s accounts to be more meaningful

THE WHOLE OF GOVERNMENT ACCOUNTS is currently an “elaborate accounting exercise” which the Treasury must shape into a more meaningful document, according to MPs.

The Public Accounts Committee’s report into the Whole of Government Accounts (WGA) 2010/11, the second consolidation of the public sector’s finances, said that the Treasury should take an “immediate stocktake” of how the full picture could be used to assist the management of public finances.

Recommendations include: The Treasury should show how it has operated as the government department’s overall finance function, including what action it is taking to improve performance in areas such as debt collection, and minimising losses through fraud and error; the WGA should include key risks to public finances and how they are managed; including cross-departmental issues such as reducing claims for clinical negligence.

It also calls on the Treasury to use the WGA to inform spending decisions; improve its layout for ‘lay readers’ to be able to comprehend the information; and comply with normal accounting rules so all government bodies, including those over which government exerts control, are consolidated within the WGA.

The report also criticised the amount of time it took to produce the consolidated figures. The accounts were published 19 months after (October 2012) the accounting period being reported on ended.

According to the committee, the Treasury has already noted that accounting and economic approaches could both be used to better inform financial planning, and the WGA will help in that process.

While improvements were made in the accounts production compared to the previous year’s consolidation, the National Audit Office still qualified the accounts as some departments failed to follow accounting standards; some of the valuations and treatments were inconsistent between departments; and some of the department’s accounts were themselves qualified.

The four banks owned by the government, plus Network Rail, are also currently excluded from the WGA – however, Northern Rock Asset Management and Bradford and Bingley Building Society are expected to be included in the accounts from 2013/14.

CIPFA said that it “fully supported” the committee’s call for a clear plan to improve the WGA to better inform decision-making.

Ian Carruthers, CIPFA’s director of policy, said: “The primary and most urgent challenges are to address current audit qualifications and to achieve more timely publication.”

The UK has made significant investment in putting the WGA at the forefront for government reporting, now it needs to “reap the dividend” of that effort by making the consolidated accounts more useful.

“In practice, use of information from WGA for these purposes is likely to develop gradually over time. It would be tremendously helpful if the Treasury itself made a point of using information from WGA in economic statements,” added Carruthers.

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