THE NATIONAL AUDIT OFFICE has qualified the latest Whole of Government Accounts (WGA) – a single document containing the financial position of the UK public sector for 2013/14, but praised it for publishing within 12 months of the reporting date, an achievement it dubbed a “significant” milestone.
The Treasury’s fifth such set of accounts consolidates the financial activities of 5,400 organisations from across the UK public sector, which includes both central and local government bodies as well as public corporations such as the Bank of England.
The watchdog said that since 2009/10 when the WGA was first published, the Treasury has “made continuous improvements to its processes for compiling these accounts, to data quality and to its commentary published alongside the accounts”.
“As a result, the Treasury has been able to reduce the publication time after the year end from 20 months in 2009/10 to producing the 2013/14 WGA within one year of the reporting date, meeting a major milestone in its aim of delivering WGAs within nine months of the year end.”
However, all is far from rosy, as NAO chief Amyas Morse, was forced to qualify his audit opinion on six counts relating to the application of the WGA accounting boundary; inconsistencies in the underlying accounting treatments within the WGA and disagreement on the accounting treatment of 3G/4G mobile licences.
Other areas of concern included a lack of evidence in support of the completeness and valuation of school assets; underlying material qualifications of the Department for Education and Ministry of Defence accounts; and inaccuracies in the elimination of intragroup transactions and balances.
Morse said “significant issues remain with the boundary of the financial statements and quality and consistency of the data” but stressed that the Treasury “is progressing with its plans to address the issues that have led me to qualify my audit opinion, particularly with regard to eliminations of intra-government transactions”. In a note of cautious optimism he said that “if these plans are successful, I may be able to remove a number of my qualifications within the next four years”.
The WGA net expenditure fell by £30.1bn to £148.6bn primarily due to increases in tax revenues and stabilisation of overall expenditure.
Direct expenditure – monies incurred in the delivery of the government’s policies – fell for the first time since 2010/11, by £2.2bn in 2013/14 to £663.6bn, primarily because of a reduction in provision expenses offset by increases in the purchase of goods and services. The cost of benefits also fell to £213.4bn from £215bn, while staff salaries dropped to £146.2bn from £147.6bn.
The Government’s net liabilities went up to £1,851bn as of 31 March 2014, from £1,627.9bn at 31 March 2013, largely due to increases in public sector pension liabilities of £130bn and government borrowing of £99.9bn.
Commenting on the publication of the WGAs for 2013/14, Vernon Soare, ICAEW executive director, said: “It is great to see that the Treasury is making significant progress in speeding up the publication of the Whole of Government Accounts. We would hope that future years see the WGA published even faster after the financial year end so that the public can be informed in a timely manner.
“We would urge all government departments to use the WGA as the key tool for all policy and decision making. By taking into account longer term financial liabilities such as pensions we can start to have a comprehensive conversation about the state of the public finances.
“However it is important that the WGA details everything that is in the public sector. A number of significant bodies including RBS and Network Rail are missing from the balance sheet. It is imperative that this is rectified in subsequent years, as only then can we have a full analysis of our public finances.”
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