HM TREASURY: RESOURCE ACCOUNTING AND RESOURCE
BASED SUPPLY
RESOURCE
BASED
SUPPLY
25. The Committee observed that the reliability of
resource based estimates would depend in part on establishing
the relationship between resource and cash accounts but noted
that the first resource based Supply Estimates for the year 2001-02
would need to be prepared before the first audited set of resource
accounts were available. Therefore it was questionable whether
the House could rely on the accuracy of the Estimates in those
circumstances. The Treasury responded that this was why they had
instigated a system of trigger points so as to make sure that
departments met those trigger points before allowing the project
to continue to the original schedule.[31]
26. The Committee noted that a number of government
bodies had faced major difficulties in introducing new accounting
systems because they had allowed insufficient time for parallel
running of the old and new systems, notwithstanding that they
were operating well-established forms of accounts. We therefore
asked the Treasury why the Committee should agree to discontinue
cash-based supply and accounts before seeing the resource based
arrangements actually in operation. In the light of reservations
expressed by some, including the Comptroller and Auditor General,
about their proposed timetable, the Treasury said they were no
longer asking for the Committee's agreement to the date at which
resource accounts could replace Appropriation Accounts. Rather,
they were asking that the date should be decided on the basis
of departments passing a series of trigger points.[32]
They emphasised the importance of ensuring the integrity of the
system and that the systems should come in only once they were
sufficiently robust for the purpose. They acknowledged that it
was sensible to have enough slack in the system to make sure that
departments produced robust information.[33]
27. The Committee also asked what contingency plans
and what options there were if departments failed to meet the
trigger points. The Treasury responded that this would depend
on the nature of the problem. If there were systematic problems
they would be cautious about making the transition; if there were
individual problems they would seek to overcome them on an individual
basis.[34]
28. The Committee also asked why the ability of departments
to produce resource-based estimates had not been included as a
trigger point. The Treasury responded that there was no reason
why there should not be an additional trigger point associated
with some earlier production of Estimates, but that would be after
the third of the proposed trigger points.[35]
They agreed that they could have a fourth trigger point in the
year 2000 on the basis of resource based Estimates for 2000-2001.[36]
They said that if the Committee agreed that a decision on when
to discontinue cash based supply and accounting could be delayed
then there would be a point in having additional trigger points
to ensure that things were absolutely right before the transition
took place.[37]
29. In his memorandum of October 1999[38]
to the Committee the C&AG referred to a number of detailed
but important points about the proposals for resource based Estimates
and Supply set out in the Treasury's July 1997 memorandum. Some
of these points were addressed in the Treasury's memorandum of
February 1998[39] but
not all have been fully resolved. For some, the response only
advised that additional research was being carried out and in
others, the Treasury's intentions were unclear. A particularly
important issue was whether the overall gross amount of each request
for resource making up a vote, would appear as separate figures
in the Estimate. It was also unclear from the Treasury's memorandum
whether each of the detailed figures in the Estimates would be
included as comparatives in the resource accounts alongside the
outturn figures, as they were in Appropriation Accounts. Without
these comparative figures and the detailed disclosure of variances
between Estimate and outturn Parliament would lose the transparency
of present Appropriation Accounts.
30. Virement is the transfer of savings on one or
more subheads to meet excess expenditure in one or more subheads
in the same date. It therefore provides a means of varying the
allocation of Supply granted by Parliament. The Committee asked
the Treasury what were their proposals for virement over both
cash and resources. The Treasury said that they were looking at
this issue in their current live testing with a number of departments
to see what an appropriate level of control should be. Their working
assumptions were that controls should be broadly similar to present
controls whereby Treasury authority would be needed[40]
for switches within votes.
Conclusions
31. The Committee note that the Treasury, in response
to concerns expressed by our predecessors and the C&AG, have
withdrawn their request for us to give approval in principle to
replacing Appropriation Accounts by Resource Accounts from 2001-02.
The Treasury's alternative proposal to review departmental progress
at specified trigger points up to 2000-2001, and then take decisions
based on that progress, is more reasonable and realistic. The
trigger points proposed are sound but they concern only the progress
of departments in implementing resource accounting and not the
development of resource-based Supply Estimates. The Committee
welcome the Treasury's readiness to consider further trigger points,
and would wish to see one in the year 2000 in order to review
whether the first public expenditure survey on a resource basis
has raised new issues.
32. Virement provides the control for transferring
resources from one budget request to another. Given the importance
of virement in holding departments to account the Treasury must
make clear proposals about how virement will be applied to cash
and resource Votes. The Committee also expect the Treasury to
set out how variances between detailed Estimate figures and outturn
are to be shown in resource accounts.
33. Some important points of detail about the rules
for resource based Supply and the way that expenditure will be
reported in Resource Accounts remain unclear or unresolved. We
will not be able to assess the implications for Parliamentary
control of the changes until resource based Estimates have been
prepared by departments and outturn against those Estimates reported
in resource accounts changes.
31 Q8 Back
32
Q2 Back
33
Q9 Back
34
Q45 Back
35
Q36 Back
36
Qs 39-42 Back
37
Q43 Back
38
Evidence, pp 90-103 Back
39
Evidence, pp 104-107 Back
40
Q33 Back
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