ILLUSTRATIVE
OUTTURN STATEMENTS
17. In addition to the illustrative Main
and Supplementary Estimates contained in this Appendix, illustrative
outturn information for DSS has also been provided. This comprises:
— Schedule 1—Summary of Resource
Outturn.
— Schedule 2—Operating Cost Statement
and Statement of Recognised Gains and Losses.
— Schedule 3—Balance Sheet.
— Schedule 4—Cashflow Statement.
— Schedule 5—Resources by Departmental
Objectives.
— A selection of key notes to the accounts
which allow comparisons to be made with the Estimates.
18. Dry run resource accounts for 1998-99
have been produced by DSS for TP3 and have been subject to a dry
run audit by the NAO. The accounts were prepared using the same
data as that used in the attached illustrations but were in a
different format, principally because they needed to reflect the
format of existing cash-based Votes rather than the planned resource-based
RfR structure.
19. The NAO's TP3 audit work identified
some issues in respect of the preparation of DSS' balance sheet
in relation to assets and liabilities for programme expenditure
using the department's existing benefit payments systems and methods
of payment. The issues identified in the resource accounts are
not new and have also arisen in relation to accounting for cash
in this area. The result is that there is a possibility that the
balance sheet numbers in the attached illustration could change,
with implications for DSS' on resource-based Estimates. DSS has
been working closely with the Treasury in this area and it is
felt that the figures provide a sufficiently reliable basis for
the preparation of resource budgets and Estimates.
20. As with the MAFF illustrations at Appendix
II, the prior year figures shown in the accounts are illustrative
and have not been subject to audit, since 1997-98 did not form
part of NAO's TP3 audit programme.
21. Issues which have been identified by
the NAO in their dry run audit have no bearing on the value of
the attached illustrations which seek to demonstrate the level
and type of information which will be contained in resource accounts,
and how data will flow through during the year from resource based
Main and Supplementary Estimates to an illustrative resource account
using "real" data for a "real" department.
22. As indicated above, the figures and
formats used in this illustration differ from those used in the
DSS dry run resource accounts which are being submitted to the
Social Security Select Committee. As well as differences arising
as a result of a four RfR structure, differences may also arise
as a result of the introduction of comparisons with Estimate figures
which were not included in the dry run resource accounts.
Schedule 1
23. Schedule 1, the Summary of Resource
Outturn, is a schedule included with resource accounts to show
outturn against the voted element of the account and which provides
a comparison with Estimate figures in relation to resource expenditure
at the level of the RfR1, capital expenditure and the overall
net cash requirement. Schedule 1 also provides explanations of
variances between outturn and Estimate. Any breach of voted limits
would be clearly identified here in respect of either resources
or cash excesses. In addition, a more detailed comparison of outturn
and Estimate data at the functional line level is provided in
note 8 to the accounts.
24. The variation between non-operating
AinA outturn and Estimate which is evidence in Schedule 1 of the
attached illustration is due to the receipt from the transfer
of freehold and leasehold properties to the private sector under
a PFI contract being treated as non-operating cost AinA in the
Estimate but as income in the accounts. There is a corresponding
variation of operating AinA shown for RfR1. Subsequent to the
production of the Estimates, the buildings were considered to
be the property of the Crown and accounting rules therefore dictated
that the receipt must be shown as income in the OCS rather than
as the sale of a fixed asset. The NAO agreed with the accounting
treatment and it has therefore been followed in the outturn statement
of this illustration.
Schedule 2
25. Schedule 2 comprises the Operating Cost
Statement (OCS) and the Statement of Recognised gains and losses
(SRGL). The OCS shows resources consumed during the year in support
of the department's administration and programme expenditure net
of departmental income financed by the Consolidated Fund and the
National Insurance Fund. The OCS takes account of both Supply
and non-Supply expenditure and income within the departmental
accounting boundary as defined in the Resource Accounting Manual.
26. As can be seen from the illustrative
documents attached, there are three totals at the foot of each
operating Cost Statement:
— "Net Operating Cost", which
is derived from the Operating Cost Statement and is the total
of departmental current expenditure on an accruals basis within
the departmental boundary defined in the Resource Accounting Manual
(RAM). This total, therefore, contains expenditure financed from
sources other than Supply, such as the national Insurance Fund,
as well as from the Consolidated Fund and includes some income
which will be treated as Consolidated Fund Extra Receipts;
— "Net Resource Outturn",
which is the sum of current resources voted to the department.
The figure is thus equal to the total net resources shown in Part
II of Estimates and in Schedule 1; and
— "Resource Budget Outturn",
which is the sum of current resources on an accruals basis which
are managed by the Treasury in its budgeting process. The Resource
Budget Outturn figure is split, for information, into DEL and
AME components which are managed by the Treasury in different
ways.
27. The main differences between Net Operating
Cost and Net Resource Outturn for DSS result from the way in which
expenditure financed by the NIF is shown. In Parts I and II of
Estimates and Schedule I of the accounts, payments to the DSS
from the NIF in respect of administration costs incurred by the
DSS are treated as AinA income, while in both forecast and outturn
OCS they are treated as a source of financing. Further information
about the NIF and its relationship with the DSS accounts is provided
in the illustrative Note 1 attached.
28. The resource budget only contains items
which form part of the departmental programme. Therefore, welfare
to work expenditure, which forms part of a central budgeting programme,
is not included in the DSS resource budgeting total. Both Supply
and non-Supply expenditure are included. The treatment of the
DSS' non-departmental public body (NDPB) is slightly different
in the resource budget compared to treatment in the resource accounts.
As the budgeting structure takes into account all public sector
expenditure and not just departmental expenditure, the scope of
the resource budget is wider than for the accounts and thus includes
NDPBs as though they were part of the department, so that capital
expenditure by the NDPB forms part of the DSS capital budget rather
than its resource budget.
29. A full reconciliation between the three
totals at the foot of the OCS is included in both Resource Estimates
and resource accounts. An example can be found at note 7 to the
attached illustration.
30. Other points worth noting on Schedule
2:
— irrecoverable VAT is charged to the
operating cost statement or, in the case of asset purchases, is
included in the capitalised purchase cost of the asset;
— CFERs shown at the base of Schedule
1 and in Part III of Estimates do not form part of the operating
income in the OCS. Only negative public expenditure CFERs and
revenue CFERs which relate to the recovery of costs recorded in
the operating costs statement or to returns on investments are
included in departmental Operating Cost Statements, neither of
which apply to the DSS.
Schedule 3
31. Schedule 3, or the Balance Sheet, shows
the assets and liabilities held by the department at the year
end which are represented by taxpayers' equity. From the illustration
it can be seen that the DSS had net assets valued at £994,994,000
on 31 March 1999. Further details of the items which make up the
department's asset holdings would be included in the notes to
the accounts.
Schedule 4
32. Schedule 4 is a cash flow statement
which analyses cash inflows, outflows and changes in balances
for the department for the year. The Statement analyses the net
cash flow in respect of both operating activities and capital
expenditure, and shows how the net cash flow has been financed.
Schedule 5
33. Schedule 5 is a statement of resources
by departmental objectives. The Statement attributes DSS' costs
to their objectives reconciling to the Net Operating Cost total.
This Statement therefore allows DSS expenditure to be analysed
in a second way, showing a different disaggregation to that used
in the Operating Cost Statement.
Statement of Accounting Officer Responsibilities
34. A Statement of Accounting Officer Responsibilities
(SAOR) for the DSS has been prepared in line with illustrative
version shown at Annex C to this Memorandum. A description of
Accounting Officer responsibilities will also be included in the
explanatory notes to Resource Estimates.
35. Although the SAOR is included with the
illustration for completeness, it is not fully operational at
this stage as AO responsibilities for resource accounts will only
come fully into play once the Government Resources and Accounts
Bill, currently before Parliament, is passed and Accounts Directions
have been given to departments.
Notes to the Accounts
36. The DSS illustration provides selected
notes to the outturn statements. A full set of accounting notes
on the basis of the RAM is included in the set of DSS resource
accounts being submitted to the Social Security Select Committee.
The notes included with the illustration comprise: a statement
of departmental accounting policies; a reconciliation of net operating
costs to net resource outturn and resource budget outturn; analysis
of net resource outturn and net operating cost by function, and
an analysis of capital expenditure, financial investment and associated
AinA.
37. The analysis of net resource outturn
and net operating cost by function note effectively shows the
detailed outturn against Resource Estimate for the year. As noted
earlier in this Annex, two new columns have been inserted into
this note to show Estimate figures and variance between outturn
and Estimate against each functional line. It is hoped that these
additional lines will provide a clearer analysis of outturn against
Estimate provision.
38. Associated notes for the core DSS operations
are not provided with this illustration, but will form part of
the resource accounts produced by the department under RAB. Examples
of core department notes are included in the MAFF illustration
at Appendix II.
