Annex B
RESOURCE ACCOUNTS 1999-2000
Accounts with a dispensation from an Accounts
Direction
This Annex gives details of the expressions
of audit opinion for the 10 bodies which were given a dispensation
from an Accounts Direction for their 1999-2000 resource accounts.
The summary for each body gives the reason for the dispensation,
the impact on the 1999-2000 resource accounts which were produced,
together with the implications for the preparation of resource
accounts for future years.
The 10 bodies covered are as follows:
| Body | Page
|
| Cabinet Office | Ev 99 |
| Department of the Environment, Transport and the Regions
| Ev 99 |
| Home Office | Ev 100 |
| Lord Chancellor's Department | Ev 100
|
| Treasury Solicitor's Department | Ev 101
|
| Principal Civil Service Pension Scheme |
Ev 101 |
| Ministry of Agriculture, Fisheries and Food
| Ev 102 |
| Northern Ireland Office | Ev 102
|
| HM Treasury | Ev 103 |
| Single Intelligence Vote | Ev 103
|
| |
1. CABINET OFFICE
Reasons for dispensation
1. More time was required to resolve the many issues
that required significant work. The Cabinet Office's difficulties
in preparing a final dry-run resource account for 1998-99 impacted
on the department's ability to produce the 1999-2000 resource
accounts within the statutory deadline. Agreement was reached,
with Treasury and NAO, that the extra time would give more time
to resolve as many of the issues as possible in order to reduce
the scope of the audit qualification on the accounts for 1999-2000.
2. In particular, delays in seeking and obtaining revised
valuation reports on land and buildings had an adverse effect
on the department's ability to deliver the 1999-2000 accounts
to the statutory deadline.
Impact on 1999-2000 accounts
1. The Comptroller and Auditor General acknowledges in
his report on the 1999-2000 resource accounts that the additional
time allowed under the dispensation enabled the Cabinet Office
to prepare an account of improved quality.
Implications for the future
1. The work undertaken on the 1999-2000 resource accounts
will help the department in the preparation of resource accounts
for 2000-01 and beyond. The Comptroller and Auditor General, however,
has stressed the challenges that remain if the department is to
meet the statutory deadline in future years. In particular, he
has highlighted the importance of the department ensuring that
sufficient appropriately skilled staff are available and allocated
to resource accounting, and of the department further developing
its internal quality control procedures for checking the accounts
before submission for audit.
2. DEPARTMENT OF
ENVIRONMENT, TRANSPORT
AND THE
REGIONS
Reasons for dispensation
1. Difficulties experienced by the Department in aggregating
its activities into one set of accounts.
2. Determining the appropriate accounting treatment for
certain Design, Build, Finance and Operate (DBFO) road schemes
(see DETR summary in Annex C).
3. Establishing an accurate figure for liabilities arising
from Highways Agency land and property acquisitions in areas where
new road schemes are proposed.
Impact on 1999-2000 accounts
1. The department has been able to produce a single resource
account on an accruals basis, although this exercise has proved
to be more complex than anticipated. The additional time allowed
by the dispensation allowed the department to make several revisions
to the accounts before they were presented for audit.
2. On land and property acquisitions liabilities, the
Highways Agency has developed a computerised database for recording
them. This has improved management controls over these liabilities,
although the Comptroller and Auditor General has noted that errors
remain in recording more complicated liability cases (in particular
those in respect of Compulsory Purchase Order and Blight).
Implications for the future
1. DETR is reviewing its procedures for the preparation
of the 2000-01 accounts with a view to making the aggregation
process more automated and to provide further training in accruals
accounting for the staff involved.
2. DETR and the Highways Agency aim to complete their
consideration of the accounting treatment of the DBFO schemes
for the 2000-01 financial statements.
3. DETR and the Highways Agency are working to ascertain
a more accurate estimate of the land and property acquisition
liabilities for the 2000-01 financial statements. A detailed review
is planned to ensure that liabilities are accurately summarised
in future accounts and to identify necessary improvements to systems.
3. HOME OFFICE
Reasons for dispensation
1. More time was required to resolve the many issues
that required significant work. Agreement was reached, with Treasury
and NAO, that the extra time would give more time to resolve as
many of the issues as possible in order to reduce the scope of
the audit qualification on the accounts for 1999-2000 and improve
the position for the 2000-01 accounts.
Impact on 1999-2000 accounts
1. Despite the additional work, the 1999-2000 resource
account as signed by the Accounting Officer still contained material
misstatements which the Home Office has yet to resolve, with a
lack of evidence to support amounts included in the financial
statements, and certain disclosures. The Comptroller and Auditor
General, as a result, has been unable to form an opinion as to
whether the accounts give a true and fair view (see Annex C).
Implications for the future
1. The department is taking steps to ensure the more
effective implementation of resource accounting and budgeting
(RAB). It has set up a RAB Implementation Board and established
a project team. It is developing long-term improvements to financial
management systems and procedures, and strengthening its financial
management staff resources and training.
2. The Comptroller and Auditor General has welcomed the
action being taken, but has stressed the importance of the department:
(a) Putting in place robust procedures to support the
resource accounts preparation process.
(b) Ensuring that sufficient appropriately skilled staff
are available and allocated to the task.
Instituting thorough quality control procedures throughout
the accounts preparation process and over the final accounts submitted
for audit.
4. THE LORD
CHANCELLOR'S
DEPARTMENT
Reasons for dispensation
1. Slippage in the preparation of signed and auditable
resource accounts for submission to the Comptroller and Auditor
General for audit.
2. Delays in the accounts preparation process of the
Court Service Agency.
Impact on 1999-2000 accounts
1. The dispensation allowed the department and the Court
Service Agency to make good progress in resolving a number of
significant accounting issues.
2. Some weaknesses, however, remain and the Comptroller
and Audit General qualified his opinion on the 1999-2000 resource
accounts (see Annex C).
Implications for the future
1. LCD has developed a new management information system
(Criminal Legal Aid Transition Project) which should help to improve
the quality of data available to support the estimated liability
for legal aid in the higher criminal courts. The system came on
stream in March 2001.
2. Progress made by the Court Service Agency is such
that the Treasury has issued it with a formal Accounts Direction
for the preparation of its 2000-01 accounts.
3. The Comptroller and Auditor General has noted that
statutory reform of the regulations governing the award of criminal
legal aid from October 2000, including the abolition of the means-test
assessment from April 2001, and the transfer of responsibility
for funding legal aid in the higher criminal courts to the Criminal
Defence Service from April 2003, should address the weaknesses
in controls which resulted in the audit qualification on the 1999-2000
resource accounts.
5. TREASURY SOLICITOR'S
DEPARTMENT
Reasons for dispensation
1. Difficulties with resolving the issue of legal accruals,
which contributed to the delay in producing an account for the
TSD Agency, the largest element of the resource accounts. Agreement
was reached, with Treasury and NAO, that the extra time would
give more time to resolve as many of the issues as possible in
order to reduce the scope of the audit qualification on the accounts
for 1999-2000 and improve the position for the 2000-01 accounts.
Impact on 1999-2000 accounts
1. The dispensation allowed the department to make good
progress in resolving a number of significant accounting issues.
2. Some weaknesses, however, remain and the Comptroller
and Audit General qualified his opinion on the 1999-2000 resource
accounts (see Annex C), given the lack of evidence to support
the provision made for adverse costs.
Implications for the future
1. With effect from 2001-02, adverse costs payments will
become the responsibility of TSD's clients and accounted for through
client money accounts, which do not form part of TSD's resource
accounts.
2. The department has strengthened its level of accounting
resources and expertise; made significant changes to its management
structure, designed to ensure that the financial implications
arising from its legal work are properly considered; and put in
place an action plan to ensure a fully operational accounts system.
3. The Comptroller and Auditor General has welcomed the
action being taken, but has stressed the importance of the department:
(a) Putting in place robust accruals accounting systems
to support the resource accounts preparation process, in particular
for the Treasury Solicitor's Department executive agency.
(b) Ensuring that sufficient appropriately skilled staff
are available and allocated to the task.
6. PRINCIPAL CIVIL
SERVICE PENSION
SCHEME
Reasons for dispensation
1. A need to resolve the legal issue of whether the PCSPS
was the agent of departments when making compensation payments.
2. A need to resolve the issue of the central funding
of compensation liabilities (the 80:20 scheme).
3. A need to make changes to Schedule 1 (summary of resource
outturn) on which proposals were only agreed by the Financial
Reporting Advisory Board (FRAB) on 18 December 2000.
Impact on 1999-2000 accounts
1. The dispensation allowed time for all the above issues
to be resolved and for the 1999-2000 resource accounts to be given
an unqualified audit opinion.
Implications for the future
1. All the above issues resolved.
7. MINISTRY OF
AGRICULTURE, FISHERIES
AND FOOD
Reasons for dispensation
1. More time needed to resolve the outstanding issues
on areas of possible audit qualification. Agreement was reached,
with Treasury and NAO, that the extra time would give more time
to clear as many of the issues as possible in order to improve
the quality of the accounts.
Impact on 1999-2000 accounts
1. The Ministry's work on European Union grants and subsidies
has ensured the accuracy of such balances in its balance sheet
as at 31 March 2000.
2. Despite the additional work, the 1999-2000 resource
account as signed by the Accounting Officer still contained material
misstatements which the Ministry has yet to resolve, with a lack
of evidence to support amounts included in the financial statements,
errors relating to amounts, and certain regularity issues. The
Comptroller and Auditor General, as a result, has been unable
to form an opinion as to whether the accounts give a true and
fair view (see Annex C).
Implications for the future
1. The Ministry is taking steps to ensure the more effective
implementation of resource accounting and budgeting (RAB). The
RAB Project Board has been restructured to improve the business
ownership of RAB and a Project Assurance Team is working to improve
the quality of RAB implementation and provide quality assurance
in future on the quality of resource accounts prior to submission
for audit. It is developing long-term improvements to financial
management systems and procedures, and strengthening its financial
management staff resources and training.
2. The Comptroller and Auditor General has welcomed the
action being taken, but has stressed the importance of the department:
(a) Ensuring that sufficient appropriately skilled staff
are available and allocated to the task, and adequate training
put in place.
(b) Improving its controls to ensure the proper recording
and accounting for fixed assets in particular.
(c) Increasing the effectiveness of management review
of financial and accounting information.
8. NORTHERN IRELAND
OFFICE
Reasons for dispensation
1. Difficulties in producing accounts for audit by the
Comptroller and Auditor General by 30 November 2000, in particular:
(a) The need to make significant adjustments to fixed
assets before work on the 1999-2000 accounts could be undertaken,
following a review of capitalisation policy carried out as a result
of inconsistencies in the application of accounting standards
in the 1998-99 dry run accounts.
(b) Difficult issues with the processes put in place for
accruals accounting and the information produced, leading to consequent
delays in identifying and resolving discrepancies.
(c) Staffing problems, in particular the delays caused
by the absence of a number of key staff during the preparation
of the 1999-2000 resource account.
Impact on 1999-2000 accounts
1. The dispensation allowed time for all the above issues
to be resolved and for the 1999-2000 resource accounts to be given
an unqualified audit opinion.
Implication for the future
1. All the above issues resolved.
9. HM TREASURY
Reasons for dispensation
1. A number of issues needed to be addressed after the
statutory deadline for submission of accounts, including: inconsistencies
between the cash flow statement and other parts of the financial
statement; unexplained balances in the cash flow statement and
analysis of general fund movements; the analysis of income between
appropriation-in-aid and Consolidated Fund Extra Receipts; the
accounting for investments in the department's opening balance
sheet; and the revaluation of the Treasury's main building, and
the subsequent calculation of its in-year impairment.
Impact on 1999-2000 accounts
1. The dispensation allowed the Treasury to deliver a
resource account which was subject to an audit qualification only
in respect of fixed assets (see Annex C for details and proposals
for resolution of this issue).
2. The Comptroller and Auditor General acknowledges in
his report on the 1999-2000 resource accounts that the additional
time allowed under the dispensation enabled the Treasury to prepare
an account of much improved quality.
Implications for the future
1. The work undertaken on the 1999-2000 resource accounts
provides a stronger foundation for preparation of resource accounts
for 2000-01 and beyond in accordance with the statutory timetable.
The Comptroller and Auditor General agrees, but has stressed the
importance of the department:
(a) Continuing in its efforts to ensure that sufficient
appropriately skilled staff are available and allocated to the
task; and
(b) Strengthening its procedures to support the task,
in particular developing its quality control procedures over this
process, to ensure that the final accounts are subject to thorough
checks prior to their formal release for audit.
10. SINGLE INTELLIGENCE
VOTE
Reasons for dispensation
1. Timing problems in the receipt of final accounts from
the three intelligence agencies in order to produce the consolidated
summarised SIV accounts by 30 November 2000.
2. On-going discussions on the form of the Accounts Direction
which would allow for the production of summarised SIV accounts
to be laid before Parliament.
3. A late issue arose on the wording of the Statement
of Accounting Office's Responsibilities, so that it better reflected
the nature of the summarised SIV accounts. This delayed the presentation
of the accounts to 4 April 2001.
Impact on 1999-2000 accounts
1. The dispensation allowed time for all the above issues
to be resolved.
Implications for the future
1. All the above issues resolved.
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