16. In 2006-07
we congratulated the Treasury on publishing a combined Annual
Report and Accounts and we were assured that we could expect a
combined document in 2007-08.
Unfortunately this expectation was not met, and the Treasury Group's
Annual Report and Resource Accounts were published separately
on 3 July 2008 and 16 July 2008.
17. By way of explanation for the separate publication,
Mr Macpherson cited some "particularly tricky accounting
issues around Northern Rock
[and the] real possibility
that we would not resolve those accounting issues with the National
Audit Office this side of the summer".
These issues were resolved and the Annual Report and Accounts
were published only two weeks apart.
18. Northern Rock was taken into temporary public
ownership on 17 February 2008 and the Treasury Resource accounts
were published on 16 July 2008, suggesting that it took five months
for HM Treasury to identify an accounting treatment of Northern
Rock which the National Audit Office (NAO) would accept as true
19. It is already apparent that
the Treasury Group's 2008-09 Resource Accounts will throw up a
number of equally complex accounting issues: the treatment of
the Government's revised equity stake in Northern Rock; the transactions
with Abbey Santander and Bradford & Bingley; and its investment
in the part-nationalised banks.
20. Louise Tulett, HM Treasury's
Director of Finance, Procurement and Operations, told us that
the accounting treatment of the Treasury's transactions with Abbey
Santander and Bradford and Bingley had not yet been agreed with
the NAO. From this
we must infer that the treatment of the part-nationalisation of
the banks also remains to be addressed. The nationalising
transactions of 2008-09 raise some complex accounting questions
for the Treasury. In order to ensure that the Treasury Group's
2008-09 Annual Report and Accounts can properly be laid before
Parliament before the summer adjournment, we recommend that the
Treasury engages early with the National Audit Office to agree
appropriate accounting treatments for the transactions surrounding
the nationalised and part-nationalised banks.
21. We were disappointed to
note that the Treasury Annual Report was published separately
to its Resource Accounts in July 2008. We recommend that, in order
to aid users of the accounts, the Treasury publishes future Annual
Reports and Resource Accounts in a single, combined document prior
to each summer adjournment.
22. In its report on the Performance
of HM Treasury in 2007-08, the NAO highlighted that no fewer then
five liabilities relating to Northern Rock were disclosed in the
Treasury's Resource Accounts as contingent liabilities but listed
These are shown in Table 3.
Table 3 - undisclosed liabilities relating to