Conclusions and Recommendations
1. In 2009-10 the Statistics Board and the
Government Actuary's Department exceeded spending limits approved
by Parliament, indicating weaknesses in their financial planning
and management. Under
the terms of the Standing Order of the House of Commons number
55(3)(c), we recommend that Parliament provides the additional
resources requested by means of an Excess Vote, as set out in
Figure 1 on page 8.
2. Two cash excesses occurred as a result
of weaknesses in cash management processes.
·The
Statistics Board breached its Net Cash Requirement of £251,000
against a limit of £207,861,000.
This was due to weaknesses in cash management controls which led
to a payment run being made at the year end when the cash limit
had already been met. Processes to calculate the available cash
balance did not take into account payments made but not yet cleared
through the bank account. Management review failed to prevent
the additional payments being made.
·The Government
Actuary's Department breached its Net Cash Requirement by £67,000
against a limit of £705,000. This
was partly due to an unexpected payment being made under the injury
benefit scheme to an ex-employee, and partly due to the failure
to consider the need for additional working capital as a result
of the expansion of its business. The Department was unable to
repay an advance from the Contingencies Fund in full by the year
end. With this known repayment, and the extra payments for the
injury benefit award being made before January 2010, the Department
could have used the Spring Supplementaries to request extra cash
resource.
3. One resource excess occurred as a result
of events crystallising late in the financial year.
·The
Government Actuary's Department incurred a resource excess of
£747,000 as a result
of the need to create a provision in its balance sheet at 31 March
2010 for the future liabilities that may be incurred as a result
of an injury benefit award being granted to an ex-employee, which
is payable for life. The details and timing of this award were
still uncertain at the time of the Spring Supplementary Estimate
and so extra resources were not requested. The administrative
nature of the provision also means that the Administration Budget
has been exceeded by £741,000.
·In the
context of the recent Comprehensive Spending Review, strong and
effective financial management and control are more important
than ever for government departments if they are to avoid exceeding
their resource limits. Departments must
ensure that staff are aware of the voted limits, and the repercussions
of a breach, and that controls are in place for the accurate forecasting
of income and expenditure to prevent future excesses. Departments
cannot decide that incurring an excess vote is an acceptable consequence
of failing to maintain appropriate financial control.
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