1Introduction: Departmental and management Accounts
The purposes of Government Accounts
1.The requirements for Government to manage and account for the spending which it undertakes, and for the taxpayer to see and have confidence in the records which it keeps are vital elements of democracy. Published Annual Reports and Accounts should enable Ministers, MPs and the public to understand how public money is spent and question whether it was spent wisely. Internal management Accounts should enable Ministers and senior officials to manage and control the spending of their Departments effectively. Crucially, published Annual Reports and Accounts are audited by an independent auditor - in the UK, the Comptroller and Auditor General (C&AG) and the staff of the National Audit Office, in a process designed to give confidence that the information which they include can be relied upon.
The current purpose of Government Accounts
2.In our current constitutional landscape, we believe that good quality Government Accounts and financial information have four main purposes:
a)To maintain and ensure the House of Commons’ control of Government spending, enabling in particular the House of Commons to hold the Government accountable for its spending;
b)To enable the public and researchers (both in civil society and Parliament) to understand and consider the value for money offered by public spending, so that they can make decisions about the effectiveness, efficiency and economy of particular policies or programmes;
c)To provide a credible and accurate record which can be relied upon;
d)To provide managers inside Departments (including both Ministers and civil servants) with the information that they require to run the Departments and its agencies efficiently and effectively.
3.Witnesses to the inquiry told us that these were the four key purposes of the accounts. But we are aware that these purposes can sometimes conflict. For example, good management information generally requires information to be captured and tracked according to lines of management responsibility, so a Department and the Treasury can tell who to hold to account for any overspends. Transparency on the other hand requires that the public can see how money is spent on particular services and achieves results. Often services are split between departments or agencies with each different body responsible for a different portion of the service: for example, victims services are both commissioned by central government and by police and crime authorities. Accounts could either split the spending for such services between each body or they could show the expenditure by service.
4.This report is organised around the four purposes that we have identified. Chapter 2 explains the current format of Accounts. The following chapters deal with each of the four purposes discussed here: Chapter 3 covers value for money; Chapter 4 covers accountability to the House of Commons; Chapter 5 covers the importance of credibility and reliability; and Chapter 6 covers the use of financial data in management within Departments.
5.PACAC’s inquiry took place in parallel with the inquiries of two other committees: the Public Accounts Committee’s inquiries into Single Departmental Plans and the Whole of Government Accounts and the Procedure Committee’s inquiry into the Estimates process.
6.PACAC has held three evidence sessions focussing on Government accounting during this inquiry. These evidence sessions focused on the utility, quality and accessibility of the information presented to Parliament and the public in the annual Accounts and ministers and officials in the management Accounts. PACAC has also received 28 submissions from organisations and individuals. We thank all those who have submitted written or oral evidence to our inquiry. We also thank the staff of the National Audit Office and of the House of Commons Scrutiny Unit for their assistance.
26 April 2017