Annex: Glossary of Terms
Accruals or Resource accounting: A method of recording expenditure as it is incurred (ie when the activity which generates the costs arises), and income as it is earned, rather than when cash is paid or received. This method of accounting is now used in the UK throughout the public and private sectors (with the exception of very small charities and businesses). In the public sector context it is also sometimes known as ‘Resource’ accounting.
Annual Reports and Accounts: Annual Reports provide a narrative about the department’s activities in the previous year. The Accounts are the core financial statements of the department. Annual Reports and Accounts have been published together since the Clear Line of Sight reforms. The more recent Treasury Simplifying and Streamlining reforms have led to Annual Reports containing sections on performance, accountability and the core financial statements.
Audit: Independent auditors examine Accounts and their supporting documentation. They certify that the Accounts are true and fair, prepared according to the chosen standards and, in the public sector, that income and expenditure was regular (in line with Parliamentary intention).
Cash Accounting: A method of accounting which records cash payments and cash receipts as they occur in an accounting period. While cash accounting was used for UK Government Departments and other public bodies for many years it was replaced by accruals accounting in the UK in 2002.
Clear Line of Sight: reforms which aimed to align the way spending was reported in Budgets, Estimates and Accounts. The same reforms brought together the Annual Reports and Accounts in a single document.
Comptroller and Auditor General: The head of the National Audit Office, and an officer of Parliament, who is wholly independent of Government. He gives an opinion (“certifies”) the Accounts of all major Government departments and many Arm’s Length Bodies.
Estimates: See entry for Main Estimate and Supplementary Estimate
Excess Votes: Where a Department has spent more - as recorded in its audited end year Accounts - than was voted by Parliament in its Estimate, or has spent beyond the coverage of its ambit i.e. its voted authority has been exceeded. In such cases Parliament retrospectively authorises the departmental overspends, approving a Statement of Excesses. Excess votes automatically lead to accounts being qualified by the Comptroller and Auditor General, which will often lead to a hearing by the Public Accounts Committee.
Financial Reporting Advisory Board: An independent committee overseeing financial reporting standards in the public sector. It considers forthcoming changes to International Financial Reporting Standards and whether any adaptations are necessary for the public sector. The Treasury is required by the Government Resource and Accounts Act 2000 to consult FRAB on changes to the accounting standards for central government. FRAB members include representatives from the accounting profession, Government departments and Arms Length Bodies, academia, the NAO and Parliament.
House of Commons Scrutiny Unit: The Unit exists to provide specialist help to select committees in the scrutiny of the Government’s financial and performance reporting and of draft bills. It also carries out other work for select committees as resources permit. The Unit also supports the evidence‐taking work of Public Bill Committees.
International Financial Reporting Standards (IFRS): A set of standards for producing Accounts and which are widely used throughout the world. In the UK, the FRAB advises on possible adaptations to IFRS before they are adopted in the public sector.
Management Accounts: A set of internal accounts used by private or public sector organisations to report internally about what the organisation is doing. These accounts will normally include both financial forecasts and outturns and also performance measures.
National Audit Office: The body which audits and scrutinises public spending on behalf of Parliament. It audits the Accounts of all central government departments and agencies, as well as a wide range of other public bodies, and reports to Parliament on the economy, efficiency and effectiveness with which they have used public money. It is totally independent of Government. The NAO is headed by the Comptroller and Auditor General.
Simplifying and streamlining the Annual Report and Accounts: In 2014, the Treasury published a command paper, Simplifying and Streamlining the Statutory Annual Report and Accounts, which set out proposals for a new format for Annual Reports and Accounts, to be initially implemented in 2015–16. The Treasury proposed that Departments should reorganise their Annual Reports and Accounts into three sections, focussing on performance, accountability and the core financial statements.
Single Departmental Plans: Single Departmental Plans have two forms. Firstly there is an internal document which sets out the department’s priorities and spend. Secondly there is a published plan set out, stating priorities, objectives and key performance indicators. The published plan is updated from time to time and is much less detailed than the internal document.
Spending Review: Internal Government reviews of future spending plans held every few years. The outcome of a Spending Review is announced in Parliament, and sets out the proposed Resource and Capital DEL limits for each department for each of a number of years ahead. (Departmental Expenditure Limit (DEL) expenditure is expenditure which it is assumed government departments can control like their pay bill, as opposed to Annually Managed Expenditure (AME) which is difficult to predict, manage or forecast like the level of unemployment benefit.) The Spending Review totals form the basis of subsequent Main Estimates voted by Parliament.
Statistical Code of Practice: The Statistics and Registration Service Act 2007 required the UK Statistics Authority to prepare and publish a Code of Practice and to assess compliance against it. Official statistics assessed as compliant are to be designated as National Statistics. Bodies that produce National Statistics are required to ensure that the Code continues to be observed.
UK Statistics Authority: The UK Statistics Authority was established under the Statistics and Registration Service Act 2007. The Authority is an independent statutory body. The Authority has a statutory objective of promoting and safeguarding the production and publication of official statistics that ‘serve the public good’.
26 April 2017