Accounting for Democracy Revisited: The Government Response and Proposed Review Contents

Conclusions and recommendations

Accounting for Democracy

1.It is not satisfactory for the Government to have taken just under a year to respond to our predecessor Committee’s Report. The Cabinet Office’s guidance to civil servants says that departments should respond within two months of the publication of the relevant report. This unusual response underlines how much needs to change in respect of government accounting. (Paragraph 14)

2.The Government has not responded in this interim response to our recommendations in detail and has offered a review instead. We expect the review to respond in full to the recommendations made in our Report. We hope this reflects the seriousness of the issues we have raised, and the government must reiterate their intention to deal properly with PACAC’s 2017 recommendations. (Paragraph 15)

The response to the Report

3.We welcome the fact that the Government accepts our four aims for Government annual and management accounts. We expect, and therefore recommend that the Financial Reporting Advisory Board and the Treasury set out that these are the main aims of Government accounts in new guidance to departments. While we agree with the Government about these objectives, it must recognise in its Review that the current accounts fail to provide the necessary credible information to hold the Government to account for the commitments it makes or the performance of Departments. (Paragraph 19)

4.We welcome the Government’s comments about management information within Government. We welcome the support of the National Audit Office for our objective that the Government should improve its management information and await with interest the conclusions of the National Audit Office Review into their current progress. (Paragraph 20)

5.We welcome the announcement of a Treasury Review into government accounts and their use. We welcome the fact that the Review will be published and made available to our Committee. (Paragraph 23)

6.We believe that the current Review team should be widened to include more representatives of the users of accounts. The Review should be published within six months of the date on which this Report is published and should lay out the Government’s proposals for reform, as well as its responses to the Report of our predecessor Committee. Evidence submitted to the Review should be published so that we and others can scrutinise its findings. (Paragraph 24)

7.Where the Government has said that departments have flexibility to reorganise their accounts to better facilitate scrutiny, we believe that the Review of the accounts should identify mechanisms to evaluate departments’ use of this flexibility. The Review should identify mechanisms for Treasury and Parliament to hold departments which refuse to make use of this flexibility to account. The National Audit Office should have a role in reporting back to Parliament about departments whose accounts do not meet the purposes described by the Committee and accepted by the Government. (Paragraph 25)

8.We are not convinced by the Government’s argument that ministerial commitments can be tracked through normal select committee scrutiny or FOI requests. These mechanisms are not developed to track ministerial commitments and are not systematic. We believe the Review that the Government has announced should reconsider the Government’s position on this recommendation. (Paragraph 29)

9.The current published versions of the Single Departmental Plans are inadequate. They contain long lists of “nice to haves” without measures of performance or any statements about which are the main priorities. The Government must review the adequacy of its response to our recommendation on this matter and that of the Public Accounts Committee. If there are elements of the plans that might have to be redacted, the Government needs to explain why. In the currently published versions, it has not got the balance right between transparency and confidentiality. (Paragraph 32)

10.There is widespread lack of confidence in the accuracy and fairness of the non-financial elements of the annual report and accounts. The Government must include considerations of extra independent checks on the unaudited information, particularly the performance information, as part of its Review into the annual report and accounts as a whole. (Paragraph 34)

Published: 27 June 2018