Select Committee on Public Accounts Appendices to the Minutes of Evidence


Supplementary memorandum submitted by HM Treasury



  The PAC's 29th Report, Session 1999-2000: Progress on Resource Accounting and the Adoption of Resource-Based Supply[33] requested that the Treasury provide the Committee with a report on the quality of departmental resource accounts for 1999-2000. In its response[34], the Treasury undertook to do so, and this Memorandum discharges that undertaking.



  Fully audited resource accounts were published for the first time for the financial year 1999-00, following a dry-run for 1998-99. A total of 49 resource accounts were scheduled to be produced in accordance with an Accounts Direction issued by the Treasury[35] under section 5 of the Exchequer and Audit Departments Act 1921. A full list of 1999-2000 resource accounts is at Annex A.

  Of the 49 resource accounts, 39 have been prepared in accordance with an Accounts Direction. The Direction required the preparation of accounts for 1999-2000 on a statutory basis, with an audit by the Comptroller and Auditor General and a deadline of laying the accounts before the House of Commons of 31 January 2001. All these accounts were laid by the statutory deadline.

Dispensations from an Accounts Direction

  A further 10 bodies (highlighted in Annex A) were given dispensations from having to follow an Accounts Direction for 1999-2000, although they were still required to prepare resource accounts, to be audited by the Comptroller and Auditor General on a non-statutory basis. Dispensations were granted by the Treasury, having consulted the National Audit Office, for those bodies which had particularly significant issues in their ability to submit accounts—within the statutory timetable—signed by the Accounting Officer to the Comptroller and Auditor General which gave a true and fair view. The dispensations were granted on the basis that the additional time these bodies would have to prepare their accounts would help them to make progress in resolving outstanding issues and improve the quality of the accounts. All these accounts were required to be presented to Parliament by 30 March 2001 and this deadline was met for all accounts, except those of the Single Intelligence Vote (SIV) which were presented on 4 April.

  Annex B to this memorandum contains details of the reasons for the dispensations given to all 10 bodies, as well as an assessment of the impact that the additional time to prepare the accounts had on their quality. In general, the extra time allowed by the dispensation has had a positive impact on the quality of accounts. For a number of bodies, however, some major challenges still remain, although action plans are in place to resolve them.

Qualified Accounts

  The Comptroller and Auditor General's Financial Auditing and Reporting: 1999-2000 General Report[36] noted that a total of 30 bodies[37] had not received an unqualified "informal" audit opinion on their 1998-99 dry-run accounts. For 1999-2000, there has been a significant improvement, with a total of 12 bodies not being given an unqualified audit opinion. The table below compares the overall position for 1998-99 and 1999-2000:
Audit Opinion 1998-991999-2000
Qualified (scope limitation/disagreement) 189
Adverse opinion50
"Nil" opinion[38] 30

  Annex C to this memorandum contains details of the reasons for the expressions of audit opinion for all 12 bodies, as well as an update of the action plan summaries provided with the December memorandum on anticipated progress.


  For 2000-01, the Treasury has issued a single Accounts Direction under Section 5 of the Exchequer and Audit Departments Act 1921, covering all departments. [39]The Treasury has informed departments that it does not intend to grant any dispensations from this Direction. This will require all resource accounts to be signed and submitted for formal audit by the Comptroller and Auditor General by 30 November 2001 and be laid before Parliament by the statutory deadline of 31 January 2002.


  Progress on resource accounting is being maintained in line with the evidence reported to the Committee for its 29th Report, Session 1999-2000 and the safeguards referred to in that Report for 1999-2000 have ensured that the process as a whole has not been affected. [40]That said, the Treasury is aware that there are still various risks and constraints, as referred to in the Committee's Report. The Treasury, therefore, will continue to closely monitor progress, and will liaise with departments and the National Audit Office to maintain the required level of progress. As noted in the December memorandum, the Treasury expects to see further improvements in 2000-01.

David Loweth

Head of Central Accountancy Team

HM Treasury

April 2001

33   HC556, 1999-2000. Back

34   Treasury Minute on the 27th and 29th to 37th Reports of the Committee of Public Accounts, 1999-2000 (Cm 4901). Back

35   This excludes four Welsh bodies (Auditor General for Wales, Estyn, Forestry Commission (Wales) and the National Assembly for Wales), the accounts for which were laid before the National Assembly for Wales. It also treats the Single Intelligence Vote as one resource account covering the three intelligence agencies (GCHQ, the Secret Intelligence Service, and the Security Service). Back

36   HC25-XIX, Session 2000-01. Back

37   Each of the three intelligence agencies received an audit qualification. Back

38   "Nil" opinions were given where the accounts were insufficiently developed to offer an audit opinion. Back

39   In some (rare) cases, an individual Accounts Direction might be issued to a body. Back

40   29th Report of the Committee of Public Accounts, Progress on Resource Accounting and the Adoption of Resource-Based Supply, (HC 556, Session 1999-2000), para 18. Back

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