Public sector accounts have faced criticism for their complexity, timeliness and relevance. Now users of local government financial information in Scotland have an opportunity to express their views and make the system work more effectively
What will local authority accounts of the future look like? Probably not a question on everyone’s lips, but one that is currently exercising the members of the advisory committee charged with setting accounting standards for councils in Scotland.
They are asking the question in the same month that the UK Public Accounts Committee has called for greater use of the Whole of Government Accounts (WGA), while a separate study from the Institute of Chartered Accountants of Scotland questioned the value of public sector accounts. These two viewpoints set the background to the latest chapter in the debate on the usability and relevance of public sector financial information.
It was the PAC report that triggered the most recent exchange. The committee didn’t hold back in its commentary on WGA, criticising it as an ‘elaborate accounting exercise’, and made recommendations about improving timeliness, clarity and use of the accounts.
In Scotland, the Icas research examines the UK’s devolved governments’ implementation of international standards – now the basis of financial reporting by all government bodies. The study, covering Scotland, Northern Ireland and Wales, finds increased disclosure in annual financial statements, but that little value has been added by this. A further finding is that financial statements have become long and unwieldy, with minimal impact on budgeting and decision-making.
So, the PAC wants more and better use of accounts while the devolved administrations find them long and complex and adding little value. But what of the users of accounts? Surely their views will add an objective basis to those of government departments and politicians? Except that no one seems to have asked what their views are.
In Scotland that is about to change. The advisory committee mentioned above has launched a further research survey. LASAAC – the Local Authority (Scotland) Accounts Advisory Committee – is seeking the views of users of financial statements. It wants to know why (and if) people use the accounts and what the basis of that use is. For example, do contractors rely on that information and, if not, why not? Are the accounts simply too complex?
A charge of complexity is nothing new but the added complication that international standards have brought is acknowledged in the survey. The concern is that even greater complexity is now hindering the needs of users of the statements. So the project aims to draw a line after the implementation of international standards within local government and seeks to canvass a variety of opinions.
Users of local authority accounts in Scotland now have a unique opportunity to express their views, whether positive or negative, to influence what the accounts of the future will resemble. The PAC vision of a more meaningful document that shapes the management reporting and direction of public finances will be a useful benchmark for all those who contribute to the survey.
Don Peebles is policy and technical manager of CIPFA in Scotland
