Tory accounting plans under fire

23 Nov 00
Conservative Party plans to establish a National Accounts Commission that would put public sector accounting standards in line with those of the private sector have been dismissed as 'naïve' and 'ill-informed'.

24 November 2000

Ken Wild, a partner at Deloitte & Touche, said the proposals only superficially addressed the issues of public sector accounting and reminded him of an 'undergraduate dissertation'. He said: 'It doesn't acknowledge the existence of the Financial Reporting Advisory Board (Frab) and the technical issues are discussed at a superficial level.'

Wild, who stressed he was speaking individually, is a member of Frab, which provides advice to the Treasury on matching government accounting rules to the private sector, and is also chairman of the Accounting Standards Board's public sector and not-for-profit committee.

The proposals to establish an NAC were contained in a report published by the Tories on November 15. They were the findings of a seven-month study by the shadow national accounts commission, a body set up by shadow chancellor Michael Portillo.

Members of the shadow commission included Sir Bryan Carsberg, secretary general of the International Accounting Standards Committee, and Robin Thompson, a partner at PricewaterhouseCoopers.

Oliver Letwin, shadow chief secretary to the Treasury, said the NAC would be loosely based on the Bank of England's monetary policy committee.

Members would be independently appointed, approved by Parliament and operate according to Nolan rules on standards in public life. Those appointed would serve for a fixed term. Its remit would be to establish a set of accounting rules that would stretch across the public sector.

The shadow commission claimed that establishing the NAC would bring 'independence' to government accounting. It stated that 'accounting standards for government should be identical with standards for the private sector, except where differences in organisational structure or differences in the nature of transactions make differences in standards necessary'.

But Wild claimed bodies such as Frab and the ASB were already bringing about standardisation of accounting practices.

Letwin said it would allow a greater transparency into the system. He said government should take its cue from the private sector where the ASB provides an accounting framework for businesses.

'The private sector is a system which tends towards perfection. There needs to be transparency in accounts [for the public sector],' he said.

But Wild said existing accounting rules for the public sector were 'not that far from where they should be'.


Did you enjoy this article?