First Whole of Government Accounts qualified

30 Nov 11
The first audited Whole of Government Accounts do not give a ‘true and fair’ view of what the UK public sector owns and owes, according to the chair of the Public Accounts Committee.

By Nick Mann | 30 November 2011

The first audited Whole of Government Accounts do not give a ‘true and fair’ view of what the UK public sector owns and owes, according to the chair of the Public Accounts Committee.

Margaret Hodge said the accounts for 2009/10, which were published in full by the Treasury alongside yesterday’s Autumn Statement, were an ‘important landmark’ in improving the scrutiny and transparency of public spending.

But she said: ‘The accounts exclude bodies that are controlled by the government which should be included, such as publicly owned banks and Network Rail. We do not yet have a complete picture of what the UK public sector owns and what it owes.’

Because of this, the head of the National Audit Office, Amyas Morse, qualified his audit opinion on the basis that these bodies should have been included for the accounts to comply with the International Financial Reporting Standards.

Network Rail, the NAO said, had gross assets of £41.7bn and gross liabilities of £35.7bn, and publicly owned banks have gross assets of £2,862.1bn and gross liabilities of £2,720.9bn.

The WGA, which were originally published in unaudited form in July, show that the public sector owned assets to the value of £12 trillion in 2009/10 and liabilities totalling £2.4trn – giving a net liability of £1.2trn.

The shortfall between operating revenues and expenses – including finance costs – during the year was £165bn.

Morse noted that the accounts also presented the financial position 20 months ago – ‘a consequence of the amount of preparation that has to be undertaken’.

He also highlighted the ‘limited analysis’ of spending across the main functions of government, such as defence and education, andon services such as consultancy, which would make the accounts more useful to the reader.

Morse said: ‘The publication of the first audited Whole of Government Accounts is a landmark event, which has substantially furthered the cause of transparency and accountability in public spending.

‘The accounts need to be significantly improved, though, if they are to play a full part in comprehensive and meaningful analysis of the government’s financial position.’

CIPFA welcomed publication of the audited accounts and said the government was going to address the NAO qualifications.

Ian Carruthers, CIPFA’s policy and technical director, said: ‘Today’s WGA publication is undoubtedly a huge step forward in terms of transparency and public accountability.

‘In addition to addressing the qualification issues, the task now is to use this new information to support management of the UK’s public finances. The sovereign debt crisis underlines the risks of not doing this.

‘Hence our recent call on international agencies, governments and other prospective partners to work with us to make a step change in public financial management internationally.’

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