| RESOURCE ACCOUNTING AND BUDGETING |
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| ANNEX F: UPDATE PAPER |
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| Background |
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| 1. In April 1998, a paper
was presented to FlAG giving background detail on Resource Accounting and
Budgeting (RAB) and its implementation in The Scottish Office. The following
seeks to outline developments in subsequent months. |
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| Resource Accounting |
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| Progress at the centre |
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| 2. Various amendments to the
Resource Accounting Manual, as approved by the Financial Reporting Advisory
Board, have been issued. The Manual was published by The Stationery Office
in April 1998 and will be kept up to date with periodic amendments. |
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| 3. Progress on the outstanding
maters has however been slow and there are still significant issues yet
to be resolved, most notably the accounting for heritage assets and capital
charging beyond the boundary. |
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| 4. The implementation timetable
at the UK level remains as previously stated. |
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| Progress within The Scottish
Office |
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| 5. The Scottish Office obtained
Stage 1 approval in July 1998. Illustrative resource accounts for the "core"
Scottish Office for the financial year 1997-98 were produced at that time.
This process identified areas where further work was required, in determining
and interpreting accounting policies, in developing or altering current
accounting practices and in firming up the constituents of the Balance Sheet
as at 1 April 1998. |
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| 6. NAO and internal audit completed
their review of the fixed asset register and reported favourably. Work on
the computer based system to deliver the valuation of the road network has
now been completed; a detailed valuation report as at 31 March 1998 is in
course of preparation. |
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| 7. The accruals based accounting
system was used to prepare the 1997-98 Appropriation Accounts. The resource
accounting reporting hierarchy is subject to continuous review: as the Vote
accounting account code structures change; as lessons are learned from investigating
specific areas and as the use of SCOAP more generally develops and changes
(e.g. to deal with the Scottish Parliament). |
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| 8. The 1 April 1998 Balance Sheet
is the "opening" Balance Sheet for RAB purposes. As part of "Stage
2", it is to be subject to audit by NAO within the next month or so.
Once agreed, a Balance Sheet will be entered onto SCOAP for the first time. |
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| 9. Work on the consolidation
of Executive Agencies and of the Health Bodies within the boundary has also
been progressing. An account for 1997-98 consolidating the NHS bodies within
the boundary should be produced by the NHS Management Executive by the end
of this year. Agencies have similarly been producing 1997-98 information
in a format for consolidation. |
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| Resource Budgeting |
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| Progress at the centre |
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| 10. Treasury have not yet produced
a Budgeting Manual to complement the RAM; this is not expected to be available
before February 1999. |
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| 11. Aside from this, the major
uncertainty continues to be the operation of the Block and Formula arrangements
under RAB. Treasury have recently produced proposals for the operation of
the Block and Formula ground rules in determining the Assigned Budget for
the Scottish Parliament. Clearly, the precise application of RAB must be
settled as part of this. |
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| Progress within The Scottish
Office |
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| 12. Finance Teams have been participating
in an exercise to model the current Estimates for each Vote according to
resource budgeting principles. Due to the uncertainties and the issues which
have yet to be resolved, this has focused on the issue of capital and the
consequences of capital and has proved valuable in aiding participants'
understanding of the implications of RAB for their subject areas. |
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