This snapshot, taken on 06/05/2007, shows web content selected for preservation by The National Archives. External links, forms and search boxes may not work in archived websites.

Terms of reference of the Financial Reporting Advisory Board

1. Context

1.1       The primary aims of financial reporting by central government bodies are to demonstrate to the public and their representatives in the UK and Scottish Parliaments, the Northern Ireland Assembly and the National Assembly for Wales:

  • the financial performance of the bodies;
  • their stewardship of public funds and assets; and
  • that, where appropriate, public monies and other resources have been used for the purposes intended by the Parliaments or the Assemblies
    and to provide the Parliaments and the Assemblies with information which is reliable and sufficient as a basis for:
  • their consideration and approval of the levels of resources and cash voted to services; and
  • their examination of performance in carrying out policies, functions, programmes and projects.

1.2     Financial reporting is also intended to underpin the UK Government’s planning, monitoring and management of public expenditure.


1.3      The authority to develop financial reporting requirements rests with HM Treasury, the National Assembly for Wales, the Scottish Ministers and the Department of Finance and Personnel, Northern Ireland in respect of accounts meeting the criteria set out in paragraph 2.1.b. below.

1.4       Financial reporting by central government bodies should be based on generally accepted accounting practice (GAAP) adapted where appropriate to take account of the public sector context. For Resource Accounts in England and Wales and for Whole of Government Accounts (UK) this requirement is set out in sections 5 and 9 of the Government Resources and Accounts Act 2000. A similar requirement is included in sections 9 and 14 of the Government Resources and Accounts Act (Northern Ireland) 2001.

1.5        Under section 24 of the Government Resources and Accounts Act 2000 the Treasury is required to consult an advisory group on financial reporting principles and standards for resource accounts and Whole of Government Accounts.   Under section 20 of the Government Resources and Accounts Act (Northern Ireland) 2001, the Department of Finance and Personnel, Northern Ireland is also required to consult with and take account of the recommendations made by this advisory group before issuing directions on resource accounts or determining the form and content of Whole of Government Accounts (Northern Ireland).  The Scottish Ministers, with the agreement of the Audit Committee of the Scottish Parliament, have determined that they should be similarly advised on such matters.  The Financial Reporting Advisory Board will be the advisory group, and thus will provide an independent element into the process of setting financial reporting standards for the UK Government, the Scottish Ministers and the Department of Finance and Personnel, Northern Ireland.


2. Terms of reference

2.1       Responsibilities of the Board:
a. The Board will provide independent advice to HM Treasury, the Scottish Ministers and the Department of Finance and Personnel, Northern Ireland.


b. The Board will advise HM Treasury, the Scottish Ministers and the Department of Finance and Personnel, Northern Ireland on the application of financial reporting standards and principles:


i Where HM Treasury, the National Assembly for Wales and the Department of Finance and Personnel, Northern Ireland are responsible for issuing reporting requirements, in respect of:
Departmental resource accounts:

  • Supply financed executive agencies
  • Non-departmental public bodies
  • Trading funds
  • Whole of Government Accounts
  • NHS trusts in England and Wales, and HSS trusts in Northern Ireland
  • NHS Foundation Trusts in England

ii. Where the Scottish Ministers are responsible for issuing reporting requirements, in respect of: 

  • Accounts falling under sections 19 and 20 of the Public Finance and Accountability (Scotland) Act 2000
  • Accounts of executive non departmental public bodies where the Scottish Ministers have the power of direction

c. The Board will decide how it reaches its conclusions.


d. The Board’s advice to the Scottish Ministers will be restricted to the technical rules of accounting and to minimum disclosure requirements.  It will not extend to the format of accounts or to disclosures beyond the minimum requirements.


e. The Board’s advice to the Department of Finance and Personnel, Northern Ireland will incorporate accounting, formatting and minimum disclosure requirements.


f. The Board will examine all amendments to the guidance in respect of the bodies listed in b above, with the aim of ensuring that they comply with GAAP, and that departures or modifications from GAAP, due to public sector and spending control contexts, are fully explained and justified.  The Board will also examine, with the same aim, amendments to accounts directions referred to the Board, issued by HM Treasury, the National Assembly for Wales, the Scottish Ministers and the Department of Finance and Personnel, Northern Ireland.


g. The Board will prepare an annual report of its activities, including its views on the changes made during the period to the accounting guidance, or, as appropriate, accounts directions, issued by HM Treasury, the National Assembly for Wales, the Scottish Ministers and the Department of Finance and Personnel, Northern Ireland in respect of bodies listed in 2.1 b. above, and will send a copy of its report direct to the Committee of Public Accounts and Treasury Select Committee of the UK Parliament, the National Assembly of Wales, the Scottish Ministers and the Department of Finance and Personnel, Northern Ireland. 


2.2 HM Treasury (in conjunction with the Department of Health in respect of NHS trusts in England and the Independent Regulator of Foundation Trusts in respect of NHS Foundation Trusts in England), the National Assembly for Wales, the Scottish Ministers and the Department of Finance and Personnel, Northern Ireland:

a. Will ensure that all relevant matters, including proposed changes to the guidance, or, as appropriate, accounts directions, in respect of accounts meeting the criteria in 2.1.b above, are brought to the Board’s attention within a reasonable time.  In particular, changes to Financial Reporting Standards and other elements of GAAP that affect such guidance or accounts directions will, as far as possible, be brought to attention in sufficient time to enable their implementation, as appropriate, within the same timescale as changes are to be made generally.


b. Will examine all issues raised by the Board within its terms of reference.


c. Will consider all advice received from the Board.

2.3 HM Treasury, the Scottish Ministers, the Department of Finance and Personnel, Northern Ireland, and the Finance Division of the National Assembly for Wales will formally lay the Board’s report before the House of Commons, the Scottish Parliament, the Northern Ireland Assembly, and the National Assembly for Wales respectively.

2.4 HM Treasury will provide the secretariat to the Board.

3. Membership

3.1 The Board will comprise:
An independent Chairman, nominated by the Chief Accountancy Adviser to the Treasury, and in respect of future appointments, in agreement with the Scottish Ministers and the Department of Finance and Personnel, Northern Ireland.
1 member nominated by the Treasury (a Treasury Official)
1 member nominated by the Scottish Ministers
1 member nominated by the Department of Finance and Personnel, Northern Ireland
1 member nominated by the Comptroller and Auditor General
1 member nominated by the Auditor General for Scotland
1 member nominated by the Audit Commission
3 members nominated by the Principal Finance Officers of UK government departments to represent respectively departments, trading funds, and non departmental public bodies.
1 member nominated by the Department of Health
1 member nominated by the Executive Chair of Monitor, the Independent Regulator of Foundation Trusts
1 member nominated by the National Statistician
1 member nominated by the Accounting Standards Board
1 member, an independent economist, nominated by the Head of the Government Economic Service.
1 independent member nominated by the Chief Accountancy Advisor to the Treasury and approved by the Chairman.


3.2 Members will normally be appointed for five year, renewable, terms.


3.3 The Board will meet as required in each year to discuss matters relating to financial reporting as they arise.

back to top