Whole of Government Accounts

The Chancellor of the Exchequer, Gordon Brown, announced today the results of a joint study by the Treasury and the National Audit Office into the development of Whole of Government Accounts (WGA) for the UK.

Commenting on the Treasury's report, the Chancellor said:

"Developing Whole of Government Accounts covering the whole public sector will be a major step in underpinning the new fiscal framework outlined in the Economic and Fiscal Strategy Report published in June. It will put the UK amongst the forerunners in the field of countries who are developing financial reporting which supports a new enhanced fiscal framework. The new accounts will help to deliver the Government's commitment to more transparent fiscal reporting, using best practice accounting methods, set out in the Code for Fiscal Stability published alongside the Budget in March.

"I look forward to seeing the results of the further research into developing Whole of Government Accounts once the next phase of the work outlined in the report has been completed."

The main conclusions of the Treasury's report are that:

the Government should proceed with work on the development of Whole of Government Accounts;
the ultimate aim should be a full set of audited accounts based on UK GAAP for the whole public sector alongside improved but unaudited national accounts based on statistical principles;
practical considerations suggest a dual approach to developing GAAP-based Whole of Government Accounts, with work being undertaken on a consolidation of the accounts of central government into a Central Government Account (CGA) alongside work in parallel to establish a basis for consolidating other parts of the public sector into a Whole of Government Account;
a decision on whether to produce a Central Government Account for 2001-02 would be taken in 2000. If this were not possible, an alternative would be to move straight to Whole of Government Accounts, with the first set of GAAP-based accounts produced for 2003-04, if the decision to proceed was justified once a full cost/benefit analysis had been completed;
the next step will be for a project team to be set up and a detailed project plan drawn up to cover the forward programme of action outlined in the report.

Notes for editors

1. Whole of Government Accounts (WGA) are a set of consolidated financial statements covering the whole of the public sector. Central Government Accounts (CGA) are a subset covering central government only.

2. The scoping study into Whole of Government Accounts was carried out by the Treasury in consultation with the NAO and other relevant bodies. The terms of reference for the study were as follows:

"To examine the possibility, desirability, practicalities, timescale and resource and other implications of consolidating the accounts of departments and agencies and other entities such as non-departmental public bodies, public corporations and local authorities, to enable the preparation of a consolidated set of financial statements initially for central government; and then, beyond that, to look at the scope for extending this to general government and the whole public sector ("whole of government accounts").

The work will build on the information currently contained in the Consolidated Fund and National Loans Fund accounts and Supplementary Statements, and will take account of:

developments on resource accounting and budgeting;
the Government's key principles for stable public finances;
experience in other relevant countries; and
the Government's undertakings to Parliament.

The initial study will be carried out jointly with the National Audit Office in the case of the accounts of central government bodies, as recommended by the PAC; and in the case of other public sector bodies, in consultation with other relevant auditing bodies as appropriate, relevant sponsor departments and, through them, with the bodies themselves.

The aim is for the initial scoping study to be completed within a timescale which will enable preliminary conclusions to be published by the Summer of 1998."

3. Subject to the outcome of the further work outlined in the scoping study report, the aim is for the first set of fully audited Whole of Government Accounts on a GAAP basis to be available and published for 2005-06, with unaudited trial accounts on this basis produced from 2003-04 onwards. A CGA could be produced before this, with the first dry run for 2001-02. The report recommends that the proposed GAAP-based accounts should be prepared by the Treasury, since the Treasury would have most ready access to the necessary information.

4. The aim is for unaudited Whole of Government Accounts based on national accounts data to be developed by the Office for National Statistics (ONS), with a target date of 2001-02 for the first set of published statistical accounts.

5. Generally Accepted Accounting Practice in the UK (UK GAAP) represents the accounting and disclosure requirements of the Companies Act 1995 and accounting standards issues by the Accounting Standards Board, supplemented by accumulated professional judgement. It is accepted that GAAP should be adapted to the particular needs of the UK public sector.

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