Transcript Slide 1
The Scrutiny Unit
Annual Reports and Accounts
Aruni Muthumala, House of Commons Scrutiny Unit
13 March 2012
Contents
(1)
Organisations involved in financial scrutiny
(2)
Characteristics of Annual Reports and Accounts
(3)
Why do select committees look at them?
(4)
How do select committees analyse them?
Parliamentary Scrutiny of Government
Finances
Scrutiny
Unit
[6 staff in
finance team]
Departmental
Select
Committees
Public Accounts
Committee
[On average 13
members supported by
5/6 staff ]
[14 members
supported by 4 staff]
National
Audit Office
[880 staff]
Government Departments
Definition
In the UK all Government Departments produce Annual
Reports and Accounts:
An Annual Report which includes a management
commentary and information on past activity and future
plans, and
Resources Accounts audited by the National Audit Office
which report on spending relating to the financial year
and assets and liabilities as at year end
Why are Annual Reports and Accounts of
interest to Committees?
Overview of Department’s financial performance
- Did the department under spend
- Changes in the composition of expenditure
Highlight Department’s performance in meeting objectives
- Management commentary highlights whether department is meeting objectives (structural
reform priorities
- Overall strategic direction of the Department
Any weaknesses in financial management capability – reports submitted
late/ qualified. [Poor financial management leads to poor policy
implementation]
Shows interesting information to Members that they not have been
previously aware for
Some numbers
2010-11
£bn
Health
Education
86.4
57.9
Work & Pensions
80.9
Business, Innovation and Skills
23.5
Defence
48.8
International Development
7.1
Foreign & Commonwealth Office
2.3
Energy and Climate Change
3.0
Environment, Forestry & Rural Affairs
4.7
Transport
10.1
Treasury
14.7
Communities & Local Government
37.7
Cabinet Office
0.4
Home Office
10.7
Ministry of Justice
49.1
How does scrutiny take place
Most select committees hold oral evidence sessions on Departments’ Annual
Reports and Accounts. A few write a report and recommendations on the
basis of the oral evidence session.
[Format: Members will ask questions on finances and department’s
administration to the Permanent Secretary]
Before the oral evidence session, the Scrutiny Unit provides analysis of
relevant Annual Reports and Accounts and suggested questions to
department to each select committee
Select committees have different approach to SU Analysis of Annual Reports
and Accounts
Some will use suggested questions in oral evidence session to committee
others will send written questions to department and will use the response by
Department to ask more pointed questions to the committee
What do we focus on
Have the accounts been qualified? Have they been submitted in
time?
insufficient and appropriate audit evidence obtained
the financial statements have not been prepared in accordance with accounting standards
the financial statements are affected by significant uncertainties
financial statements do not give a true and fair view
irregular expenditure
[In 2010-11, DWP, DEFRA and HMRC accounts were qualified]
Department’s performance – structural reform plan [actions in business plan not
completed in time/performance against input indicators highlighted]
Staff costs
Provisions – funds set aside for future
Big changes
Remuneration report – directors are paid
Some examples of questions
Justice
Foreign &
Commonwealth
Office
Environment,
Forestry & Rural
Affairs
Transport
Communities &
Local Government
This is the second successive year that you have missed the presummer recess deadline for laying your accounts. What went
wrong this time?
Which embassies and areas within the FCO have lost out the
most due to cut-backs in the capital program?
How much funds did the Department raise last year through
selling buildings? How much will it raise this year?
Has the Department delivered the £162m in-year savings that
were announced for 2010-11 and where were the savings made?
The Department under spent on its 2010-11 budget by £1 billion
and you ended up giving £543 million back to the Treasury. Why
were you unable to spend that money on transport projects?
Why did the Department pay £428k for the ten months work of
its interim Finance Director between 1 March 2010 and 4
January 2011?