the scrutiny unit annual reports and accounts aruni muthumala, house of commons scrutiny unit 13...
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The Scrutiny UnitAnnual Reports and Accounts
Aruni Muthumala, House of Commons Scrutiny Unit
13 March 2012
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(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?
Contents
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Parliamentary Scrutiny of Government Finances
Government Departments
Departmental Select
Committees
[On average 13 members supported
by 5/6 staff ]
Scrutiny Unit
[6 staff in finance team]
National Audit Office
[880 staff]
Public Accounts
Committee
[14 members supported by 4
staff]
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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
Definition
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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
Why are Annual Reports and Accounts of interest to Committees?
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Some numbers2010-11
£bnHealth 86.4
Education57.9
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
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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
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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
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Some examples of questions
JusticeThis is the second successive year that you have missed the pre-summer recess deadline for laying your accounts. What went wrong this time?
Foreign & Commonwealth Office
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?
Environment, Forestry & Rural Affairs
Has the Department delivered the £162m in-year savings that were announced for 2010-11 and where were the savings made?
Transport
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?
Communities & Local Government
Why did the Department pay £428k for the ten months work of its interim Finance Director between 1 March 2010 and 4 January 2011?