Inquiry into Government accounts launched
23 February 2016
Effective Parliamentary scrutiny of the Government depends in practice upon its power to authorise and examine public expenditure, income and taxation. Parliament depends upon audited information (normally in the form of resource accounts) and unaudited information (such as the Quarterly Data Summaries from departments or the mid-year reports to Select Committees) to carry out this financial scrutiny. Ministers, Departmental Boards and Permanent Secretaries rely upon similar information (normally in the form of monthly management accounts) to scrutinise and manage their departments.
This inquiry examines the format and utility of monthly management accounts used by Ministers, Permanent Secretaries and Departmental Boards, and the Departmental Accounts published for Parliament and the public. The House of Commons and its Committees have not expressed a view of the accounts submitted to them by the Government since 2009. It is not clear that they are of any use to Select Committees, or to the public, in holding the Government to account. Despite this, the Government spends considerable amounts of money in producing and auditing them. Yet the published accounts are used by Ministers more to promote the Government's own achievements, than to provide useful tables of figures and information. Numerous reviews over the last decade have identified poor management information and management accounts as a factor in poor decision making within Departments.
The Committee's inquiry is intended to complement the Procedure Committee's current inquiry into the Scrutiny of the Government's supply estimate and with inquiries conducted by the Committee for Public Accounts and the National Audit Office into the accountability of the civil service.
Terms of Reference
The inquiry will focus on two key areas:
- How monthly management accounts can be improved as a tool for managing government departments and agencies. In particular, how Ministers, Permanent Secretaries and Departmental Boards are able to use management accounts as a tool to examine the functions of the department they are charged with running.
- How both departmental accounts, other accounts and retrospective financial information given to Parliament can be improved to enable both MPs and the public to hold the executive to account. We will be examining the contents and format of the accounts and how far they are transparent to a lay user.
Questions to consider
The format of monthly management accounts
Monthly management accounts are prepared in all Departments for Ministers, the Board and the Permanent Secretary. They are used to inform Departments and Agencies about their operations and finances.
- What is the purpose of monthly management accounts?
- How far do monthly management accounts currently meet this objective? Is their quality consistent?
- How can the monthly management accounts be improved to ensure they are more useful to decision makers, particularly Permanent Secretaries, Departmental Boards and Ministers?
- How could outcomes be integrated into the monthly management accounts, such as proposed by the MINIS system promoted by Lord Heseltine?
- How far can the monthly management accounts be made public?
The current utility of departmental accounts
Departmental accounts are prepared on an annual basis for a year ending on the 31 March. Accounts are laid on the floor of the House and published at the same time, normally before the Summer Recess.
- How useful are the accounts as a tool to scrutinise the Government?
- Which parts of the accounts are used by those scrutinising the Government? Which parts are not?
Reforms to the format of departmental accounts
The Treasury publishes the standard format for government accounts. It published new guidance in 2014 which will be implemented in 2015–16 accounting year. The guidance seeks to make accounts clearer for the user and connect performance and financial data.
- How could Departmental Accounts be improved to meet the needs of Parliament and the public?
a. What is best practice in public sector accounts across the world and why is it best practice?
b. What is best practice in the private sector and why?
- What if anything is missing from the Treasury 2014 Command Paper (PDF 1.52MB) which laid out the new accounting procedures for 2015–16 ?
- How far should other government accounts (for NDPBs and Agencies) reflect the format of Departmental accounts?
a. How much more should government accounts be standardised?
Future improvements to accounts
Currently the Treasury sets the framework for the format of government accounts. They are advised by the Financial Reporting Advisory Board (FRAB) which includes representatives from the House of Commons, the National Audit Office, professional associations and the government.
- Who should have control over the format of Departmental Accounts and Whole of Government Accounts?
- What independent body should advise on the format of Departmental accounts in the future?
- How can we judge the success of Departmental Accounts as disclosures of information to the public?
Improving scrutiny of financial information from the Government
- How can financial scrutiny of Departments in both Parliament and outside be improved?
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