Public Accounts Committees
24 October 2013
Governance and control in managing and
accounting for public money:
principles and process
Sylvia Thomson
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Public Accounts Committees
24 October 2013
This Presentation:
1. Setting budgets and allocating public funds
2. Accounting for and Reporting public spending
– Internal and external audit
– Quality audit and scrutinising performance
– Parliament ‘s role
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Public Accounts Committees
19th February 2013
Part 1: Setting budgets and allocating public funds
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Public Accounts Committees
22 October 2013
Setting budgets and allocating public funds
Principle 1: Only Parliament supplies money for public bodies to
spend
• Supply Procedure: The Crown (the Government)
demands, the House of Commons grants, the House of
Lords assents
• Departments need statutory authority for both the use of
resources and for funds to be drawn from the
Consolidated Fund by Acts of Parliament known as
Consolidated Fund Acts and Appropriation Acts, which
only apply to the specific financial year
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Public Accounts Committees
24 October 2013
Chancellor BUDGET
JUDGMENT
CABINET
OBR
SPENDING REVIEW
FINANCE ACT
SUPPLY ESTIMATES
NAO
ANNUAL REPORTS AND ACCOUNTS
REVENUE
PAC
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24 October 2013
Public Accounts Committees
Setting budgets and allocating public funds: THE SUPPLY CALENDAR
2012-13
FY -1 2011-12
FY 2012-13
April - June
Forecast outturn
Vote on Account
Main Estimates
Revised Estimates
EYF take up
Departmental
reports
July September
PESA
October December
January March
Final accounts
FY +1 2013-14
Spending Review outcome
Autumn Statement
Vote on Account
Spring Supplementaries
Estimated Outturn
Departmental
Reports
Budget
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Public Accounts Committees
22 October 2013
Setting budgets and allocating public funds
Principle 2: The Treasury controls what is spent and how
it is spent
Even when Parliament has voted money, Departments also need Treasury consent
to spend the money and must do it in accordance with any conditions laid down by
the Treasury:
There are particular rules about types of spending, in year controls, and a general
worry about spending which is ‘novel’ or ‘contentious’: limits on overheads and
capital spending, special rules for eg finance leases.
There is a general overriding rule that the expenditure must be efficient, economic
and effective
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Public Accounts Committees
24th October 2013
Setting budgets and allocating public funds
Principles of Fiscal Control
Macro economic stability
• Fiscal honesty
• Cabinet responsibility
• Decisive decisions
Economic disposition of resources
• Value for money
• Incentives to manage public services well
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Public Accounts Committees
24 October 2012
What do you want to control?
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£696bn : Total Managed Expenditure–
TME -key ratio to GDP
£637bn; Departmental Current
spending – hardest to cut in year, and
nearly half is Annual Managed
Expenditure (AME)
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£343bn: Resource Departmental
Expenditure Limits – how much is ringfenced?
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£43.5bn: Departmental Capital
spending – easiest to cut but not
necessarily good vfm
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£16bn Administration Budgets – the
cost of government - 2 per cent of TME
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Total DELs– consumption measure
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Total AME – cyclical and demand
led,
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Public Sector net investment – link
to ‘The golden rule’ that
government borrows only to invest’
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24 October 2013
Public Accounts Committees
Setting budgets and allocating public funds
• Treasury expenditure teams typically have fewer than 15 people
• Details vary, but many teams control more than £50bn of
expenditure
• During a spending review they are understaffed and under pressure
compared with departmental finance staff
Chancellor
Office for Budget
Responsibility
Chief Secretary
PE control
Capital investment
Public sector services
Pay and pensions
Procurement
Financial management
and reporting
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24 October 2013
Public Accounts Committees
Setting budgets and allocating public funds
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Public accounts committees
24 October 2013
Spending Review Process
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Preliminary Skirmishes
Budget judgment (HMT –March)
Public Expenditure Cabinet
Spending Review Guidelines
Department Response
Negotiations (multiple)
Star Chamber (Ministers)
Settlement Letter (officials)
Announcement (summer/autumn)
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Public Accounts Committees
24 October 2013
Part 2: Accounting, Audit and Reporting
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Public Accounts Committees
24 October 2013
Accounting, Audit and Reporting: Accounting
Each Vote has an Accounting Officer who is personally responsible to
Parliament for the honesty of the Vote
1. AO must sign the Estimate and the Departmental Financial
Statements and Accounts
2. The AO appears, often along with the Minister, before the Public
Accounts Committee
3. The AO will often also appear before the PAC with Additional
Accounting Officers, and before the Departmental Select Committee
with other staff
4. The AO’s relationship with the Secretary of State is crucial
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Public Accounts Committees
24 October 2013
Accounting, Audit and Reporting: Accounting
Accounting Officer required to ensure
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funds authorised by Parliament are used for the purposes intended by
Parliament and that these funds and any receipts are properly accounted for
safeguarding the public funds; for ensuring propriety and regularity in the
handling of public funds;
and for the day-to-day operations and management of the department
promoting and safeguarding regularity, propriety, affordability, sustainability,
risk, and value for money across the public sector; and accounting accurately,
and transparently, for the department’s financial position and transactions.
ensure the department as a whole is run on the basis of the standards, in
terms of governance, decision-making and financial management that are set
out in Box 3.1 of Managing Public Money.
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24 October 2013
Public Accounts Committees
Setting budgets and allocating public funds: THE SUPPLY CALENDAR
2012-13
FY -1 2011-12
FY 2012-13
April - June
Forecast outturn
Vote on Account
Main Estimates
Revised Estimates
EYF take up
Departmental
reports
July September
PESA
October December
January March
Final accounts
FY +1 2013-14
Spending Review outcome
(2010, 2013)
Autumn Statement
Vote on Account
Spring Supplementaries
Estimated Outturn
Departmental
Reports
Budget
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Public Accounts Committees
24 October 2013
Accounting, Audit and Reporting: Audit
The National Audit Office and the Comptroller and
Auditor General
• C&AG is appointed by Parliament
• NAO conducts audits of Appropriation Accounts, particular
projects or policy programmes as requested by the Public
Accounts Committee, and ‘value for money’ audits. All
reports are laid before the house.
• Not all reports result in a PAC hearing
• The Treasury attends all PAC hearings and advises
Accounting Officers before the hearing
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Public Accounts Committees
24 October 2013
Accounting, Audit and Reporting: Audit
Internal Audit
• Assurance for Accounting Officer
• Audit Committee agrees programme
• Feeds into governance statement
External Audit
• Assurance for Parliament
• Department and HMT consulted over programme
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Public Accounts Committees
24 October 2013
Accounting, Audit and Reporting: Reporting
Principles of reporting
Tell Parliament (the public):
What you intend to do and what it will cost (always)
What you have done and what it did cost (always)
What you think you might do (sometimes)
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Public Accounts Committees
22 October 2013
Accounting, Audit and Reporting: Reporting
Internal: Treasury, Cabinet Office, Colleagues
External: Parliament, Public,
Freedom of information, transparency agenda
Press Releases
Social Media
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Public Accounts Committees
24 October 2013
Accounting, Audit and Reporting: Reporting
Departmental Select Committees
Wider focus than PAC
Agenda usually more political and policy based but not slow
to point out perceived shortcomings
Regular hearings on Estimates and Annual Reports
Also receive business plans and performance reports
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Public Accounts Committees
22 October 2013
Accounting, Auditing, Reporting: Reporting
Defence Select Committee: Current inquiries
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Work of the Chief of the Defence Staff
MoD Annual Report and Accounts 2012-13
Deterrence in the 21st Century
Intervention: Why, When and How?
Remote Control: Remotely Piloted Air Systems - current and future UK use
UK Armed Forces Personnel and the Legal Framework for Future Operations
MoD Main Estimates 2013-14
Future Army 2020
Towards the Next Defence and Security Review
MoD Supplementary Estimates 2012-13
Defence Implications of Possible Scottish Independence
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Public Accounts Committees
24 October 2013
Conclusions/Questions
What next?
• IT and Social media now driving agenda, can Parliament
keep up?
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Public Accounts Committees
22 October 2013
Template
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