THE MOVE TO RESOURCE ACCOUNTING AND BUDGETING

1
THE MOVE TO RESOURCE ACCOUNTING AND BUDGETING

• THE DEPARTMENTAL VIEW

2
THE NEW REQUIREMENTS

• Accrual accounting - leading to
• Creation of a balance sheet and more
  comprehensive reporting
• Identification of Departmental aims and objectives

3
THE NEW FINANCIAL DISCIPLINES

• Balance sheet management - of fixed assets,
  current assets and liabilities
• Identification and management of risk
• Greater transparency of operations
• Rigorous reporting and audit environment
• Capital and resource planning and accounting
• Objectives and targets - the link of policy to
  resources

4
WHAT THIS MEANS

• RAB has already and will continue to bring
  substantial VFM benefits to the taxpayer and
  additional financial control at HM Treasury.
• Its transparency and financial disciplines has
  and will improve greatly the management of
  budgets and assets throughout Whitehall.
• The link with objectives and targets will provide
  a much more focussed use of resources.
• Management skills will attain a higher profile.

5
A FOCUSSED MANAGEMENT ENVIRONMENT

• Assets need to be effectively managed.
• The cost of activities has to be recognised.
• Financial decisions should suit the circumstances
  and not simply be budget driven.
• Operational units need to liaise closely with
  the Centre to ensure good planning and accurate
  forecasting.
• Audit and review work demand accuracy and
  transparency in all data capture and reporting.

6
PROBLEMS IN IMPLEMENTATION

• Culture change greater than anticipated
• Technical accounting issues can become complex -
  eg capital recognition estate valuations
  pension/terminal benefit liabilities asset
  impairments
• Marrying the planning, monitoring and accounting
  processes
• Creation of an accurate cost model
• The financial year end becomes a major management
  exercise
• Financial awareness training is paramount