The National Audit Office (NAO) has today published its report on HM Treasury’s Whole of Government Accounts (WGA). The WGA provides the most complete and accurate picture of the financial performance and position of the UK public sector in 2016-17. It sets out what the government receives, pays, owns and owes.
The NAO report highlights that the WGA is increasingly important to the ongoing management of the public finances, with the Treasury continuing to increase the impact and profile of the accounts. The Office for Budget Responsibility and outside government, the Institute for Fiscal Studies and the International Monetary Fund, have all drawn upon the WGA in their reports on the management and sustainability of the public finances. The Treasury used the WGA to scope its balance sheet review, launched in November 2017, and identify initial opportunities to make more effective use of assets, improve the return from investments and reduce the cost of liabilities. The Treasury plans to provide an update on the review findings in the 2018 Budget.
The NAO found that the Treasury has continued to improve the presentation of the 2016-17 WGA, providing better quality analysis of the cross government finances and the main drivers of movements in the accounts. This should assist users of the accounts in better understanding where the WGA sits within wider fiscal measures, and provides a more complete picture of the economic performance and position of the UK public sector.
Despite recent improvements, the WGA continues to lack specific detail in key areas that would enable a fuller analysis of the public finances. There remains limited information in the WGA in relation to the purchase of goods and services by government which represents some £194.8 billion of government expenditure. As the UK exits from the European Union and the process of managing the government’s deficit progresses, these disclosures and the underlying data will be increasingly relevant and useful; and will improve the ability to scrutinise the Treasury’s management of the public finances.
The usefulness of the WGA remains limited by the time it takes to produce, which has been an average of around thirteen months after the accounting year end. The Treasury has a significant challenge to meet its ultimate aim to publish the accounts within nine months of the financial year-end as more timely publication is reliant upon a number of factors, including the receipt of consolidation information from component bodies.
The Treasury has continued to make progress in improving the completeness and accuracy of transactions and balances in the WGA accounts, allowing the Comptroller and Auditor General to reduce the number of qualifications to his opinion. The remaining qualifications relate to technical issues, including the exclusion of Royal Bank of Scotland from the accounts, and underlying accounting problems in the Ministry of Defence and the academy sector.
The NAO recommends that the Treasury should continue to raise the profile of the WGA. Treasury should embed the WGA into the routine monitoring of risks to public finances and ensure that the balance sheet review process has a lasting effect., Whilst continuing to improve the quality of the information in the WGA to address qualification issues, Treasury should also set out its plan for producing the WGA sooner, setting out key milestones to achieve their target of producing the WGA within nine months.