Amyas Morse, Comptroller and Auditor General, has refused to fully sign off the 2011-12 accounts of the Department for Culture, Media and Sport. The C&AG’s audit opinion was qualified due to the Department’s accounts not accurately reflecting the value of certain assets held within the Group.
The BBC properly prepares its accounts to the International Financial Accounting Standards, rather than government accounting standards, meaning it recorded its tangible non-current assets (mainly land and buildings, plant and machinery, and fixtures and fittings) at depreciated historic cost rather than under the fair value convention. The BBC has indicated to the Department that it will supply figures on a fair value basis for future years.
Despite the absence of reliable valuation information under the fair value convention, given the cost of the assets involved, it is likely that there is a significant misstatement of assets in the Department’s accounts.
The Department’s focus on the delivery of the London 2012 Olympic and Paralympic Games meant that it had originally planned to prepare the accounts in the autumn and lay them in December. Notwithstanding the difficulties involved in preparing the accounts for a complex department with a large number of separate bodies, this still allowed a period of more than four months to prepare the accounts. However, the Department underestimated the complexity of the task and lacked the necessary capacity in its finance function, meaning that an extension to the statutory deadline had to be granted, and additional help needed to be purchased.
The Department has committed to undertake a review of the 2011-12 process. This review has been welcomed by the NAO, which has called on the Department to learn the lessons from this year to ensure it can account to Parliament in a timely manner in the future.