The National Audit Office has welcomed the publication by the Treasury of the very first audited set of accounts showing in one document the financial position of the whole public sector. The accounts, the Whole of Government Accounts (WGA), are described as an important milestone for the Treasury in its improvement of the transparency with which the Government manages public finances and its accountability. However, the NAO highlights some limitations in the information provided.
The WGA constitutes the first and most comprehensive account of what the UK Government spends and earns and what it owns and owes. It is broader than similar accounts published by other countries, for it consolidates the financial positions of central government, the devolved administrations, local government, the health service and public corporations.
The WGA shows that, in 2009-10, the public sector owned assets to the value of £1.2 trillion and liabilities totaling £2.4 trillion, giving a net liability of £1.2 trillion. The shortfall between operating revenues and expenses (including finance costs) during the year was £165 billion.
The NAO does, however, highlight important limitations in this first WGA. Among these are that the financial position it presents is some 20 months old, a consequence of the amount of preparation that has to be undertaken. Of particular concern is that the WGA significantly understates the true value of public assets and liabilities by excluding the publicly owned banks, the Bank of England and Network Rail which, in the opinion of the Comptroller and Auditor General, are owned and controlled by government. It also gives limited analysis of spending across the main functions of government, such as defence and education, or on services such as consultancy, which would make the account more useful to the reader.
The Comptroller and Auditor General has qualified his audit opinion. Among the reasons for his qualification are the exclusion of the government-controlled bodies that, in the C&AG’s view, should have been included to comply with the International Financial Reporting Standards.