parliamentary correspondent, Accountancy Age, Wednesday 7 July 2010 at 09:06:00

Lib-Cons continue project to unravel complex Whitehall accounting

MPs have voted to implement massive accounting changes aligning government financial reporting and Parliamentary spending controls ? but leaving misalignments totaling 22 bn.

Financial secretary Mark Hoban , himself a former accountant, said in the Commons the changes would simplify and align as much as possible of the financial public spending control system and implement the Clear Line of Sight project.

The project was designed to simplify government financial reporting on plans, estimates and spending outcomes and was begun in 2007 under Labour.

The bulk of the misalignment involves 19bn in capital grants to the private sector, local government and public corporations ? treated as resource spending in departmental accounts to reflect international financial reporting standards, but capital spending in budgets to reflect national accounts treatment.

Hoban said the framework project "represents an excellent opportunity to achieve greater consistency" with the extension of departmental accounting to include non-departmental pubic bodies, and other bodies classified to central government , bringing them within the coverage of estimates presented to Parliament for approval.

He said the project, with cross party backing, would "enhance consistency and transparency at all stages" removing inconsistency totaling 500bn between national accounts produced by the Office of National Statistics, budgets defined by the Treasury, supply estimates in tune with UK GAAP and resource accounts following UK GAAP adapted for the public sector.

New Public Accounts Committee chairwoman Margaret Hodge said the changes would ensure the government is better held to account.

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