Finance Committee, 03 Oct 2000

Meeting date: Tuesday, October 3, 2000

Official Report 84KB pdf

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Resource Accounting and Budgeting

Members have before them FI/00/23/2, a detailed draft remit for the committee's inquiry into resource accounting and budgeting. It has been drawn up in conjunction with Professor Lapsley.

The draft remit follows on from our previous discussions. It tries to capture the key elements of resource accounting, particularly the move to full accrual recognition of assets, and raises issues about how liabilities are recognised. There is also a distinct focus on policy implementation and how we can draw lessons from policy.

The last line of the first paragraph refers to

"the whole of the Government accounts".

Should "Government" read "Scottish Executive"?

The whole of the Government accounts will cover everything, including the Scottish Executive and non-departmental public bodies. Some of the accounting is drawn from public corporations, which are quasi-autonomous. I favour the word "Government".

I entirely accept that explanation.

The second paragraph mentions

"the accounting ramifications of the shift".

I am not sure that I like the use of the word "ramifications"; it is a nice word, but I wonder whether we should use a phrase such as "the accounting and budgetary effects of the shift".

"Ramifications" suggests that there may be unforeseen consequences or implications. We certainly intended to refer to accounting and budgetary effects.

The draft remit says that

"relevant organisations and individuals will be contacted".

Do we want to spell out what organisations we would like to contact initially? We have heard evidence that RAB moves us towards the private sector. It would be interesting to find out how close by looking at some parallel body.

I have suggested that we should also look at the national health service and determine what effect, if any, RAB has had on health policy in Scotland. I want us to lay out the initial stages a little more fully, if Professor Lapsley feels that that is appropriate.

It is entirely appropriate to consider health. It makes a lot of sense to look at the health service's experience of using capital charging and the implications at the top level for financial management and management generally. Much could be gained by engaging with people in the NHS.

You say that RAB would move us closer to the private sector. How close is close?

Well, that is the question.

It is still quite a bit away, I think. There are people in the private sector who would not recognise some of the accounting that is being done under the name of RAB. That is not to say that RAB is bad, because it is ahead of some of the developments in private-sector institutions. A halfway house would be to look at the experiences of the privatised utilities. It might not be so helpful to go straight to a major commercial public limited company. Issues of accountability, measurement and the framework for putting the accounts together make the RAB experience quite different.

Another suggestion is to look at how other countries address issues of governmental accounting. That would obviously give the inquiry a wide span.

Does the committee agree in principle to appoint an adviser to assist the committee with the inquiry?

Will Professor Lapsley not be our adviser on the inquiry? Are we having an adviser specifically on this issue?

We will have to consider that on 24 October, in our first meeting after the recess.

Are we agreed on the remit and that we will have an adviser?

Members indicated agreement.

As the draft work programme says, we will not be considering the inquiry until 5 December, so it is not terribly pressing at this stage.

RAB is novel. I suggest that there will be a continuing need to monitor its development. The inquiry is important, but I think that issues will continue to arise as RAB fully beds down.

Thank you very much, Professor. We now move into private session to consider agenda items 5 and 6.

Meeting continued in private until 10:57.