Government accounts

The government’s latest accounts have been published but show significant weaknesses with quality and consistency of data provided by the health and education sectors, while organisations such as Network Rail have been totally excluded from the accounts even though accounting standards require their inclusion.

The comptroller and head of the National Audit Office (NAO), Amyas Morse, said that the exclusion of bodies such as Network Rail – with gross assets of £43.3bn and gross liabilities of £35.6bn; publicly-owned banks which had gross assets of £2,575.3bn and gross liabilities of £2,446.9bn; and other bodies had estimated gross assets of £36.1bn and estimated gross liabilities of £27.8bn – would have a significant impact on the government’s statement of financial position.

Morse also raised concerns with the length of time it took to produce the accounts – the latest accounts were completed 19 months after the end of the financial year to which they relate.

The NAO is also concerned over the completeness and valuation of school assets.

Morse said in his report that the Treasury and the Department for Education had not arranged for the academies’ returns to be audited. He added that the Department for Education did not provide him with sufficient assurance that the data included in the accounts were accurate and complete.

‘I have reviewed the process for consolidating these returns but was unable to obtain any assurance over the accuracy and completeness of this data,’ he said.

The impact of this, he said was that £2.2bn of income, £1.9bn of expenditure, assets of £3.5bn and liabilities of £0.3bn included in the accounts are unaudited; there is an understatement of gross assets in these accounts estimated to be £2.6bn arising from the omission of 195 academies; and a review of returns submitted by academies estimated a further understatement of assets of approximately £1.4bn, where insufficient value has been attributed to the assets.

The accounts have shown that government has significantly reduced its annual deficit from £163bn to £94bn over 2010/2011 but its overall net liability has remained at some £1.2 trillion due to a reduction in the public sector pension liability being offset by a rise in government borrowing.

Accounting standards used by local government have now also been brought into line with those used by central government, with comparative data added.