CIPFA welcomes the publication of the UK’s Whole of Government Accounts (WGA). The accounts were released as George Osborne, Chancellor of the Exchequer, delivered his Autumn Statement to Parliament this afternoon. Only a handful of other countries have produced equivalent consolidated financial statements. The UK is the first to publish accounts covering the whole of the public sector including both central and local services.
Publication of WGA places the UK at the international forefront of government reporting and is a major step forward in terms of transparency and accountability. Taxpayers, commentators and the public at large can now see audited summary information about the public finances for the first time.
The Comptroller and Auditor General has issued a qualified opinion on the accounts. This is a reflection of the scale of the technical challenge involved in preparing WGA for the first time. Going forward, Government will no doubt be looking to address and remove these qualifications, as well as to report earlier after the close of the relevant financial year.
The publication of WGA highlights the risks that governments around the world take in managing fiscal policy using the National Accounts produced by statistical offices alone rather than complementing them with accounts prepared in accordance with internationally recognised financial reporting standards. The latter provide significantly more information on assets and liabilities such as public service pensions, costs of nuclear decommissioning and liabilities under PFI contracts enabling governments to make better informed economic decisions.
For example, the UK’s current deficit rises by around £58bn (from £107bn to £165bn) when its accounts are prepared using International Financial Reporting Standards (IFRS) compared with National Accounts, and its net liabilities increase by £452bn (from £760bn to £1,212bn), as IFRS based accounts include amounts (such as pensions) not included in National Accounts.
CIPFA has recently launched an initiative calling for a co-ordinated and concerted global effort to improve reporting, auditing and public financial management practices by governments around the world. We believe that this is a critical underlying issue in the current sovereign debt crises. WGA is an excellent example of the higher reporting standards which we want all governments to meet.
Ian Carruthers, CIPFA’s Policy and Technical Director commented:
‘Today’s WGA publication is undoubtedly a huge step forward in terms of transparency and public accountability. In addition to addressing the qualification issues, the task now is to use this new information to support management of the UK’s public finances. The sovereign debt crisis underlines some of the risks which can arise if government accounts fail to inspire market confidence. Hence CIPFA’s urgent call to international agencies, governments and other prospective partners to work with us to secure a step change in public financial management internationally.’
Contact: Tim Windle
CIPFA Press Office
t 020 7543 5787