Recommendations & Conclusions
32 items
2
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
It is unacceptable that the increase in missing data is reducing the utility and reliability of the Whole of Government Accounts. A total of 155 public bodies did not submit data this year, including two pension schemes with liabilities of £86.9 billion and £48.2 billion respectively. As we found in …
Read more
It is unacceptable that the increase in missing data is reducing the utility and reliability of the Whole of Government Accounts. A total of 155 public bodies did not submit data this year, including two pension schemes with liabilities of £86.9 billion and £48.2 billion respectively. As we found in our examination of the 2019– 20 WGA, gaps in the data reduces the completeness of the information available in the WGA, and reduces the certainty of any consequent insights, conclusions or decisions. When combined with the delays to the accounts, it makes it a less useful source to base decision making on. Stakeholders have suggested that using unaudited numbers for local authorities would be better than omitting them, as the omission renders the data definitely inaccurate, whereas including unaudited data is only potentially incorrect. Trend analysis will also be negatively impacted by missing data. We are particularly concerned that unless the trend towards incomplete data can be rapidly reversed, it could take several cycles for any trend analysis from the WGA to be of usable quality. As we say throughout this report this delay is highly undesirable and HM Treasury must prioritise ways of improving on this prediction. Recommendation 2a: HM Treasury must be more proactive in collecting the data required to complete the WGA, including: • Engaging with bodies to better understand why they have not submitted data. • Requiring bodies to submit draft data even if audited data is not available. • Identifying appropriate consequences/sanctions for bodies that don’t submit required data. b) HM Treasury should, as part of the 2021–22 WGA, include within the governance statement details of how it is addressing the issue of missing data. 6 Whole of Government Accounts 2020–21
Show less
Government response AI summary
The government agrees, stating it has already included details on addressing missing data in the 2021-22 WGA governance statement and an expanded section in the performance report, and will continue to do so in future publications.
Read full response →
HM Treasury
3
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
We remain concerned that failures in the English local audit market are resulting in poorer quality data for Central Government, and are at risk of spreading to other sectors. The system of local government audit is close to breaking point, with over 630 accounts, some of which date as far …
Read more
We remain concerned that failures in the English local audit market are resulting in poorer quality data for Central Government, and are at risk of spreading to other sectors. The system of local government audit is close to breaking point, with over 630 accounts, some of which date as far back to 2015–16, yet to be signed off by auditors by the end of November 2022. Delays to local audit reduces transparency over approximately £100 billion of local government spending, and also impacts other areas of government spending, such as the NHS. We have previously found that the delays to assurance on the accounts of the Local Government Penson Scheme contributed to delays of four to five months on certifying the accounts of Ministry of Justice and the Department for Digital, Culture, Media & Sport. As part of the 2021 Spending Review, HM Treasury has allocated an additional £40 million to support local government bodies in responding to new auditing requirements and implementing the recommendation of the Redmond review. Despite this, performance continues to deteriorate, with just five of 467 local government entities meeting the statutory deadline for publication of their 2022–23 audit opinions. Recommendation 3: HM Treasury should write to the Committee by the end of February 2024 to explain how it is engaging at a senior level with the Department for Levelling Up, Housing and Communities, and the Financial Reporting Council, to ensure that they have a credible plan to resolve the local audit crisis.
Show less
Government response AI summary
The government agrees and states it has implemented the recommendation by writing to the Committee in early March 2024, detailing its senior-level engagement with DLUHC and FRC to address the local audit crisis.
Read full response →
HM Treasury
4
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
HM Treasury does not have a clear plan for tracking ongoing COVID costs or evaluating COVID schemes in the longer term. It is essential that government learns from its response to the pandemic to ensure that lessons are applied and improve both future responses and business-as-usual service delivery. Yet HM …
Read more
HM Treasury does not have a clear plan for tracking ongoing COVID costs or evaluating COVID schemes in the longer term. It is essential that government learns from its response to the pandemic to ensure that lessons are applied and improve both future responses and business-as-usual service delivery. Yet HM Treasury has no existing plans to track COVID spending beyond next year. There is clear value in tracking some specific data for longer, such as the 20-year culture loans and 10-year business loans, and in learning lessons to understand if these initiatives just propped up struggling institutions or allowed them to invest and expand. There is also a risk that Machinery of Government changes can obfuscate attempts to follow the performance of, and return on, these investments. Evaluation of COVID support schemes is beginning to be reported, but on a scheme-by-scheme basis. Recommendation 4a: HM Treasury should, within six months, set out a long-term plan for tracking COVID-related costs, such as requiring accounts disclosures for annual accounts of significant schemes beyond the cost-tracker. b) HM Treasury should, by July 2024, provide a compendium of evaluation of COVID schemes from across Government, and cross cutting lessons to learn.
Show less
Government response AI summary
The government agrees and commits to providing a list of relevant COVID scheme evaluations by July 2024 and to carry out an exercise to distil cross-cutting lessons, with an update to the Committee in April. It also highlights ongoing efforts in risk management and refining …
Read full response →
HM Treasury
5
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
HM Treasury is not sufficiently proactive in identifying the data it requires for reporting thematic spend in the WGA, or communicating this with Departments. HM Treasury does not actively pursue the data it needs for the WGA beyond providing initial guidance on the format data should be provided in. The …
Read more
HM Treasury is not sufficiently proactive in identifying the data it requires for reporting thematic spend in the WGA, or communicating this with Departments. HM Treasury does not actively pursue the data it needs for the WGA beyond providing initial guidance on the format data should be provided in. The performance report in the most recent WGA provides a comprehensive explanation of the contents of the financial statements but does not yet meet best practice in terms of providing a comprehensive strategic, operational and financial review of the financial year. The WGA also includes limited or no commentary on non-financial key performance indicators used by the government to measure its progress on its policy objectives, Whole of Government Accounts 2020–21 7 for example national wellbeing, educational achievement, levelling up, tackling poverty, crime levels, progress on major strategic infrastructure projects, or illegal immigration. Recommendation 5: HM Treasury should, within its Treasury Minute response, explain how it will use guidance to departments or accounts directions to ensure there is more consistent data available from departmental accounts for use in improving reporting within future WGAs on key strategic themes such as climate change and the impact of inflation.
Show less
Government response AI summary
The government agrees, stating the 2021-22 WGA already includes updates on climate-related disclosures and inflation impacts, and it signposts to other relevant government publications. HM Treasury will remain mindful of useful disclosures while balancing complexity, noting WGA is part of a broader flexible reporting framework.
Read full response →
HM Treasury
6
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
HM Treasury is not making the most of the information available within the WGA. As the balance sheet of the nation and an economic snapshot of the economy, the WGA has the potential to be an important and useful document in explaining where taxpayers’ money is spent and where are …
Read more
HM Treasury is not making the most of the information available within the WGA. As the balance sheet of the nation and an economic snapshot of the economy, the WGA has the potential to be an important and useful document in explaining where taxpayers’ money is spent and where are the government’s financial liabilities. Given this, there is more that HM Treasury could do to help Parliament read the accounts, and understand what the implications are of the information presented. This could, for example, take the form of an annual financial presentation, using the data and information included in the most recent audited WGA. There are also international examples of transparency over public spending that HM Treasury could learn from, such the regional spending analysis available within the US. Regional analysis of spending in the UK is now available through OSCAR II. Recommendation 6: HM Treasury should, within its Treasury Minute response, explain how it intends to improve the accessibility of the information within the Whole of Government Accounts, for example through seminars with MPs, and providing access to the localised spending data now available through OSCAR II. 8 Whole of Government Accounts 2020–21 1 Timeliness of the WGA
Show less
Government response AI summary
The government agrees with the recommendation and has written to the Parliamentary Scrutiny Unit to explore providing training and seminars to MPs to improve WGA accessibility. It also highlighted that regional spending data is already available through OSCAR II publications like PESA and CRA.
Read full response →
HM Treasury
1
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
Based on the Whole of Government Accounts (WGA) for the year ended 31 March 2021, we took evidence from HM Treasury (the Treasury) on 9th November 2023.1
Government response AI summary
The government outlines a specific forward recovery plan for WGA publication, committing to publish the 2021-22 WGA by March 2024, 2022-23 by November 2024, and 2023-24 by July 2025.
Read full response →
HM Treasury
7
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
The Treasury published the 2020–21 WGA on 20 July 2023, 27 months after the end of the financial year. The Treasury did not provide the first complete draft of the accounts to the NAO until April 2023, nearly 14 months after the statutory deadline. The delay meant that the accounts …
Read more
The Treasury published the 2020–21 WGA on 20 July 2023, 27 months after the end of the financial year. The Treasury did not provide the first complete draft of the accounts to the NAO until April 2023, nearly 14 months after the statutory deadline. The delay meant that the accounts were not laid until 20 July 2023, more than six months after the statutory deadline. In comparison, HM Treasury provided the complete first draft of the 2019–20 Whole of Government Accounts to the NAO in March 2022 and the 2019–20 accounts were published just over 26 months after year-end. Compared to the 2019–20 accounts, even though the account production time has decreased, the timeline for publication has nonetheless lengthened further.7
Show less
Government response AI summary
The government agrees with the observation regarding publication delays and has set specific target dates to publish the 2021-22 WGA by March 2024, 2022-23 by November 2024, and 2023-24 by July 2025, outlining a forward recovery plan.
Read full response →
HM Treasury
8
Recommendation
Ninth Report - Whole of Government Acco…
Accepted
As part of our inquiry into the 2019–20 Whole of Government Accounts, we concluded that the Treasury had taken too long to deliver the accounts, having been unrealistic with its timetable. We recommended that the Department reviewed the causes of its optimism bis, and revisited future timetables to ensure that …
Read more
As part of our inquiry into the 2019–20 Whole of Government Accounts, we concluded that the Treasury had taken too long to deliver the accounts, having been unrealistic with its timetable. We recommended that the Department reviewed the causes of its optimism bis, and revisited future timetables to ensure that they were realistic. The Treasury accepted our recommendation, and committed to revising the timetable for the 2020–21 account and future cycles. It also committed to setting out a long term recovery strategy that was realistic.8 In our previous evidence session on the 2019–20 WGA, HM Treasury said that it aimed to deliver the 2020–21 and 2021–22 accounts for publication of March 2023 and November 2023 respectively. However, in October 2022, the Treasury wrote to tell us that a March 2023 publication now looked unlikely.9 The Treasury wrote to us again in December 2022 to provide a further update on the timetable for the delivery of future WGAs, which it expected to published in quarter three of 2023.10 5 Public Accounts Committee, Whole of Government Accounts 2019–20, Twentieth Report of Session 2022–23, HC 31, 14 October 2022 6 HM Treasury, The Whole of Government Accounts (Specified Dates) Order 2010, 2010 No. 570, 31 March 2010 7 Q 1; WGA 2020–21, para 11, p 264; and HM Treasury, Whole of Government Accounts: year ended 31 March 2020, HC 246, June 2022 8 Committee of Public Accounts, Whole of Government Accounts 2019–20, Twentieth Report of Session 2022–23, HC 31, 14 October 2022; and HM Treasury, Government Response to the Committee of Public Accounts on the Eighteenth to the Twenty-Second Reports from Session 2022–23, CP 774, 12 December 2022 9 Correspondence from Catherine Little, Director General, Public Spending HM Treasury, re Whole of Government Accounts (WGA), dated 4 October 2022, published 17 October 2022 10 Correspondence from Catherine Little, Second Permanent Secretary Head of Government Finance Function, HM Treasury, re Whole of Government Ac
Show less
Government response AI summary
The government agrees and will write to the Committee by end of March 2024 with an update on future WGA publication plans, including specific target dates for 2021-22 (March 2024), 2022-23 (November 2024), and 2023-24 (July 2025) based on a forward recovery plan.
Read full response →
HM Treasury
9
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
We therefore asked the Treasury why publication of the 2020–21 WGA was so delayed. The Treasury told us that it had assumed that collecting the data needed for the WGA would take two to three months, that preparing the accounts would take five to six months, and that the C&AG’s …
Read more
We therefore asked the Treasury why publication of the 2020–21 WGA was so delayed. The Treasury told us that it had assumed that collecting the data needed for the WGA would take two to three months, that preparing the accounts would take five to six months, and that the C&AG’s audit would take three to four months. It explained that the process was prolonged by delays to the accounts that feed into the WGA and delays to receiving the data needed for the WGA, which resulted in it having to extend the data collection window. Under the system in use at the time, the data collection phase must end before the accounts preparation phase could begin. HM Treasury extended this deadline three times until December 2022. The Treasury recognised that it had taken longer to produce the 2020–21 WGA after the end of the financial year that it related to compared to previous WGAs. But it asserted that given the delays to being able to start preparing the account, this was “probably one of the fastest production timetables that we have ever followed” and that, at 14 months from start to completion, this was the fastest that it had ever produced.11
Show less
Government response AI summary
The government agrees with the Committee's observation on WGA delays and outlines a forward recovery plan with specific publication dates: March 2024 for 2021-22, November 2024 for 2022-23, and July 2025 for 2023-24.
Read full response →
HM Treasury
10
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
The WGA offers an important tool not only for managing public finances but for ensuring transparency and accountability.12 We received written evidence from the Institute of Chartered Accountants in England and Wales (ICAEW), which told us that the WGA is uniquely positioned to provide an overview of public sector spending, …
Read more
The WGA offers an important tool not only for managing public finances but for ensuring transparency and accountability.12 We received written evidence from the Institute of Chartered Accountants in England and Wales (ICAEW), which told us that the WGA is uniquely positioned to provide an overview of public sector spending, and how the public sector’s financial landscape is evolving. We also received written evidence from the University of Glasgow, which told us that timeliness is essential when gathering high-quality data needed to produce useful information, and that delays reduce the credibility and transparency of information in the WGA and diminish its potential to generate valuable insights. ICAEW similarly explained that there are also implications for governance, as if the publication of audit findings is delayed, so is the opportunity for resolving them.13
Show less
Government response AI summary
The government agrees with the importance of timely WGA publication and commits to publishing the 2021-22 WGA by March 2024, the 2022-23 WGA by November 2024, and the 2023-24 WGA by July 2025, outlining an ambitious forward recovery plan.
Read full response →
HM Treasury
11
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
The Treasury included its recovery plan for the WGA as part of its update in December 2022, which included returning to the pre-Covid timetables of produce the WGA no more than 15-months after the end of the relevant financial year. We asked the Treasury whether it was confident that future …
Read more
The Treasury included its recovery plan for the WGA as part of its update in December 2022, which included returning to the pre-Covid timetables of produce the WGA no more than 15-months after the end of the relevant financial year. We asked the Treasury whether it was confident that future WGAs would be completed within this timetable. HM Treasury told us that it was confident in its revised timetable for the recovery of the 15 months publication schedule. It explained that it was working on preparing the draft accounts for WGA 2021–22, which it told us that it expected to provide to the NAO in November 2023 and to publish in April 2024, nine months after the 2020–21 WGA.14 The Treasury subsequently wrote to us after our evidence session to confirm that it expected to provide the draft accounts to the NAO in December 2023.15 The Treasury told us, however, that it would take it three or four further WGA cycles to fully catch-up. HM Treasury told us that it planned to achieve this by relying on the new functionality of the OSCAR II 11 Qq 1–3 12 WGA 2020–21, para 1, p 261 13 WGA0002 Written evidence from ICAEW: The Institute of Chartered Accountants in England and Wales; and WGA0001 Written evidence from Professor David Heald (Emeritus Professor at Adam Smith Business School, University of Glasgow) 14 Qq 1, 18 15 Correspondence from Conrad Smewing, Director General Public Spending, re Follow up to the Whole of Government Accounts (WGA) 2020–21 PAC Hearing, dated 3 December 2023, 11 December 2023 Whole of Government Accounts 2020–21 11 system, which enables it to capture the data for the WGA for one year while the previous year is still being worked on. In comparison, for previous WGAs, the accounts could only be worked on in strict sequence.16 16 Qq 1, 18; Correspondence from Catherine Little, Second Permanent Secretary Head of Government Finance Function, HM Treasury, re Whole of Government Accounts (WGA), dated 20 December 2022, published 12 January 2023 12 Whole of
Show less
Government response AI summary
The government agrees with the committee's observation regarding the Whole of Government Accounts (WGA) recovery timetable and provides specific publication plans for future WGAs: 2021-22 in March 2024, 2022-23 in November 2024, and 2023-24 in July 2025, with a target to return to the 15-month …
Read full response →
HM Treasury
12
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
Despite the multiple extensions to the data collection window, a large volume of data was nonetheless missing from the 2020–21 WGA when it was published. A total of 155 entities did not submit the data requested, including 137 entities which were included in the 2019–20 WGA. In total, data on …
Read more
Despite the multiple extensions to the data collection window, a large volume of data was nonetheless missing from the 2020–21 WGA when it was published. A total of 155 entities did not submit the data requested, including 137 entities which were included in the 2019–20 WGA. In total, data on £55.3 billion (4.9%) of public expenditure was missing from the 2020–21 accounts. A large subsection of this figure relates to local government bodies, with 128 (just over 25%) of a total 510 local government bodies failing to provide data.17
Show less
Government response AI summary
The government agrees to proactively work with entities to ensure timely data collection, requiring draft data where necessary, and is running webinars and strengthening discipline in central government by linking WGA returns to Accounting Officer assessments.
Read full response →
HM Treasury
13
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
When we examined the 2019–20 WGA, only 23 local bodies had failed to submit data. We found that this nonetheless impaired the reliability and quality of the data underlying the accounts, and consequently the validity of this data as a basis for insights, conclusion, and subsequent decisions.18 We received written …
Read more
When we examined the 2019–20 WGA, only 23 local bodies had failed to submit data. We found that this nonetheless impaired the reliability and quality of the data underlying the accounts, and consequently the validity of this data as a basis for insights, conclusion, and subsequent decisions.18 We received written evidence from the Association of Chartered Certified Accountants (ACCA), which suggested that the extent of the data that was missing from the 2020–21 WGA meant that not only was comparison between the 2020–21 WGA with figures for the previous year now compromised, but the reader’s ability to reconcile actual and budgeted expenditure was also impaired.19 We were concerned that this problem may be exacerbated further in the 2021–22 WGA, which will cover a period of high inflation.20
Show less
Government response AI summary
The government agrees with the committee's concerns regarding missing data impacting the Whole of Government Accounts (WGA) and is taking proactive steps including requiring draft data submissions, engaging with stakeholders, running webinars, and strengthening central government discipline, targeting implementation by Spring 2024.
Read full response →
HM Treasury
14
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
We asked the Treasury about the extent of missing data and the impact of this on the ability of government to make decisions about public spending. HM Treasury recognised that any gap in data meant that there was uncertainty about the completeness of the information that it was using. It …
Read more
We asked the Treasury about the extent of missing data and the impact of this on the ability of government to make decisions about public spending. HM Treasury recognised that any gap in data meant that there was uncertainty about the completeness of the information that it was using. It also recognised that, combined with the timeliness of the accounts, this made the WGA a “less timely, less complete set of data for us to base decision making on”.21 It told us that it did not think that this fundamentally changed the way that it made decisions, or the quality of those decisions, as it did not make decisions about public spending in isolation. But it accepted that it needed to think carefully about what it should do next year if there was more missing data, which it expected to be the case, in order to allow people to draw trends as reliably as possible from the data in the WGA.22
Show less
Government response AI summary
The government agrees with the committee's concerns regarding the impact of missing data on WGA decision-making and is proactively working to improve data collection and completeness through requiring draft data, engaging stakeholders, running webinars, and strengthening central government discipline, with a target implementation by Spring …
Read full response →
HM Treasury
15
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
HM Treasury also increased the use of unaudited data—data which has been audited only for presentation in the individual entity’s own accounts, rather than in OSCAR II format—in the 2020–21 WGA. We received written evidence from the ICAEW, which told us that the use of incompletely audited draft account data …
Read more
HM Treasury also increased the use of unaudited data—data which has been audited only for presentation in the individual entity’s own accounts, rather than in OSCAR II format—in the 2020–21 WGA. We received written evidence from the ICAEW, which told us that the use of incompletely audited draft account data would almost certainly have led to the C&AG further qualifying his opinion on the 2020–21 WGA for a lack of assurance over the local authorities and other public bodies concerned. The ICAEW 17 WGA 2020–21, para 5, p 262, para 1.7, p 16, para 1.56, p 30 18 Committee of Public Accounts, Report of session: Whole of Government Accounts 2019–20, Twentieth Report of Session 2022–23, HC 31, 14 October 2022 19 WGA0003 Written evidence submitted by the Association of Chartered Certified Accountants, 10 November 2023 20 Qq 27–28, 47 21 Q 27 22 Q 27–28, 48 Whole of Government Accounts 2020–21 13 contended that the exclusion of these numbers harmed the WGA to a much greater extent than the inclusion of unaudited balances would do. It noted that excluding the figures would guarantee the materially incorrect nature of the final WGA balances on the basis that a nil value was certainly incorrect, whereas including draft data would mean only a potential inaccuracy.23 We asked the Treasury about the balance between using unaudited yet complete figures but producing the WGA in a more timely manner. The Treasury said that it was trying to get a “balance between timeliness, quality and the level of assurance we get as part of the Whole of Government Accounts”.24
Show less
Government response AI summary
The government agrees with the committee's observation regarding the use of unaudited data in the WGA and is committed to proactively working with entities to ensure timely data collection, including draft data submissions, to balance timeliness, quality, and assurance for the Whole of Government Accounts.
Read full response →
HM Treasury
16
Recommendation
Ninth Report - Whole of Government Acco…
Accepted
We asked the Treasury about the relationship it had with the public bodies which are required to submit data to the WGA, noting that the Treasury appeared to have operated largely as a passive receiver of data rather than actively seeking it out. The Treasury told us that while it …
Read more
We asked the Treasury about the relationship it had with the public bodies which are required to submit data to the WGA, noting that the Treasury appeared to have operated largely as a passive receiver of data rather than actively seeking it out. The Treasury told us that while it may not be proactively contacting local authorities, it was regularly contacted by them with reasons why they cannot submit the required data, so it felt that it knew the underlying issues. It also told us that one area of engagement that it had focused on for 2021–22 was engagement with Scotland, where it was working to increase the number of entities that submitted data.25 Local audit crisis
Show less
Government response AI summary
The government agrees and commits to proactively working with entities to ensure timely data collection, requiring draft data, engaging senior stakeholders, running webinars, and strengthening central government discipline by linking WGA returns to Accounting Officer assessments.
Read full response →
HM Treasury
17
Conclusion
Ninth Report - Whole of Government Acco…
Acknowledged
When examining the 2019–20 WGA, we concluded that failures in the local audit market in England were resulting in poorer quality data for preparing the Whole of Government Accounts.26 We subsequently examined the timeliness of local auditor reporting in June 2023, and found that the backlog of audit opinions for …
Read more
When examining the 2019–20 WGA, we concluded that failures in the local audit market in England were resulting in poorer quality data for preparing the Whole of Government Accounts.26 We subsequently examined the timeliness of local auditor reporting in June 2023, and found that the backlog of audit opinions for local government bodies remained unacceptably high, and delays to their publication hindered accountability for public spending. We found that over 630 accounts, some of which date as far back to 2015–16, were yet to be signed off by auditors by the end of November 2022.27 We also noted the pattern of deterioration in the number of local government audits completed by statutory deadlines. This issue has once again led to a qualification of the 2020–21 WGA, with the C&AG having identified 120 bodies where unaudited draft data was consolidated into the 2020–21 WGA following delays in the audit of the underlying accounts, a fourfold increase on the previous year. The C&AG noted that HM Treasury did not obtain information, or undertake analysis, to understand the risk of misstatements within the unaudited draft accounts, and that his own analysis, completed substantially using publicly available data, identified assurance gaps over £51.6 billion worth of Property, Plant and Equipment.28
Show less
Government response AI summary
The government states it agrees and has implemented the recommendation, noting it wrote to the Committee in March 2024 to update on its senior-level engagement and discussions with stakeholders about options for clearing the local audit backlog.
Read full response →
HM Treasury
18
Conclusion
Ninth Report - Whole of Government Acco…
Acknowledged
We received written evidence from the University of Glasgow, which suggested two main points of failure in HM Treasury’s approach to the local audit crisis. Firstly, that the emerging problems in local audit were not identified or considered in terms of risk. It explained that this meant that a gap …
Read more
We received written evidence from the University of Glasgow, which suggested two main points of failure in HM Treasury’s approach to the local audit crisis. Firstly, that the emerging problems in local audit were not identified or considered in terms of risk. It explained that this meant that a gap in oversight was allowed to grow when the Department for Levelling Up, Housing & Communities did not step into the oversight role previously occupied by the now defunct Audit Commission. Secondly, it suggested that HM Treasury had failed to appreciate the prime importance of reductions in local 23 WGA0002 Written evidence from ICAEW: The Institute of Chartered Accountants in England and Wales 24 Q 8 25 Q 22 26 Committee of Public Accounts, Report of session: Whole of Government Accounts 2019–20, Twentieth Report of Session 2022–23, HC 31, 14 October 2022 27 Committee of Public Accounts, Timeliness of local auditor reporting, Sixtieth Report of Session 2022–23, HC 995, 23 June 2023 28 WGA 2020–21, para 6, p 262 14 Whole of Government Accounts 2020–21 authority capacity and the malfunctioning of the English local audit market. It noted that the local audit crisis had not manifested outside England, where responsibility for local audit is devolved to the Accounts Commission in Scotland and to Northern Ireland Audit Office (NIAO) in Northern Ireland.29 We asked the Treasury about the evidence we had received. The Treasury told us that it thought that these were very fair assessments and that it talked regularly to the Charted Institute of Public Finance and Accountancy (CIPFA) about the financial management of local authorities. It recognised that it needed to focus on this, as well as the quality of local authority audit committee, and financial capacity and leadership in local government.30
Show less
Government response AI summary
The government agrees and claims implementation, stating it updated the Committee in March 2024 on its senior-level engagement and detailed discussions with stakeholders regarding options for clearing the local audit backlog.
Read full response →
HM Treasury
19
Conclusion
Ninth Report - Whole of Government Acco…
Acknowledged
The Treasury told us that was putting in place a plan to try to eliminate the backlogs in local audit. It explained that this included: • establishing a final deadline for the production of the audited accounts for local government bodies, accepting that this may necessitate qualifications or even disclaimers …
Read more
The Treasury told us that was putting in place a plan to try to eliminate the backlogs in local audit. It explained that this included: • establishing a final deadline for the production of the audited accounts for local government bodies, accepting that this may necessitate qualifications or even disclaimers on those accounts; • looking at the audit approach, in collaboration with the Financial Reporting Council, with the intention of providing guidance to auditors that underlines the importance of timeliness, and establishing a proportionate approach to historic audits in looking at audit quality reviews; • reviewing the workforce strategies that underly the production of these audits to close the resourcing gaps across the system; and • identifying what can be flexed in the accounting standards and the financial reporting framework to help to streamline the production of the accounts.31 In our report on the 2019–20 WGA, we noted the shortage of auditors with the knowledge and experience to deliver, within the expected timeframes, the high-quality audits required for the increasingly complex structures and transactions within Local Government accounts. The Treasury acknowledged that its primary contribution may be ensuring that funding is available to make engagement with public sector audit commercially viable for audit firms. As part of the 2021 spending review, the Treasury provided £40 million to the local authority sector to carry out audits and encourage more audit firms to enter the sector.32
Show less
Government response AI summary
The government agrees and claims implementation, stating it wrote to the Committee in March 2024 to provide an update on its ongoing senior-level engagement and detailed discussions with stakeholders regarding the local audit backlog.
Read full response →
HM Treasury
20
Conclusion
Ninth Report - Whole of Government Acco…
Acknowledged
We were concerned that the problems we see now in the local audit sector could spread and contaminate the health sector. We asked what more it could do to help to address the issues with the audit of local government. The Treasury recognised the importance of both auditor incentives and …
Read more
We were concerned that the problems we see now in the local audit sector could spread and contaminate the health sector. We asked what more it could do to help to address the issues with the audit of local government. The Treasury recognised the importance of both auditor incentives and sanctions. It told us that its work so far had tended to focus on incentives, through providing more funding and the proportionality of the regulatory framework, so it thought that it now needed to turn to look at what the sanctions were. It similarly recognised the importance of fixing the issues within local government audit in order to stem the contagion of audit failures from spread to other sectors such as health. 29 WGA0001 Written evidence from Professor David Heald (Emeritus Professor at Adam Smith Business School, University of Glasgow) 30 Q 17 31 Q 3 32 Q 10; Public Accounts Committee, Report of session: Whole of Government Accounts 2019–20, 14 October 2022 Whole of Government Accounts 2020–21 15 The C&AG noted that this risk was already crystallising, and that he expected that the Department of Health’s accounts for 2022–23 will be delayed by two months because of a failure of a local audit supplier to complete the necessary work.33
Show less
Government response AI summary
The government agrees and claims implementation, noting it updated the Committee in March 2024 on its senior-level engagement and detailed discussions with stakeholders regarding options for clearing the local audit backlog.
Read full response →
HM Treasury
21
Conclusion
Ninth Report - Whole of Government Acco…
Acknowledged
We asked the Treasury what it could do to address the audit backlog in the local government sector more quickly. The Treasury stated that it expected the clearance of the local audit backlog to take several years. The C&AG noted that the work that the Treasury and the NAO were …
Read more
We asked the Treasury what it could do to address the audit backlog in the local government sector more quickly. The Treasury stated that it expected the clearance of the local audit backlog to take several years. The C&AG noted that the work that the Treasury and the NAO were doing could clear the backlog much faster, but that this would be at the expense of a large number of qualified and disclaimed audit opinions, the price of which would be lost assurance over public spending. He explained that returning to unqualified audit opinions within local government would take longer owing to the need to close the gap between “accepted accounting and audit practice in that sector and what is now required by auditing standards and accounting standards”. The Treasury recognised that it needed to strike a balance between the risks posed by getting the timeliness of accounts back on track.34
Show less
Government response AI summary
The government states it agrees and has implemented the recommendation, noting it wrote to the Committee in March 2024 to update on its senior-level engagement and discussions with stakeholders about options for clearing the local audit backlog.
Read full response →
HM Treasury
22
Conclusion
Ninth Report - Whole of Government Acco…
Prior to the 2020–21 WGA, public bodies with a budget in excess of £0.5 billion were required to undergo an NAO audit of the data they submitted for the WGA, in addition to the existing statutory audit of the annual report and accounts. In order to reduce the pressure on …
Read more
Prior to the 2020–21 WGA, public bodies with a budget in excess of £0.5 billion were required to undergo an NAO audit of the data they submitted for the WGA, in addition to the existing statutory audit of the annual report and accounts. In order to reduce the pressure on finance teams, the Treasury increased the threshold for the 2020–21 WGA from £0.5 billion to £2 billion. This did not lead to the C&AG qualifying his audit opinion in relation to this issue. HM Treasury explained that it viewed the lowering of the audit threshold as a temporary measure rather than an approach they would want to see persistently pursued.35 33 Qq 4–6 34 Qq 7–8 35 Qq 5, 7–8; Public Accounts Committee, Oral evidence: Whole of Government Accounts 2020–21, HC 65, 9 November 2023; and WGA0001 Written evidence from Professor David Heald (Emeritus Professor at Adam Smith Business School, University of Glasgow), 10 November 2023 16 Whole of Government Accounts 2020–21 3 Future of the WGA Long term tracking of COVID spending
Show less
HM Treasury
23
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
The scale and nature of the COVID-19 pandemic and the government’s response are unprecedented in recent history, the full cost of which will not be known for many years. By the end of March 2021, the estimated lifetime cost of measures announced as part of the government’s response was £372 …
Read more
The scale and nature of the COVID-19 pandemic and the government’s response are unprecedented in recent history, the full cost of which will not be known for many years. By the end of March 2021, the estimated lifetime cost of measures announced as part of the government’s response was £372 billion. The exceptional nature of some of this spending offers unique lessons which it will be essential for government to learn. Some of these lessons can be considered in the near future, others will need to be tracked over ten to twenty years.36
Show less
Government response AI summary
The government agrees to continue tracking COVID-related costs, stating it will set out further details after summer 2024, and commits to providing a compendium of relevant COVID scheme evaluations by July 2024 and an update in April on its exercise to distil cross-cutting lessons.
Read full response →
HM Treasury
24
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
The final cost and impact of some of the measures introduced in response to the pandemic will not be known for many years. We examined the Bounce Back Loans Scheme in December 2020 and April 2022, where we found that the Scheme’s impact could only be judged when borrowers reached …
Read more
The final cost and impact of some of the measures introduced in response to the pandemic will not be known for many years. We examined the Bounce Back Loans Scheme in December 2020 and April 2022, where we found that the Scheme’s impact could only be judged when borrowers reached the end of their six- or ten- year loan period and their loans were either repaid or written off if the business has not survived.37 In June 2021, we also examined the Culture Recovery Fund, a £1.57 billion fund which aimed to save up to 75% of organisations in the arts, culture and heritage sectors at risks of financial ruin following the national lockdown. The loans had a 20 year term, with a low interest rate and no repayments for two to four years.38 We noted that the recipients of these unexpected injections of funding will have absorbed that money into their forward funding plans and will have reconfigured how they will fund future activities. We asked the Treasury whether the taxpayer was subsidising an organisation unnecessarily, or was stimulating growth, innovation, and employment opportunities. Given the length over which spending measures such as the Culture Recovery Fund and Bounce Back Loan Scheme funding will be repaid, we also asked how the Treasury would ensure that this spending could be evaluated by the next generation of elected and permanent officials without having to go through every individual Department’s accounts. HM Treasury told us that it had recently written to all Departments to remind them of the expectation that material policies are evaluated. It confirmed that it would be checking that major policies are evaluated in the way intended.39
Show less
Government response AI summary
The government agrees to continue tracking COVID-related costs, stating it will outline further details after summer 2024, and commits to providing a list of relevant COVID scheme evaluations by July 2024 and an April update on its exercise to distil cross-cutting lessons from pandemic business …
Read full response →
HM Treasury
25
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
The NAO collated and published information on the government’s response to the pandemic in its COVID-19 cost tracker, the first iteration of which was published in September 2020.40 The cost tracker is now maintained by HM Treasury, and this expenditure was included in the 2020–21 WGA. The Treasury told us …
Read more
The NAO collated and published information on the government’s response to the pandemic in its COVID-19 cost tracker, the first iteration of which was published in September 2020.40 The cost tracker is now maintained by HM Treasury, and this expenditure was included in the 2020–21 WGA. The Treasury told us that it thought that it would want to carry on including the cost tracker in the 2021–22, but it did not commit to producing the cost tracker or incorporating it into the WGA beyond the 2021–22 WGA.41 The Treasury explained that in future it would need to consider how much to keep revising the cost tracker when changes would start to become quite small, “but not for the next 36 Committee of Public Accounts, Initial lessons from the government’s response to the COVID-19 pandemic, Thirteenth Report of Session 2021–22, HC 175, 25 July 2021 37 Committee of Public Accounts, Bounce Back Loans Scheme: Follow-up, Fiftieth Report of Session 2021–22, HC 951, 27 April 2022 38 Q 30–31; Committee of Public Accounts, COVID-19: Culture Recovery Fund, Eighth Report of Session 2021–22, HC 340, 23 June 2021 39 Qq 40–42 40 Committee of Public Accounts, Covid-19: Cost tracker update, Thirty-Eighth Report of Session 2021–22, HC 640, 23 February 2022 41 Q 31, 41 Whole of Government Accounts 2020–21 17 year or two”.42 It told us that, if it reached the point at which it thought that maintaining or updating the cost tracker was not necessary, it would think about what approach will be needed to ensure the long-term traceability of costs for future generations of officials and elected representatives. Such an approach must survive even changes in the machinery of government and the departure of staff with the required current and historical knowledge of the relevant balances.43
Show less
Government response AI summary
The government agrees with the committee's implicit recommendation to ensure long-term traceability of COVID-related costs and commits to setting out further details on how it will continue tracking these costs after the current HMT Covid Cost Tracker is published in summer 2024, targeting Autumn 2024 …
Read full response →
HM Treasury
26
Conclusion
Ninth Report - Whole of Government Acco…
Deferred
Government’s response to the pandemic has exposed the taxpayer to substantial financial risks from fraud and error. Government is likely to better understand the incidence of fraudulent receipt of COVID-19 funds over the medium-term as fraud estimates crystallise.44 The Committee has discussed the issue in some detail in its examination …
Read more
Government’s response to the pandemic has exposed the taxpayer to substantial financial risks from fraud and error. Government is likely to better understand the incidence of fraudulent receipt of COVID-19 funds over the medium-term as fraud estimates crystallise.44 The Committee has discussed the issue in some detail in its examination of the Bounce Back Loans Scheme which was deemed to be at particularly high risk of fraud. HM Treasury acknowledged that some elements presently in the Cost Tracker represent undetected fraud. It confirmed that the BEIS accounts will be the primary tracker for this particular scheme.45 To preserve the learning from cases of fraud across government, both related to COVID spending and elsewhere, HM Treasury created the Public Sector Fraud Authority in 2022.46
Show less
Government response AI summary
The government agrees to continue tracking COVID-related costs, stating it will set out further details on its approach after the HMT Covid Cost Tracker is published in summer 2024, to determine how best to track live spending areas.
Read full response →
HM Treasury
27
Recommendation
Ninth Report - Whole of Government Acco…
Accepted
We have repeatedly raised the need and importance of evaluating the impact of funding provided as part of the measures introduced by government during the COVID-19 pandemic. The Treasury told us that it had undertaken interim evaluations of the schemes that it was responsible for, and that its expectation was …
Read more
We have repeatedly raised the need and importance of evaluating the impact of funding provided as part of the measures introduced by government during the COVID-19 pandemic. The Treasury told us that it had undertaken interim evaluations of the schemes that it was responsible for, and that its expectation was that all Accounting Officers undertake evaluations of “material policy”.47 It explained that the Treasury and the Cabinet Office had written to all Departmental accounting officers to make clear that they are expected to undertake evaluations and that they will be checking that Departments have undertaken the evaluation of major policies in the way that is intended. We asked the Treasury how it would ensure and monitor that the standard of evaluations. Our attention was drawn both to the Evaluation Task Force, which was established to set the standard for evaluation and provide support Departments. It explained that the intention was for the Evaluation Taskforce to make sure that “we are driving better lessons learned about how we do good evaluation across Government, as we all as providing some resources”. It further explained that the Evaluation Taskforce would hold Departments to account for the quality of their evaluations. The Treasury emphasised that evaluations will be published.48 Thematic Data Collection
Show less
Government response AI summary
The government agrees with the importance of evaluating COVID schemes and commits to providing a list of relevant evaluations in a single compendium by July 2024 and an update in April on an exercise to distil lessons from pandemic business support.
Read full response →
HM Treasury
28
Conclusion
Ninth Report - Whole of Government Acco…
Acknowledged
Both of the professional bodies that responded to the Committee’s request for evidence addressed the collection and use of data. The ICAEW told us that a lot more could be done to explain how public spending has been used to meet policy objectives and the needs of the population, and …
Read more
Both of the professional bodies that responded to the Committee’s request for evidence addressed the collection and use of data. The ICAEW told us that a lot more could be done to explain how public spending has been used to meet policy objectives and the needs of the population, and noted a lack of commentary on the non-financial KPIs used as metrics for policy progress on matters including education, levelling up, tackling poverty, crime 42 Q 37 43 Q 41 44 Q 38; Committee of Public Accounts, Covid-19: Cost tracker update, Thirty-Eighth Report of Session 2021–22, HC 640, 23 February 2022 45 Qq 28, 40; Public Accounts Committee, Bounce Back Loans Scheme: Follow-up – Report, HC 961, 27 April 2022 46 Q 38; Public Sector Fraud Authority Website 47 Q 42 48 Qq 42–43 18 Whole of Government Accounts 2020–21 levels, progress on major strategic infrastructure projects, or illegal immigration.49 This echoes our own concerns raised in the report on the 2019–20 WGA, where we stated that current Government policies and economic context were not reflected in WGA reporting, and we recommended changes to the Performance Report.50 The ACCA made particular note of the scope for expanding and enhancing the reporting of data relating to the Net Zero and wider sustainability targets, and commented on the need for this data to be subject to external audit.51
Show less
Government response AI summary
The government acknowledges the committee's observations and commits to continuous WGA improvement, ensuring it reflects topical interest, and considering additional disclosures, while noting the 2021-22 WGA includes climate disclosures and signposts other relevant government publications.
Read full response →
HM Treasury
29
Conclusion
Ninth Report - Whole of Government Acco…
Acknowledged
We asked the Treasury how it was reflecting the issue of Net Zero spending in the WGA, given its importance across government and therefore every public body that is included in the WGA. At present, the WGA deals primarily with listing spending commitments relating to Net Zero. HM Treasury committed …
Read more
We asked the Treasury how it was reflecting the issue of Net Zero spending in the WGA, given its importance across government and therefore every public body that is included in the WGA. At present, the WGA deals primarily with listing spending commitments relating to Net Zero. HM Treasury committed to making this information more prominent as the money begins to be spent and it has data on what has been spent against those commitments.52 We observed that, as with COVID spending, some of this spending will become business as usual, so it will be important to balance this with the ability to track funding. There is also a risk that both the funding and the activity become so entrenched as business as usual that the impact can no longer reliably be tied to the intervention. HM Treasury maintained that for the moment, it was sufficient to know where spending is planned – in the 2021 Spending Review, and in the performance reports of individual components. The NAO noted that the data that HM Treasury plans to collect now will only be published in two to three years, given the accounts’ productions schedule. The public bodies that are incorporated into the WGA and their auditors will need time to produce audited sustainability data.53 Optimal use of WGA data
Show less
Government response AI summary
The government acknowledges the importance of reflecting topical issues like Net Zero and states the 2021-22 WGA includes climate disclosures. It commits to continuous improvement and careful consideration of additional disclosures, while maintaining WGA as a record of past performance and part of a broader …
Read full response →
HM Treasury
30
Conclusion
Ninth Report - Whole of Government Acco…
Accepted in Part
In its written evidence to us, the ICAEW told us that the WGA was not yet filling its full potential as it was not being used as the multi-purpose tool that it should be. The Institute maintained that annual financial reporting is a multi-purpose tool that underpins effective financial management, …
Read more
In its written evidence to us, the ICAEW told us that the WGA was not yet filling its full potential as it was not being used as the multi-purpose tool that it should be. The Institute maintained that annual financial reporting is a multi-purpose tool that underpins effective financial management, strategic decision-making, risk management, governance processes, and regulatory and legal compliance. It told us that the WGA had enabled progress to be made in many of the above areas. However, it also told us that the continuing pattern of delays in accounts production we have explored earlier in this report prevent the WGA from being sufficiently relevant to take their proper place as a pillar of governmental decision-making. They also limit the opportunity for the WGA to act as a means to share policy successes and good practice, and as a tool for accountability.54
Show less
Government response AI summary
The government agrees to improve WGA accessibility, commits to working with NAO and Parliament on seminars, and has written to the Parliamentary Scrutiny Unit to explore providing training sessions for MPs to better utilise the WGA.
Read full response →
HM Treasury
31
Recommendation
Ninth Report - Whole of Government Acco…
Accepted
Given the potential for the WGA to be an important and really useful document about public spending, we asked the Treasury how it could help Parliamentarians and members of the public to understand the WGA and its implications. The ICAEW suggested that that it would be beneficial to hold events …
Read more
Given the potential for the WGA to be an important and really useful document about public spending, we asked the Treasury how it could help Parliamentarians and members of the public to understand the WGA and its implications. The ICAEW suggested that that it would be beneficial to hold events additional to our annual evidence session, to 49 WGA0002 Written evidence from ICAEW: The Institute of Chartered Accountants in England and Wales, 10 November 2023 50 Committee of Public Accounts, Whole of Government Accounts 2019–20, Twentieth Report of Session 2022–23, HC 31, 14 December 2022. Para 18 51 WGA0003 Written evidence submitted by the Association of Chartered Certified Accountants, 10 November 2023 52 Q 50 53 Qq 1–2, 50–51, 53 54 WGA0002 Written evidence from ICAEW: The Institute of Chartered Accountants in England and Wales, 10 November 2023 Whole of Government Accounts 2020–21 19 enable Parliament to hold government to account for its stewardship of public money. It suggested that annual financial presentations, using the numbers in the WGA, could be beneficial to Parliament – similar to how listed companies present their annual financial resutls to shareholders and other stakehodlers. We therefore also asked it whether it would consider giving seminars introducing and explaining the document to be made available to Parliamentarians and the wider public. The Treasury told us that it had worked hard to make the WGA more understandable and use much more plain English, and that it would continue to do so. It recognised that importance of people being able to understand where taxpayers’ money is spent and said that it was open to doing seminars and teachings wherever there is demand.55
Show less
Government response AI summary
The government agrees to help Parliamentarians and the public understand the WGA by committing to improve accessibility, welcoming opportunities to hold seminars with NAO and Parliament, and having written to the Parliamentary Scrutiny Unit to explore providing training sessions for MPs.
Read full response →
HM Treasury
32
Conclusion
Ninth Report - Whole of Government Acco…
Accepted
We have previously expressed concern about the level of transparency in WGA reporting.56 The ICAEW suggested that it would have been helpful to have a more definitive estimate of fraud and waste incurred during 2020–21 financial year. The ICAEW would also have liked to see a corresponding summary of the …
Read more
We have previously expressed concern about the level of transparency in WGA reporting.56 The ICAEW suggested that it would have been helpful to have a more definitive estimate of fraud and waste incurred during 2020–21 financial year. The ICAEW would also have liked to see a corresponding summary of the estimates of COVID-19 fraud and waste from across government to present an overall picture of the potential exposure to fraud and waste in 2020/21 before and after recovery actions.57 As part of our inquiry into the 2019–20 WGA, we raised concerned about the design and testing of OSCAR II, the Treasury’s system for collating and consolidating data into the WGA. This was expected to bring significant benefits, including improved data quality and analysis, and advancements in the quality of the informaiton in the WGA.58 We therefore asked the Treasury about the capabilities of OSCAR II and how it was being used. The Treasury told us that that the system was fully live, with WGA, forecasting and estimates teams working with data from across Whitehall. We noted that the Government Accountability Office in the USA had produced interactive fund tracking mapping produced by the Government Accountability Office., The Treasury told us that it was working with the Department for Levelling-Up, Housing and Communities on a project that showed spending by region, which had been enabled by OSCAR II. It also said that “there is a lot more we can do on that” and that its next stage would be to think about what else it could enhance or make better use of, particularly around data quality.59 55 Q 16; WGA0002 Written evidence from ICAEW: The Institute of Chartered Accountants in England and Wales, 10 November 2023 56 Committee of Public Accounts, Whole of Government Accounts 2019–20, Twentieth Report of Session 2022–23, HC 31, 14 December 2022. Para 19–22 57 WGA0002 Written evidence from ICAEW: The Institute of Chartered Accountants in England and Wales, 10 November 2023 58 Committee o
Show less
Government response AI summary
The government agrees with the committee's implicit recommendation for greater transparency regarding fraud and waste. It commits to compiling a compendium of COVID scheme evaluations and providing a list of relevant evaluations in July 2024, as well as an update on distilling lessons from business …
Read full response →
HM Treasury