Source · Select Committees · Public Accounts Committee
Recommendation 29
29
Accepted
C&AG qualified Group accruals and Core Department financial assets due to valuation issues.
Conclusion
The C&AG also qualified the Groups ‘other accruals’ in 2020–21 as there was insufficient assurance in respect of existence and valuation of £17.3 billion, the Department accrues expenditure it has incurred but has not yet been invoiced for and therefore a liability which will need to be paid in future. In 2019–20 the C&AG qualified his ‘true and fair’ opinion on the Core Departments ‘other financial assets’ due to a disagreement in the application of financial reporting standard IFRS 9. The Department did not impair the value of the loans to NHS Trusts and Foundation Trusts, resulting in assets being overstated by an estimated £2.2 billion.57
Government Response Summary
The government states it has already undertaken a financial reset programme to establish robust financial controls and governance across the department and its arm’s length bodies, which has put in place proportionate controls to reduce future financial and governance failings.
Government Response
Accepted
HM Government
Accepted
6.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 6.2 As the Committee is aware, the department has undertaken a financial reset programme. This programme established robust financial controls and governance across the department and its arms’ length bodies. 6.3 This programme put in place a proportionate, risk-based financial control framework that ensures that areas of spend subject to external controls (for example, by HM Treasury and Cabinet Office) are reviewed and approved as required by Managing Public Money. Internal delegations ensure that spending proposals below those subject to external controls are also subject to appropriate review and approval and maximise value for money. 6.4 During 2021-22 the financial reset programme was still being implemented. The department has now put into place controls which are proportionate in reducing the risk of future financial and governance failings. 6.5 Despite the clear processes and improvements set out above, it is important to note that ensuring full compliance across such a diverse and sizeable group is inherently challenging. As such, whilst the department believes the processes and controls in place represent a proportionate and robust risk mitigation, they cannot guarantee full compliance from all bodies. 6.6 The department keeps these controls under continual review and applies a ‘lessons learnt’ process in the event that governance issues are identified.