Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Accepted
Electoral Commission failed to budget for new lease assets, leading to CDEL breach.
Conclusion
However, under the Consolidated Budgeting Guidance issued by HM Treasury, the initial recognition of a right of use asset at the start of a lease should be classified as CDEL. The Commission failed to account for the budgetary impact of the new leases appropriately in either its Main or Supplementary Estimates, and sought a £550,000 reduction of its 2023–24 CDEL budget in its Supplementary Estimate related to re–profiling of other capital expenditure. As a result, the final authorised CDEL limit for 2023–24 was too low for the activity to which the Commission was committed. 1 The Electoral Commission Annual Report and Accounts 2023–24, HC 193, published 29 July 2024 5 The Office of Qualifications and Examinations Regulation (Ofqual)2
Government Response Summary
The Electoral Commission reviewed and increased Finance team capacity, updated processes, and improved technical accounting capability by providing additional training, revising procedures, and commissioning a technical review.
Government Response
Accepted
HM Government
Accepted
1.4 The overspend was due to the Commission’s failure to appropriately account for the budgetary impact of new leases for office space in Belfast and Cardiff in either the main or supplementary spending estimates submitted to Parliament. This was caused by an error in a technical accounting judgement relating to IFRS 16 by the finance department and flagged by the NAO in its 2023-24 audit. 1.5 The Electoral Commission (‘the Commission’) has taken the following actions: 1.6 Reviewed and increased Finance team capacity (and structure): the Commission has established a new Finance organisational structure with increased numbers of suitably qualified staff across all teams, including a permanent finance director to oversee the Commission's financial management and processes. The National Audit Office (NAO) states that it considers its recommendations in relation to finance team capacity have been implemented. 1.7 Updated processes: the Commission has updated its processes to ensure that the impact of any operational decisions on its Accounts is fully understood and reported in an accurate and timely manner. Including implementing regular reviews and checks to prevent similar issues in the future. The NAO notes that the Commission "performed significant work to respond to the recommendations by the NAO audit team". 1.8 Improving technical accounting capability: the Commission has addressed technical accounting errors related to IFRS 16 by providing additional training to the finance team, revised procedures to ensure accurate accounting judgements and estimates, and commissioning a technical review and report by an appropriately qualified and reputable third- party accounting organization.