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Twentieth Report - Whole of Government Accounts 2019–20

Public Accounts Committee HC 31 Published 14 October 2022

Report Status

Government responded

Conclusions & Recommendations

27 items (21 recs)

Source

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Government Response

AI assessment · 27 of 27 classified

Accepted in Part 1

Recommendations

15 results

2 Accepted

Poor design and testing of OSCAR II caused significant delays to the Whole of Government...

Recommendation

Poor design and testing of OSCAR II caused significant delays to the Whole of Government Accounts. In July 2020 the Treasury replaced its now obsolete IT system with a new system, OSCAR II, used for collecting and consolidating data from … Read more

Government Response Summary

The Treasury has undertaken a number of lessons learned exercises, including engaging the Government Internal Audit Agency to support this work and changed its practices for project managing changes to the system.

HM Treasury

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3 Accepted

Failures in the local audit market in England and Wales are resulting in poorer quality...

Recommendation

Failures in the local audit market in England and Wales are resulting in poorer quality data for Central Government to use in oversight, and in preparing the Whole of Government Accounts. Before the pandemic, the Local Government audit sector was … Read more

Government Response Summary

The Treasury will centrally carry out assurance work over data submissions that are below the audit threshold (across all sectors) and is obtaining further specialist assurance advice on how to enhance the efficiency and effectiveness of the assurance procedures for WGA.

HM Treasury

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4 Accepted

Inconsistent presentation of data between years, and lack of reflection of current Government policies and...

Recommendation

Inconsistent presentation of data between years, and lack of reflection of current Government policies and economic context, reduce the usability of the Whole of Government Accounts. The 2019–20 WGA presented some important trend analysis within the Performance Report; an aspect … Read more

Government Response Summary

The government agrees to ensure that analysis in the WGA supports comparability and reflects developments since the reporting date, by building on trend data, reflecting topical interests, following best practices in data presentation, and including commentary to reflect developments in the public sector and financial landscapes since the reporting date, while balancing change and continuity, and reflecting the impact of inflation in the WGA Statement of Revenue and Expenditure.

HM Treasury

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10 Accepted

In July 2020 the Treasury launched its new financial IT system, OSCAR II, for use...

Recommendation

In July 2020 the Treasury launched its new financial IT system, OSCAR II, for use in preparing the WGA. OSCAR II replaced the previous, obsolete system and was designed to support, amongst other functions: the collection and consolidation of data … Read more

Government Response Summary

The government agrees to undertake a lessons-learnt exercise addressing the root causes of poor design specification and testing of OSCAR II, and ensure identified improvements are implemented when applying future system changes.

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11 Accepted

However, during the implementation of OSCAR II, a number of significant problems arose.

Recommendation

However, during the implementation of OSCAR II, a number of significant problems arose. The problems, which were not localised but were encountered across the system’s different functionalities, included: issues faced by component bodies when attempting to submit their data to … Read more However, during the implementation of OSCAR II, a number of significant problems arose. The problems, which were not localised but were encountered across the system’s different functionalities, included: issues faced by component bodies when attempting to submit their data to the system, in some cases requiring system changes to be made, and 19 WGA 2019–20, para 14, p 212 20 Public Accounts Committee, Oral evidence: Whole of Government Accounts, HC 655, 19 November 2020, Q 117 21 Public Accounts Committee, Correspondence re Whole of Government Accounts (WGA) 2019–20, 25 January 2021 22 Public Accounts Committee, Correspondence re Whole of Government Accounts (WGA) 2019–20, 15 July 2021 23 Public Accounts Committee, Correspondence re Whole of Government Accounts (WGA) 2019–20, 23 October 2021 24 Public Accounts Committee, Correspondence re Whole of Government Accounts (WGA) 2019–20, 11 January 2022 25 Public Accounts Committee, Oral evidence: Whole of Government Accounts, HC 31, 8 June 2022, Q 83 26 Q 17 27 WGA 2019–20, paras 13–14, pp 211–212 28 WGA 2019–20, para 17b, p 213 29 Public Accounts Committee, Correspondence re Information on the OSCAR II system, 28 October 2020 30 PAC report – WGA 2018–19, para 21, part 2 12 Whole of Government Accounts 2019–20 taking up to a year to resolve; some reports produced by the system were incomplete and inaccurate, including the reports used by component auditors to validate data entry as well as some reports provided to the NAO for audit; and performance issues with the reporting module, which delayed the production of the accounts.31 We questioned the Treasury on why these issues had not been anticipated; although they had carried out preliminary user acceptance testing, they nonetheless failed to identify or resolve these issues before the system went live.32 The Treasury told us that the initial system specification was not sufficient and that not all data collection requirements had been anticipated.33 The Treasury estima Show less

Government Response Summary

The Treasury has undertaken a number of lessons learned exercises, including engaging the Government Internal Audit Agency to support this work, and is applying the lessons learned in deciding on the future support and development arrangements for the system.

HM Treasury

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12 Accepted

The Treasury has told us that that all known issues with OSCAR II have now...

Recommendation

The Treasury has told us that that all known issues with OSCAR II have now been resolved as they move onto the production of the 2020–21 WGA. However, the Treasury informed us that it anticipates that there are likely to … Read more

Government Response Summary

The Treasury has changed its practices for project managing changes to the OSCAR II system and is negotiating a new plan with Deloitte. They are applying lessons learned in deciding on future support arrangements, with the existing contract due to end in November 2023.

HM Treasury

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13 Accepted

The Local Government audit sector in England and Wales has been under significant strain for...

Recommendation

The Local Government audit sector in England and Wales has been under significant strain for a number of years. There is a shortage of auditors with the knowledge and experience to deliver, within the expected timeframes, the high-quality audits required … Read more

Government Response Summary

The Treasury will centrally carry out assurance work over WGA data submissions that are below the audit threshold and is obtaining further specialist assurance advice on how to enhance the efficiency and effectiveness of the assurance procedures for WGA.

HM Treasury

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14 Accepted

The Treasury explained that the decision was made to prepare the WGA using unaudited data...

Recommendation

The Treasury explained that the decision was made to prepare the WGA using unaudited data from these bodies as a trade-off between timeliness and completeness. The Treasury told us that it waited for the audits of all the largest bodies … Read more

Government Response Summary

The government agrees to ensure the data in OSCAR II will remain of sufficient quality by centrally carrying out assurance work over data submissions that are below the audit threshold and by obtaining further specialist assurance advice on how to enhance the efficiency and effectiveness of the assurance procedures for WGA.

HM Treasury

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16 Accepted

There are several factors that contribute to maximising the usability of the WGA for the...

Recommendation

There are several factors that contribute to maximising the usability of the WGA for the public and other stakeholders. We discussed with the Treasury how creating successive sets of accounts which are presented in a consistent and comparable way enables … Read more

Government Response Summary

The government agrees to ensure that analysis in the WGA supports comparability and reflects developments since the reporting date such as the impact of high inflation. They will build on the existing 5-year trend data and ensure comparative data is presented as effectively as possible, reflecting areas of topical interest and following best practice in presentation.

HM Treasury

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17 Accepted

In the 2019–20 WGA, the Treasury presented some important trend analysis within the Performance Report...

Recommendation

In the 2019–20 WGA, the Treasury presented some important trend analysis within the Performance Report on income and expenditure, as well as assets and liabilities.47 This is an aspect of the WGA reporting that we welcome as an incredibly useful … Read more

Government Response Summary

The Treasury will build on the WGA performance report to ensure comparative data is presented as effectively as possible, to enhance the useability of the accounts, and provide clear prior year data to aid comparability where presentational changes are made.

HM Treasury

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18 Accepted

Another factor to consider in elevating the usability of the WGA is the way in...

Recommendation

Another factor to consider in elevating the usability of the WGA is the way in which current Government policies and economic context are reflected in its reporting; currently such context is lacking. The Treasury has invited our thoughts on how … Read more Another factor to consider in elevating the usability of the WGA is the way in which current Government policies and economic context are reflected in its reporting; currently such context is lacking. The Treasury has invited our thoughts on how value could be added to the WGA and the Performance Report could be greatly improved by developing the commentary to reflect developments in the public sector and financial landscapes since the reporting date.49 50 This is especially relevant given the significant gap between the year-end and the time of publication for the WGA. Even if the Treasury succeed with plans to recover some of the delays experienced in 2019–20, this gap will still be around two years for the 2020–21 WGA.51 For example, we asked the Treasury how it is considering the impacts of inflation, which permeate across all sectors, issues, projects and Departments, and how these inflationary pressures will be managed.52 The Treasury told us it is in constant touch with departmental finance teams to discuss the impact of inflation on their programmes and how they are seeking to manage these whilst continuing to observe departmental budgets. The Treasury explained how non- staff expenditure is often governed through committed contracts and that it works closely with supply chains to mitigate and manage cost pressures. Staff costs are often directed by 46 WGA 2019–20, para 1, p 209 47 WGA 2019–20, pp 40–75 48 Qq 37–39 49 Q 75 50 Q 79 51 Q 17 52 Q 42 Whole of Government Accounts 2019–20 15 recommendations from independent pay review bodies; how inflation will be considered in these recommendations will be seen in the upcoming reviews.53 The impact of inflation on budgets, spending, and pay reviews is not currently reported in the WGA.54 Similarly, the commentary on key targets does not include all current updates and proposals. For example, the 2015–2020 target for capital receipts on property disposals is reported but the Treasury were not clear on current targ Show less

Government Response Summary

The Treasury will build on the WGA performance report to ensure comparative data is presented as effectively as possible, to enhance the useability of the accounts, and provide clear prior year data to aid comparability where presentational changes are made.

HM Treasury

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19 Accepted

The Treasury explained to us how the WGA plays a crucial role in enhancing the...

Recommendation

The Treasury explained to us how the WGA plays a crucial role in enhancing the fiscal transparency of the public sector, giving a more complete and overarching view of government spending and the public financial structure that exists elsewhere. This … Read more

Government Response Summary

The government agrees to continue improving the content of the WGA, including spending on net zero, government emissions, fraud across government, long term costs of COVID interventions and inclusion of the equivalent of a viability statement, with a target implementation date of July 2023.

HM Treasury

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20 Accepted

The Treasury expressed its understanding of how the issues that are of greatest interest to...

Recommendation

The Treasury expressed its understanding of how the issues that are of greatest interest to users of the WGA, including the Committee, evolve over time. The Treasury told us that where users of the WGA continue to rely on the … Read more

Government Response Summary

The government agrees to continue improving the content of the WGA, including spending on net zero, government emissions, fraud across government, long term costs of COVID interventions and inclusion of the equivalent of a viability statement, with a target implementation date of July 2023.

HM Treasury

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21 Accepted

The Treasury currently uses the NAO’s COVID-19 Cost Tracker to provide data for its reporting...

Recommendation

The Treasury currently uses the NAO’s COVID-19 Cost Tracker to provide data for its reporting on COVID-19 in the WGA. However, the NAO is set to cease publishing this information in the near future and it is therefore important that … Read more

Government Response Summary

HM Treasury will continue to improve the content of WGA, to ensure it brings together the best available published information on topics of interest, incorporating public updates into the WGA performance report.

HM Treasury

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22 Accepted

Improvements to the transparency of information in the WGA would also be achieved through more...

Recommendation

Improvements to the transparency of information in the WGA would also be achieved through more detailed narrative in certain areas. The asset and liability split reported in the WGA shows total assets of £2,138.5 billion and total liabilities of £4,972.7 … Read more

Government Response Summary

HM Treasury will continue to improve the content of WGA, to ensure it brings together the best available published information on topics of interest, incorporating public updates into the WGA performance report.

HM Treasury

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Conclusions (1)

Observations and findings

15 Conclusion Accepted

This problem is expected to escalate further as the Treasury look towards the 2020– 21 WGA. The proportion of 2020–21 Local Government audits that had been completed by the target date of 20 September 2021 dropped again from 45% in 2019–20 to just 9%.43 In advance of the 2020–21 WGA …

Government Response Summary

The government agrees with the recommendation to ensure the data in OSCAR II will remain of sufficient quality. They state WGA data submissions are prepared based on component entity’s audited accounts where published, and entities above a certain size are also required to have their WGA data submission audited. The Treasury will centrally carry out assurance work over data submissions that are below the audit threshold.

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