Consultation: Whole of Government Accounts 2020-21 Inquiry

ACCA welcomes the opportunity to respond to the Call for Evidence on the Whole of Government Accounts 2020-21.

ACCA agrees with the recommendations of the Public Accounts Committee (PAC) during the 2019-20 Inquiry and reaffirms, for the 2020-21 accounts, that the publication of financial statements over two full years after the reporting date has a detrimental impact on their usefulness. This has been a problem since before the coronavirus pandemic. ACCA’s report, Whole of Government Accounts: Who Is Using Them?, looked at literature relating to the consolidated public sector financial reports of Australia, Canada, New Zealand, Sweden and the UK. Our broad conclusions at that time were that the usefulness of such financial reports was debatable in part due to timeliness but also the extensive number of qualifications related to, for example, the boundary of consolidation and inconsistent asset valuations. These issues are still relevant to the 2020-21 Whole of Government Accounts (WGA), especially in the context of WGA being intended as an internationally respected publication and the pace of development in sustainability reporting and public sector sustainability standards.

In ACCA’s Rethinking Public Financial Management report we reiterated our call for the adoption of accrual accounting but also recommended that governments adopt an accrual-basis for budgeting and appropriations. This is because few decisions on resource allocation are made by public bodies based on their historic financial statements. Consistent accrual-based information would require politicians and senior officials to consider the full impact of their options in the planning phase of the public financial management cycle.

The financial statements of many of the organisations that are consolidated into the WGA include comparisons of their actual expenditure against their budget. This is useful information for stakeholders and should support wider understanding of the information by the public. It would be useful if the WGA included an explicit and clear comparison of actual income and expenditure against the consolidated budget for the UK government, for example, as set out in the Chancellor’s Budget.

ACCA’s latest public sector research launched at the United Nations’ World Investment Forum in October 2023, Public sector globally, identifies the pivotal role of the public sector in both setting the conditions for sustainable development and taking action to achieve it. We note that the WGA 2020–21 incorporates reporting on progress against greenhouse gases - the Net Zero targets. This is encouraging. However, in future WGA, we would like to see the reporting on sustainability matters expanded and enhanced. The sustainability disclosures should be subject to independent assurance that comply with the upcoming ISSA 5000 standard from the International Auditing and Assurance Standards Board, so that the UK is a role model for other governments.

Overall, ACCA would like to reiterate the importance of accounts being published in a timelier manner.

To read the response in full, please download the consultation document on this page.