EUROSTAT TASKFORCE – EPSAS GOVERNANCE UK public sector financial reporting governance arrangements UNCLASSIFIED

Contents Legal framework for financial reporting in public sector Role of Treasury in developing the Financial Reporting Manual (FReM) and the function of the other “relevant authorities” Role and function of the Financial Reporting Advisory Board Practical example of governance in operation UNCLASSIFIED UNCLASSIFIED

Legal framework for financial reporting Government Resources and Accounts Act 2000 Necessary legislative changes to introduce accrual accounting across whole of the public sector Powers granted to the Treasury Other key features including audit arrangements UNCLASSIFIED UNCLASSIFIED

Role of Treasury in developing the Financial Reporting Manual (FReM) and the function of the other “relevant authorities” GRAA requires accounting in accordance with Generally Accepted Accounting Practice (GAAP) which Treasury has taken to be UK GAAP initially and now IFRS. FReM is the financial reporting manual for central government and it requires the application in full of EU adopted IFRS unless there is a specific and valid public sector reason not to. In this case the Treasury can interpret or amend the standards, subject to independent oversight from the Financial Reporting Advisory Board. For public sector entities outside of central government, other “relevant authorities” produce their own accounting manuals but these need to be consistent with the FReM. UNCLASSIFIED UNCLASSIFIED

Role and function of the Financial Reporting Advisory Board (FRAB) FRAB is an independent body fulfilling the statutory role of the ‘group of persons who appear to the Treasury to be appropriate to advise on financial reporting principles and standards’ for government An independent element in the process of setting accounting standards for government and exists to promote the highest possible standards in financial reporting by government. The Board seeks to ensure that any adaptations of, or departures from, generally accepted accounting practice in the public sector context, are justifiable and appropriate. Reports yearly to Parliament on its activities UNCLASSIFIED UNCLASSIFIED

Practical example of governance in operation Consolidation standards and the acceptance of the ONS defined Departmental boundary UNCLASSIFIED UNCLASSIFIED

Questions? UNCLASSIFIED UNCLASSIFIED