The whole of government accounts: an exercise in elimination

Posted: July 7th, 2010 | Author: lisa | Filed under: Uncategorized | 1 Comment »

When the large sample of COINS data was published on the 4th June it was accompanied by a guide to the data. The guide is very useful, but one thing it doesn’t explain in very much detail is where the COINS data comes from. The guide lists the inputs:

COINS – the Combined On-line Information System – is used by the Treasury to collect financial data from across the public sector to support fiscal management, the production of Parliamentary Supply Estimates and public expenditure statistics, the preparation of Whole of Government Accounts (WGA) and to meet data requirements of the Office for National Statistics (ONS).

But in what form are each of these different types of financial data  entered into COINS? To answer this question for the Whole Of Government Accounts (WGA) data, I’ve been looking more closely at the data gathered for this exercise.

After reading the WGA materials on the Treasury and the Communities and Local Government web pages, and chatting to some very helpful members of the WGA team, my understanding of the WGA exercise is that it identifies exchanges of funds between public bodies. These exchanges include the flow of funds from Central Government bodies down to Local Authorities and all the exchanges of funds between departments. When the transactions between public bodies are identified, the WGA exercise makes some adjustments to avoid double counting the money. So, if body A gives money to body B, then WGA would be responsible for subtracting the amount body B received from body A’s total.

As we know the COINS data is made up of spending or income records for each department. In these department records there is a Counter Party ID (CPID),  if that identifies another government department that means that some funds have been exchanged between the two departments.

There are scripts used on the COINS data to look for  eliminations using the CPID code.  which has the code in every department’s spending, if money of the public body money was exchanged with and the WGA team perform lots of checks on this. You can see this process happening in the adjustments table in COINS.

There are two guides to the WGA, one for  local authorities and the other for central government departments.

Central Government Accounts

The process of WGA for Central Government departments is simply that each central government department is required to fill in a C-Pack once a year, which is a spreadsheet constructed by the WGA team.

Point2.4. of the Guide for the C-Pack (PDF) says:

The key deliverable is the C-Pack, and the upload of Resource Accounts data and CPID data into COINS.

Local Authority Accounts

The WGA process for Local Authorities is a slightly different exercise. The Local Authority is asked by WGA to fill in an L-Pack once a year.  If you follow that link to the L-Pack excel spreadsheet that the Communities and Local Government branch of WGA prepare, they you will see that it is quite a complex looking creature. I’m going on a training course to understand it better, but I do know that the results of every local authority filling out this form amounts to quite a significant documentation of public spending and income.

In fact the WAG guide for local authorities states:

Local government controls over 50% of public sector fixed assets, accounts for about 25% of net public expenditure and represents 10% of UK GDP.

Now, here is the interesting part. The Local Authority spending and income that is recorded in the L-Pack is not in the COINS data that was published recently.

Now, I thought this missing detail in COINS might be because the WGA would be published separately.

There is a WGA report expected in spring 2011, but on further investigation it transpires that the level of detail will be the same as company accounts. We will get some extra details in this report, for example spending on PFIs will be included for the first time. But essentially we will miss out on all the lovely detail from the L-packs and C-packs.

The Auditing

Auditing, I believe in the context of WGA, means matching up buyers and providers:

A perfect match is: Barnet Council purchases £5.5 m from Enfield Council. Enfield Concil sales £5.5 m to Barnet Council.

The COINS scripts would eliminate this to zero as perfect match.

Another example: Barnet Council purchases £5.0 m from Enfield Council. Enfield Council sales £5.5 m to Barnet Council. COINS would eliminate 5.0m and and put 0.5M into suspense. The the suspense needs to be investigated more to see where the mistake is. This investigation is the job of the Whole of Government’s Account team. You can set a tolerance in COINS, which is the extent of the difference between two accounts it will put into suspense. The tolerance was set to 5.0m for 2008/09 accounts. I will be set to 1.0m for 2009/10 accounts.

Conclusion

The WAG is an exercise in eliminating excess data that clouds the picture of public spending and income.  The WAG team’s work seem to keep process of reporting spending and income more manageable. This is completely understandable. But on the other hand it would be great to have this detail of exchanges of funds so we can understand public spending as it really is.

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