HISTORIC PRESS RELEASE : Reform of Government Financial management takes step forward [August 1997]

The press release issued by HM Treasury on 4 August 1997.

Better control of public spending through the introduction of best commercial practice into Government accounting moved closer today.

Financial reporting principles and standards which will underpin resource accounting were given the green light when the independent Financial Reporting Advisory Board (FRAB) approved the Treasury’s draft resource accounting Manual for use by Government departments.

This will improve the way the Government accounts for how taxpayers’ money has been spent, bringing it into line with best private sector practice.

Welcoming FRAB approval of the Manual, Chief Secretary Alistair Darling said :

“The Government is determined to put its accounting procedures on a proper and modern footing. This is the greatest reform to the public finances in over 100 years.

“Resource accounting is an important development in getting best value for money for the taxpayer. It will provide a better measure of the cost of the activities of central Government departments, and of their assets and liabilities.

“Resource budgeting will then build on that and improve the way in which we plan and control Government spending. FRAB approval of the resource accounting Manual means that progress towards that goal will continue to schedule.

“The Government is committed to carrying through this important initiative, which is already bearing fruit. Departments’ work on their resource accounts will help them to prepare the National Assets Register. This will show which assets departments own, and will enable more informed decisions on what should be done with them.

“Resource accounting and budgeting will play an important part in increasing the transparency and public understanding of the finances of departments and measuring their success  in meeting their targets. This is essential to improving public confidence in the effective management of public finance.

“I am grateful to FRAB for conducting their review, and I look forward to further advice as resource accounting develops.