Transport and Technical Services: Budget transfers

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A decision made 14 January 2011 regarding: Transport and Technical Services: Budget transfers - GAAP accounting.

Decision Reference: MD-T-2011-0003
Decision Summary Title:	TTS Revenue to Capital Transfer 2010		Date of Decision Summary:	30 December 2010
Decision Summary Author:	Finance Manager		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	TTS Revenue to Capital Transfers 2010		Date of Written Report:	30 December 2010
Written Report Author:	Finance Manager		Written Report : Public or Exempt?	Public
Subject: 2010 Budget Transfer between Revenue and Capital Heads of Expenditure for TTS to comply with GAAP accounting.
Decision(s): The Minister approved the 2010 budget transfer between Revenue and Capital for TTS, representing a net budget transfer of £375,000 from revenue to capital, as detailed in the attached report.
Reason(s) for Decision: The States of Jersey implemented Generally Accepted Accounting Principles (GAAP) in 2009. GAAP accounting requires that all expenditure meeting the GAAP definition of capital expenditure should be treated as such; other expenditure must be accounted for as revenue. These budget transfers are the movements in budgets between revenue and capital required to align the budgeting treatment of expenditure with the GAAP accounting treatment. This does not change the total amount of expenditure approved by the States.
Resource Implications: The effect of the transfer would be to decrease the Department’s 2010 Revenue Cash Limit from £27,609,600 to £27,234,600, a decrease of 1.36%, and increase the value of capital budgets by an equivalent amount. This does not change the total amount of expenditure approved by the States.
Action required: The Finance Director to seek the approval of the Minister for Treasury and Resources for the transfer. Once approval obtained, the Finance Director to action budget transfers.
Signature:		Position:
Date Signed:		Date of Decision:

Transport and Technical Services: Budget transfers - GAAP accounting

TRANSPORT AND TECHNICAL SERVICES

TTS REVENUE TO CAPITAL TRANSFER 2010

Purpose of the Report

For the Minister to approve the budget transfer of £375,000 between the Transport and Technical Services Department revenue and capital budgets to align budgeting with Generally Accepted Accounting Principles (GAAP).

Background

The States of Jersey implemented Generally Accepted Accounting Principles (GAAP) in 2009. GAAP accounting requires that expenditure should be accounted for as capital if it meets the GAAP accounting definition of capital expenditure, and revenue otherwise.

Previously, ‘capital’ budgets have represented whatever the States Assembly voted as capital. The States have already approved capital allocations for 2010 in the 2010 Business Plan. These budget transfers move budgets between revenue and capital so as to align the budgeting treatment of 2010 expenditure with the GAAP accounting treatment.

Discussion

The following table identifies the transfer between revenue and capital to meet the relevant GAAP definitions.

Rev – Cap

Description

Account codes

Debit £

Credit £

From Revenue

Waste: Ash Pits

QBSW04.713005

375,000

To Capital

Waste: Ash Pit La Collette

New BU to be set up

375,000

New Ash Pit to be built at EfW Plant at La Collette. The construction of the pit was due to be completed before 31 December 2010 but due to delays in planning permits this has now been put back to February 2011. This project was initially considered to be of revenue nature but has recently been reclassified as capital expenditure.

Conclusion

Revenue to Capital transfers required in the sum of £375,000 to comply with UK GAAP.

Recommendation

The Minister approves the net budget transfer of £375,000 between revenue and capital within the Transport and Technical Services Department to align budgeting with accounting treatment.

Reason(s) for Decision

The States of Jersey implemented Generally Accepted Accounting Principles (GAAP) in 2009. GAAP accounting requires that all expenditure meeting the GAAP definition of capital expenditure should be treated as such; other expenditure must be accounted for as revenue. These budget transfers are the movements in budgets between revenue and capital required to align the budgeting treatment of expenditure with the GAAP accounting treatment. This does not change the total amount of expenditure voted by the States.

Resource Implications

The effect of the transfer would be to decrease the Department’s 2010 Revenue Cash Limit from £27,609,600 to £27,234,600 a decrease of 1.36%, and increase the value of capital budgets by an equivalent amount. This does not change the total amount of expenditure approved by the States.

Action Required

The Finance Director to seek Treasury and Resources Ministerial approval for the transfer. Once approval obtained, the Finance Director to action budget transfers.

Written by:

Finance Manager

Approved by:

Acting Director of Finance - Transport and Technical Services

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