2009 Budget Transfers between Capital and Revenue Heads of Expenditure as a result of moving to GAAP accounting.

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A decision made (18/03/2009) regarding: 2009 Budget Transfers between Capital and Revenue Heads of Expenditure as a result of moving to GAAP accounting.

Decision Reference: MD-ESC-2009-0006
Decision Summary Title:	Capital/Revenue Budget Transfer – Education, Sport and Culture		Date of Decision Summary:	20th February 2009
Decision Summary Author:	Peter Robinson – Assistant Director – Finance		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	2009 Shadow Budget - transfer of budgets		Date of Written Report:	20th February 2009
Written Report Author:	Peter Robinson – Assistant Director - Finance		Written Report : Public or Exempt?	Public
Subject: 2009 Budget Transfers between Capital and Revenue Heads of Expenditure as a result of moving to GAAP accounting
Decision(s): The Minister approved 2009 budget transfers between capital and revenue, representing a net budget transfer of £20,000 revenue to capital, as detailed in the attached report.
Reason(s) for Decision: The States of Jersey is implementing Generally Accepted Accounting Principles (GAAP) in 2009. GAAP accounting requires that only expenditure meeting the GAAP definition of capital expenditure should be treated as such. All other expenditure must be accounted for as revenue. The budget transfer is the movement in budgets between capital and revenue 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: None.
Action required: Assistant Director - Finance to seek Treasury and Resources Ministerial approval for the transfer. Once approval obtained, Assistant Director - Finance to action budget transfers.
Signature:		Position: Deputy J.Reed, Minister for Education, Sport and Culture
Date Signed:		Date of Decision:

2009 Budget Transfers between Capital and Revenue Heads of Expenditure as a result of moving to GAAP accounting.

Education, Sport and Culture Department Ministerial Report
Subject:	2009 Shadow Budget – transfer of budgets
Exempt Clause:	N/A	Date:	20th February 2009

Author:	Peter Robinson: Assistant Director - Finance

Introduction

To approve the transfer of £20,000 from the Department’s revenue to capital budget, to align budgeting with Generally Accepted Accounting Principles (GAAP).

Background

The States of Jersey is implementing Generally Accepted Accounting Principles (GAAP) in 2009. GAAP accounting requires that expenditure should be accounted for as capital only 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 2009 in the 2009 Business Plan. The budget transfers move budgets between capital and revenue so as to align the budgeting treatment of 2009 expenditure with the GAAP accounting treatment.

This is a restatement exercise that only affects expenditure that is expected to be incurred in 2009. Revenue budgets held in capital that relate to future years will remain on the Department's capital budget ledgers, i.e. this transfer from revenue to capital only relates to 2009 expenditure. There will continue to be ‘capital’ budgets held against capital projects that relate to revenue spend expected in years 2010+, which will be transferred to revenue in the relevant year. In addition, expected capital spend held within revenue will also be transferred in the relevant year.

The following table identifies transfers between revenue and capital and vice versa that meet the relevant GAAP definitions.

Capital Programme 2009
	2009 Capital Programme Per 2009 Business Plan	Transfers to revenue budget (2009 expenditure only)	Transfers from revenue budget (2009 expenditure only)	Re-stated Capital Budget after 2009 expenditure transfer only
	£	£	£	£
2009 Minor Capital	100,000	(45,000)	65,000	120,000
Total	100,000	(45,000)	65,000	120,000

			2009 Net Revenue Expenditure before transfer	Transfers to/(from) capital budget (2009 expenditure only)	2009 Net Revenue Expenditure after transfer
Net Revenue Expenditure 2009			£	£	£

	Non Fee-Paying Provided Schools
		Pre-School Education	2,645,200		2,645,200
		Primary Education	23,094,300		23,094,300
		Secondary Education	23,597,100	(25,000)	23,572,100
	Fee-Paying Schools				0
		Provided Schools	5,728,400	(40,000)	5,688,400
		Non-Provided Schools	4,722,900		4,722,900
	Further Education (Highlands College)		8,860,400		8,860,400
	Special Educational Needs and Special Schools		8,072,200		8,072,200
	Public Libraries		1,678,800		1,678,800
	Youth Service		1,486,700		1,486,700
	Higher Education (note 1)		9,460,200		9,460,200
	Instrumental Music Service		722,700		722,700
	Child Care Support				0
		Day Care Services	194,900		194,900
		Jersey Child Care Trust	171,200		171,200
	Heritage (Grant to the JHT)		2,076,700		2,076,700
	Arts (including the Grant to the JAT)		1,592,800		1,592,800
	Sports Centres		2,091,800	45,000	2,136,800
	Playing Fields and Schools Sports		1,269,500		1,269,500
	Sport Development		553,800		553,800
	Grants and Advisory Council		250,300		250,300
	Community Fund		0		0
	Playschemes and Outdoor Education		242,700		242,700


			98,512,600	(20,000)	98,492,600

The effect of the transfer will be to decrease the Department’s 2009 Revenue Cash Limit only from £98,512,600 to £98,492,600, and increase the value of capital budgets by an equivalent amount. This does not change the total amount of expenditure approved by the States.

There will continue to be a need to make transfers to/from Capital to Revenue on existing approved projects and net revenue expenditure in each of the years in which expenditure will be incurred.

Recommendation

To approve the net transfer of £20,000 budget from revenue to capital within Education, Sport and Culture, to align budgeting with accounting treatment.