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

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A decision made (20/02/2009) regarding: 2009 Budget Transfer between Capital and Revenue Heads of Expenditure as a result of moving to GAAP accounting.

Decision Reference: MD-E-2009-0026
Decision Summary Title:	DS-Capital/Revenue Budget Transfer – Economic Development Department – Jersey Harbours		Date of Decision Summary:	13/02/2009
Decision Summary Author:	Finance and Information Manager-Jersey Harbours		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	WR-Transfer of budgets		Date of Written Report:	13/02/2009
Written Report Author:	Finance and Information Manager-Jersey Harbours		Written Report : Public or Exempt?	Public
Subject: 2009 Budget Transfer 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 £169,795 from capital to revenue, 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. This budget transfer is the movement in budget 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: Departmental Finance Director to seek Treasury and Resources Ministerial Approval for the transfer. Once approval obtained, Departmental Finance Director to action budget transfers.
Signature:		Position: Assistant Minister – Economic Development
Date Signed:		Date of Decision:

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

Report Name: Transfer of Budgets PUBLIC

Support for Ministerial Decision Capital/Revenue Budget Transfer – Economic Development Department – Jersey Harbours

Date: 13 February 2009

Purpose of the report

To approve the transfer of £169,795 budget from Jersey Harbours capital to Jersey Harbours revenue, 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. This budget transfer moves budget 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.

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

Pre 2009 Approved Projects
	Capital Budget at 31 December 2008	Transfers (to)/from revenue budget (2009 expenditure only)	Re-stated Capital Budgets after 2009 expenditure transfer only
	£	£	£
Asset Replacement Programme	169,795	(169,795)	-
Total	169,795	(169,795)	-

Operating Account
	2009 Net Revenue Expenditure before transfer	Adjust for 2009 Capital Projects Capital/Revenue Transfers	Adjust for pre-2009 Capital Projects Capital/Revenue Transfers	2009 Net Revenue Expenditure after Transfer
	£	£	£	£
Income
Passenger Port and Terminal	2,504,800			2,504,800
Commercial Port	5,524,450			5,524,450
Marine Leisure	3,016,850			3,016,850
Port Estate	2,310,400			2,310,400
Coastguard	286,500			286,500


Total Income	13,643,000			13,643,000

Expenditure
Passenger Port and Terminal	2,378,800		40,900	2,419,699
Commercial Port	3,379,400		48,895	3,428,295
Marine Leisure	2,187,300		35,000	2,222,300
Port Estate	1,128,100		25,500	1,153,601
Coastguard	1,409,900		19,500	1,429,400


Total Expenditure	10,483,500		169,795	10,653,296


Gross Operating Surplus	3,159,500		-169,795	2,989,704

Less:
Payments made to the States:
Transport and Technical Services Capital Repayment	450,000			450,000
Other Repayments	-			-
Capital Return paid to the States	977,425			977,425
Revenue Return paid to the States	232,440			232,440


Net Surplus	1,499,635		-169,795	1,329,839


Transfer to Trading Fund	£ 1,499,635		-169,795	1,329,839

The effect of the transfer would be to increase the Department’s 2009 operating expenditure cash limit from £10,483,500 to £10,653,296, an increase of 1.6%, and reduce the value of capital budgets by an equivalent amount. This does not change the total amount of expenditure approved by the States.

Recommendations

To approve the net transfer of £169,795 budget from capital to revenue within Jersey Harbours, to align budgeting with accounting treatment.

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