Transport and Technical Services: Budget transfer for 2011 between revenue and capital

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A decision made 18 March 2011:

Decision Reference: MD-T-2011-0028
Decision Summary Title:	TTS Revenue to Capital Transfer 2011		Date of Decision Summary:	09 March 2011
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 2011		Date of Written Report:	09 March 2011
Written Report Author:	Finance Manager		Written Report : Public or Exempt?	Public
Subject: 2011 Budget Transfer between Revenue and Capital Heads of Expenditure for TTS to comply with GAAP accounting.
Decision(s): The Minister approved the 2011 budget transfer between Revenue and Capital for TTS, representing a net budget transfer of £2,005,000 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 Department’s revenue head of expenditure to decrease by £2,005,000 and various capital heads of expenditure to increase by an identical amount. This decision does not change the total amount of expenditure approved by the States.
Action required: The Finance Director to seek the Minister for Treasury and Resources’ approval for the transfer. Once approval obtained, the Finance Director to action budget transfers.
Signature:		Position:
Date Signed:		Date of Decision:

Budget transfer for 2011 between revenue and capital - GAAP Accounting

TRANSPORT AND TECHNICAL SERVICES

TTS REVENUE TO CAPITAL BUDGET TRANSFER 2011

Purpose of the Report

For the Minister to approve the budget transfer of £2,005,000 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 2011 in the 2011 Business Plan. The 2011 business plan included transfers from capital to revenue based on assumptions made in the 2010 business plan around the type of work carried out. These assumptions have been updated following finalisation of the infrastructure maintenance work for 2011 and reclassification of certain types of expenditure e.g. ash pits, as capital to align with other similar bodies. As a result budget transfers are needed to move funds back into capital to align the budgeting treatment of 2011 expenditure with the GAAP accounting treatment.

Discussion

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

QA4 - Directorate - Waste Management	Revenue Account Code		Revenue
QBA097 - Capital Revenue Transfers	334010 - Miscellaneous Income	50,000	Transfer
QBA097 - Capital Revenue Transfers	713005 - Infrastructure Maintenance	675,000	725,000
Q03 - Solid Waste
QBSW05 - Asbestos Disposal	501000 - Materials	237,708
QBSW05 - Asbestos Disposal	540110 - Hired Services	69,000
QBSW05 - Asbestos Disposal	540440 - Waste Disposal	155,113
QBSW05 - Asbestos Disposal	548150 - Licences	12,988
QBSW05 - Asbestos Disposal	670101 - Professional Fees	25,188	499,997
Q03 - Solid Waste
QBSW04 - Ash Pits	501000 - Materials	5,000
QBSW04 - Ash Pits	540110 - Hired Services	20,000
QBSW04 - Ash Pits	670101 - Professional Fees	23,900
QBSW04 - Ash Pits	713005 - Infrastructure Maintenance	226,103	275,003
Q04 - Highways & Infrastructure
QEH001 - Resurfacing-Highways Resurfacing	540110 - Hired Services		445,000
QET006 - Traffic-Street Lighting	701300 - Electrical Services Maint.		60,000
		Total	2,005,000


Waste	Business Unit & Account Code		Capital
Infrastructure Works			Allocation
CHP Unit & Biogas Scrubber	QZL179.121010	140,000
Wash water Filtration & Pumping	QZL180.121010	200,000
Asset replacement
Pumping Station Pumps	QZL181.121010	120,000
Samares Marsh Pump/Archimedes Pump	QZL182.121010	120,000
Baudrette Brook - Archimedes Screw Pump	QZL183.121010	175,000
Pumping Station Panel Replacements	QZL178.121010	175,000
Le Dicq Control Panel	QZL184.121010	100,000
Maintenance (Staff Recharge)
La Collette - Ash Cell 33	QZW019.121010	235,000
Infonet Data Collection & Input	QZL172.121010	70,000
Maintenance - WME	QZRE01.121010	75,000	1,410,000
Drainage	QZL179.121010		150,000
Municipals
Q00RL10011 - Infrastructure	QZH250.121010		445,000
		Total	2,005,000

Conclusion

Revenue to Capital transfers required in the sum of £2,005,000 to comply with UK GAAP.

Recommendation

The Minister approves the net budget transfer of £2,005,000 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 Department’s revenue head of expenditure to decrease by £2,005,000 and various capital heads of expenditure to increase by an identical amount. This decision does not change the total amount of expenditure approved by the States.

Action Required

The Finance Director to seek the Minister for Treasury and Resources’ 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

I:\Minister\2011\Ministerial Decisions\MD 00 TTS Revenue to Capital Budget Transfer 2011\WR TTS Revenue to Capital Budget Transfer 2011.doc