TRANSPORT AND TECHNICAL SERVICES
CAPITAL / REVENUE BUDGET TRANSFERS
Purpose of the Report
To approve the transfer of £882,845 budget 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 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. These 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 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.
Discussion
The following table identifies transfers between revenue and capital and vice versa that meet the relevant GAAP definitions.
The effect of the transfer would be to increase the Department’s 2009 Revenue Cash Limit from £22,704,900 to £23,587,745, an increase of 3.9%, and reduce 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 from Capital to Revenue on existing approved projects in each of the years in which expenditure will be incurred.
Recommendations
To approve the net budget transfer of £882,845 between capital and revenue within the Transport and Technical Services Department, to align budgeting with accounting treatment.
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. These budget transfers are the movements 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.
Action Required
For 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 Director |
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Approved by: | Chief Executive Officer |
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