Economic Development Department: Capital/Revenue Budget Transfer

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A decision made (06.03.09) to approve budget transfers between capital and revenue budgets for the Economic Development Department.

Decision Reference: MD-E-2009-0039
Decision Summary Title:	Capital/Revenue Budget Transfer – Economic Development Department		Date of Decision Summary:	5 March 2009
Decision Summary Author:	Loretta Outhwaite Finance Director		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	5th March 2009		Person Giving Oral Report:	N/A
Written Report Title:	Transfer of budgets		Date of Written Report:	05/03/2009
Written Report Author:	Loretta Outhwaite Finance Director		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 £1,019,566 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 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.
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: Senator Alan Maclean		Position: Minister for Economic Development
Date Signed:		Date of Decision:

Economic Development Department: Capital/Revenue Budget Transfer

Report Name:Transfer of Budgets

Support for Ministerial Decision

Date: 5th March 2009

Purpose of the report

To approve the transfer of £1,019,566 budget from Economic Development Department’s capital to Economic Development Department’s 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 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.

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/(from) revenue budget (2009 expenditure only)	Re-stated Capital Budgets after 2009 expenditure transfer only
	£	£	£
	-	-	-
	-	-	-
	-	-	-
Total	-	-	-

Pre 2009 Approved Projects
	Net budget at 31 December 2008	Transfers to/(from) revenue budget (2009 expenditure only)	Re-stated Capital Budgets after 2009 expenditure transfer only
	£	£	£
Pre 2009 Project – Crabbe	-	97,185	97,185
Pre 2009 Project – Economic Growth Fund	-	922,381	922,381
Total	-	1,019,566	1,019,566

Net Expenditure - Service Analysis
	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
	£	£	£	£
Enterprise & Business Development	2,013,700		722,381	2,013,700

Marketing
Destination Marketing & Communication	4,211,000		200,000	4,211,000
Events	742,400			742,400
Finance Industry Development	1,800,600			1,800,600
Joint Marketing	1,008,800			1,008,800
Research & Statistics	137,600			137,600
Visitor Services	362,400			362,400

Policy & Regulation
Competition Law	594,600			594,600
Consumer Affairs/Trading Standards	564,700			564,700
Finance Sector	192,000			192,000
Gambling Legislation & Control	335,500			335,500
Regulation of Undertakings	380,600			380,600
Rural Sector	290,700		97,185	387,885
Policy Development	597,400			597,400

Rural Support
Single Area Payment	1,091,100			1,091,100
Quality Milk Payment	631,500			631,500
Dairy Service Support Payment	241,000			241,000
Provision of School Milk	-			-
Rural Initiative	515,000			515,000
General Support	237,100			237,100

Skills
Training & Workforce Development	474,900			474,900

Net Revenue Expenditure	16,422,600	-	1,019,566	17,442,166

The effect of the transfer would be to increase the Department’s 2009 Revenue Cash Limit from £16,422,600 to £17,442,166, an increase of 6.2%, 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 transfer of £1,019,566 budget from capital to revenue within the Economic Development Department, to align budgeting with accounting treatment.