Budget transfer relating to municipals directorate GAAP accounting

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A decision made 1 October 2010 regarding: Budget transfer relating to municipals directorate GAAP accounting.

Decision Reference: MD-T-2010-0091
Decision Summary Title :	Municipal Directorate Revenue to Capital Transfers 2010		Date of Decision Summary:	21 September 2010
Decision Summary Author:	Senior Management Accountant		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Municipal Directorate Revenue to Capital Transfers 2010		Date of Written Report:	21 September 2010
Written Report Author:	Senior Management Accountant		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: 2010 Budget Transfers between Revenue and Capital Heads of Expenditure for the Municipals Directorate as a result of moving to GAAP accounting.
Decision(s): The Minister approved the 2010 budget transfers between revenue and capital for the Municipals Directorate, representing a net budget transfer of £512,000 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: There are no resource implications as a result of this decision.
Action required: The Finance Director to seek approval from the Minister for Treasury and Resources for the transfer. Once approval is obtained, the Finance Director to action budget transfers.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Budget transfer relating to municipals directorate GAAP accounting

TRANSPORT AND TECHNICAL SERVICES DEPARTMENT

MUNICIPAL DIRECTORATE REVENUE TO CAPITAL TRANSFERS 2010

Purpose Of Report

For the Minister to approve the budget transfer of £512,000 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 2010 in the 2010 Business Plan. These budget transfers move budgets between revenue and capital so as to align the budgeting treatment of 2010 expenditure with the GAAP accounting treatment.

This is a restatement exercise that only affects expenditure that is expected to be incurred in 2010. This transfer from revenue to capital only relates to 2010 expenditure.

Discussion

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

Revenue / Capital	Description	Account Codes	DR £	CR £
Revenue	Resurfacing	QEH003.540110		409,900
Revenue	Traffic - Street Lighting	QET006.701300		60,000
Capital	Q00RL10011 - Infrastructure	QZH250.121010	469,900
Revenue	Civils - Highway Maintenance	QEIC03.828200		42,100
Capital	Q00RL10011 - Pontac Piling	QZE165.121010	42,100
Total			512,000	512,000

The effect of the transfer would be to decrease the Department’s 2010 Revenue Cash Limit from £27,609,600 to £27,097,600, a decrease of 1.86%, and increase the value of capital budgets by an equivalent amount. This does not change the total amount of expenditure approved by the States.

Recommendation

That the Minister approves the net budget transfer of £512,000 between revenue and capital within the Transport and Technical Services Department to align budgeting with accounting treatment.

Reason 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

There are no resource implications as a result of this decision.

Action Required

The Finance Director to seek approval from the Minister for Treasury and Resources for the transfer. Once approval is obtained, the Finance Director to action budget transfers.

Written by: Senior Management Accountant

Approved by: Finance Director