Sustainable Transport Policy: Budget Transfer

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A decision made on 8 August 2012:

Decision Reference: MD-T-2012-0068
Decision Summary Title :	Transfer From Revenue To Capital Heads of Expenditure for STP Capital Expenditure		Date of Decision Summary:	02 August 2012
Decision Summary Author:	Capital Accountant		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Transfer From Revenue To Capital Heads of Expenditure for STP Capital Expenditure		Date of Written Report:	02 August 2012
Written Report Author:	Capital Accountant		Written Report : Public or Exempt?	Public
Subject: Internal budget transfer from revenue to capital head of expenditure “Q00RL10011 - Infrastructure” amounting to £130,000 for the correct treatment of expenditure, as a result of GAAP accounting.
Decision(s): The Minister for Transport and Technical Services approved a budget transfer from revenue to capital totalling £130,000 of expenditure as set out in the supporting document.
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. This budget transfer is the movement 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: Other than those detailed in the report there are no further financial or manpower implications.
Action required: The Finance Director to request the Minister for Treasury and Resources to approve the budget transfers from revenue to capital and capital to revenue as referred to in the accompanying report.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Sustainable Transport Policy: Budget Transfer

TRANSPORT AND TECHNICAL SERVICES DEPARTMENT

TRANSFER BETWEEN REVENUE AND CAPITAL HEADS OF

EXPENDITURE AS PER GAAP ACCOUNTING REQUIREMENTS

Purpose of Report

The purpose of this report is to seek the approval of the Minister for Transport and Technical Services for an internal budget transfer amounting to £130,000.00 expenditure from revenue to capital head of expenditure “Q00RL10011 - Infrastructure”.

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. These budget transfers move budgets between revenue and capital so as to align the budgeting treatment of 2011 expenditure with the GAAP accounting treatment.

This is a restatement exercise that only affects expenditure that is expected to be incurred in 2012. This transfer from revenue to capital only relates to 2012 expenditure.

The STP vote is a historic vote from the pre-GAAP era. It was awarded on the basis that £500,000 per annum is spent on any sustainable transport initiatives. As the funding was awarded pre-GAAP it has historically been awarded to the revenue budget. Since the implementation of GAAP capital projects have been required to be removed from this budget and properly accounted for with the States of Jersey capital budgets.

The STP Projects which will be capitalised are shown below:

Project Name	Budget (£)
Le Hocq	15,000.00
Route De Fort	40,000.00
Midvale Road	20,000.00
Bus Shelters	40,000.00
Rugby Club Footpath	15,000.00
Total	130,000.00

Discussion

Finance Direction No.3.6 ‘Variations to Heads of Expenditure’ sets out the procedures for the transfers between revenue and capital heads of expenditure and states that budget transfers in excess of £1,000,000 require the approval of the Minister for Treasury and Resources and the relevant Minister party to the transfer. Authority to approve non-contentious budget transfers under £1,000,000 has been delegated to the Treasurer of the States.

Recommendation

To approve a budget transfer totalling £130,000.00 expenditure from TTS revenue head of expenditure to TTS capital head of expenditure. This will allow for the expenditure to be properly accounted for under GAAP.

Reason for Decision

The States of Jersey implemented GAAP in 2009. GAAP accounting requires that all expenditure meeting the definition of capital expenditure to be treated as such; other expenditure must be accounted for as a revenue cost. This budget transfer is the movement 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 request the Minister for Treasury and Resources to approve the budget transfer from revenue to capital as referred to in this report

Written by:	Capital Accountant – TTS Finance
Approved by:	Acting Director of Finance