PLANNING AND ENVIRONMENT DEPARTMENT
CAPITAL / REVENUE BUDGET TRANSFERS FOR ISLAND PLAN REVIEW AND URBAN RENEWAL
Purpose of the Report
To approve budget transfers of £63,126 for the Island plan Review and £62,230 for Urban Renewal from the Planning and Environment Department Capital to Revenue budgets to align budgeting with Generally Accepted Accounting Principles (GAAP).
Background
The States of Jersey is implementing Generally Accepted Accounting Principles (GAAP) in 2010. 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 2010 in the 2010 Business Plan. These budget transfers move budgets between capital and revenue 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. 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 2010 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 capital and revenue that meet the relevant GAAP definitions.
The transfers are required to fund the Island Plan Review and urban renewal works relating to La Motte Street, Cheapside and Directional Signage.
Capital Programme 2010 | | |
| | |
Head of Capital Expenditure | Transfers from Capital | Transfers to revenue budget (2010 expenditure only) |
| £ | £ |
C0973 – Island Plan Review IXB170.121010 | (63,126) | |
Island Plan Review IBP060.548050 | | 63,126 |
C0971 – Urban Renewal 2008 IXB164.121010 | (62,230) | |
Urban Renewal – La Motte Street IBP040.713005 Urban Renewal - Cheapside IBP042.670101 | | 18,788 43,442 |
The effect of the transfer would be to increase the Department’s 2010 Revenue Cash Limit by £125,356 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 budget transfers of £63,126 for the Island plan Review and £62,230 for Urban Renewal from the Planning and Environment Department Capital to Revenue budgets to align budgeting with accounting treatment.
Reason (s) for Decision
The States of Jersey is implementing Generally Accepted Accounting Principles (GAAP). 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: | Senior Management Accountant |
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Approved by: | Finance Director |
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Reference: | |