2009 Budget Transfers between Capital and Revenue Heads of Expenditure as a result of moving to GAAP accounting.

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A decision made (20/03/2009) regarding: 2009 Budget Transfers between Capital and Revenue Heads of Expenditure as a result of moving to GAAP accounting.

Decision Reference: MD-C-2009-0022
Decision Summary Title:	Capital/Revenue Budget Transfer – Economic Development Department		Date of Decision Summary:	11/03/09
Decision Summary Author:	Loretta Outhwaite Finance Director		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	11th March 2009		Person Giving Oral Report:	N/A
Written Report Title:	Transfer of budgets		Date of Written Report:	11/03/2009
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 £4,755,911 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:		Position: Senator Terry Le Sueur, Chief Minister
Date Signed: 20 March 2009		Date of Decision:

2009 Budget Transfers between Capital and Revenue Heads of Expenditure as a result of moving to GAAP accounting.

Report Name:Transfer of Budgets

Support for Ministerial Decision

Date: 11th March 2009

Purpose of the report

To approve the transfer of £4,755,911 budget from Chief Minister’s Department’s capital to Chief Minister’s 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
	£	£	£
CXC900 - ISD capital vote	9,438,246	3,500,000	5,938,246
Total	9,438,246	3,500,000	5,938,246
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
	£	£	£

Total CXC330 - AP Scanning	45,507	45,507	0
Total CXC350 - Network Hardware	40,353	40,353	0
Total CXC370 - CLMH Data Centre Refurbishment	628,128	628,128	0
Total CXC380 - PCH Data Centre Refurbishment	85,388	85,388	0
Total CXH100 - HR Transform (Change)	794,496	377,496	417,000
Total CXP110 - Visioning	79,038	79,038	0
Total	1,672,910	1,255,910	417,000

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
	£	£	£	£
Policy Unit
Chief Executive's Office	1,145,400		79,038	1,224,438
Communications Unit	208,800			208,800
Population Office	283,700			283,700
Statistics
Statistics Unit	450,100			450,100
External Affairs, Economics and International Finance
External Affairs, Economics and International Finance	1,335,300			1,335,300
Information Services
Corporate Projects	461,300	1,665,007	45,507	2,171,814
Infrastructure	1,243,900	1,834,993	753,870	3,832,763
Business Support Groups	1,641,000	0		1,641,000
Human Resources
Head of Profession and Core Team	0			0
HR Business Partnering	2,226,800			2,226,800
HR Business Support	626,401		377,496	1,003,897
HR Learning and Development	533,600			533,600
Employee Relations	346,500			346,500
PECRS Pre-1987 Debt	3,319,600			3,319,600
Pensions (Other)	459,600			459,600
Customer Service
Customer Service Centre	447,300			447,300
Law Drafting
Law Drafting Department	861,200			861,200
Emergency Planning
Emergency Planning	208,200			208,200
Legislation Advisory Panel
Legislation Advisory Panel	45,000			45,000


Net Revenue Expenditure	15,843,700	3,500,000	1,255,911	20,599,611

The effect of the transfer would be to increase the Department’s 2009 Revenue Cash Limit from £15,843,700 to £20,599,611 , an increase of 30%, 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 £4,755,911 budget from capital to revenue within the Chief Minister’s Department, to align budgeting with accounting treatment.