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