Government of Jersey

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A decision made (12/03/2009) regarding: Capital Revenue Budget Transfer - Housing Department.

Decision Reference: MD-H-2009-0020
Decision Summary Title:	Capital/Revenue Budget Transfer – Housing Department		Date of Decision Summary:	27th February 2009
Decision Summary Author:	Brian Welsh Finance Director		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Transfer of budgets		Date of Written Report:	27/02/2009
Written Report Author:	Jason English Senior Management Accountant		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 £1,967,000 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 movement 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: Minister for Housing
Date Signed:		Date of Decision:

Capital Revenue Budget Transfer - Housing Department.

Date: 27 th February 2009

REPORT FOR HOUSING MINISTER

Transfer of Budgets from Capital to Revenue Expenditure

Purpose of the report

To approve the transfer of £1,967,000 budget from Housing Department capital to Housing Department 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
	£’000	£’000	£’000

Social Housing Works	17,770	(1,967)	15,803

Total	17,770	(1,967)	15,803

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
	£’000	£’000	£’000	£’000
Estate Services
Maintenance	5,105	1,967		7,072
Operations	1,967			1,967
Cleaning	997			997

Tenant Services
Assisted Living	362			362
Tenant Participation	246			246
Lettings	1,690			1690

Finance Services
Rent and Fee Collection	(32,729)			(32,729)

Net Revenue Expenditure	(22,362)	1,967		(20,395)

The effect of the transfer would be to decrease the Department’s 2009 Revenue Cash Limit from £(22,362,200) to £(20,395,200), an decrease of 8.8%, 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.

Recommendation

To approve the net transfer of £1,967,000 budget from capital to revenue within Housing Department, to align budgeting with accounting treatment.

Jason English

Senior Management Accountant

27th February 2009

Brian Welsh

Finance Director

27th February 2009