Budget transfers between capital and revenue heads of expenditure

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A decision made on 9 December 2009 to approve budget transfers between capital and revenue heads of expenditure

Decision Reference: MD-PE-2009-0194
Decision Summary Title :	Planning and Environment Department – Capital/Revenue Budget Transfers		Date of Decision Summary:	01/12/09
Decision Summary Author:	Senior Management Accountant		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Capital/Revenue Budget Transfers		Date of Written Report:	01/12/09
Written Report Author:	Senior Management Accountant		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	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 £34,000 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. 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.
Resource Implications: N/A
Action required: For the Finance Director to seek the Minister for Treasury and Resources approval for the transfer. Once approval is obtained, the Finance Director to action budget transfers.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Budget transfers between capital and revenue heads of expenditure

PLANNING AND ENVIRONMENT DEPARTMENT

CAPITAL / REVENUE BUDGET TRANSFERS

Purpose of the Report

To approve the transfer of £34,000 budget 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 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. These budget transfers move 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.

Discussion

The following table identifies transfers between revenue and capital and vice versa that meet the relevant GAAP definitions.

This transfer is to fund the Tidal Power Survey not directly attributed to an asset.

Capital Programme 2009

Head of Capital Expenditure	2009 Capital Programme Per 2009 Business Plan	Transfers to revenue budget (2009 expenditure only)
	£	£
C0014 – Central Environmental Management	34,000	(34,000)
Total	34,000	(34,000)

The effect of the transfer would be to increase the Department’s 2009 Revenue Cash Limit by £34,000 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 budget transfer of £34,000 between capital and revenue within the Planning and Environment Department, to align budgeting with accounting treatment.

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. 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

Approved by:	Acting Finance Director

Reference: