Committee
Finance Committee, 16 Jan 2001
16 Jan 2001 · S1 · Finance Committee
Item of business
Resource Accounting and Budgeting
Thank you. Committee members will have several questions to put to you, Mr Hathorn.The opening statement of your submission makes it clear that the Institute of Chartered Accountants of Scotland is"fully supportive of the Scottish Executive's move to Resource Accounting and Budgeting".What was the public sector committee's view of resource accounting and budgeting before the Scottish Executive announced its intention? Were you advocating it in advance? Have you been in favour of it for some time or is your position simply a reaction to the Scottish Executive's announcement that it would adopt the system?
In the same item of business
The Convener:
Lab
We return to public session for the next agenda item. I am pleased to welcome Mike Hathorn, the convener of the public sector committee of the Institute of C...
Mike Hathorn (Institute of Chartered Accountants of Scotland):
Thank you for including the institute in your consultation. As we state in our paper, the institute fully supports the Scottish Executive's move to resource ...
The Convener:
Lab
Thank you. Committee members will have several questions to put to you, Mr Hathorn.The opening statement of your submission makes it clear that the Institute...
Mike Hathorn:
The institute's public sector committee is drawn from a wide range of accountants, who are involved in management, the public sector and the Scottish Executi...
The Convener:
Lab
Is there a trend in other European Union member states towards using accrual accounting?
Mike Hathorn:
Yes. When the IFAC public sector committee met in Paris in April, the French Government announced at a dinner that it hosted for us that it was moving toward...
The Convener:
Lab
Vive la différence.
Mike Hathorn:
Indeed. We also had a conference in Amsterdam in October, at which the Dutch Government announced a six-year programme to adopt accrual accounting. Three or ...
The Convener:
Lab
In your paper, you mention the difficulties caused by adopting accrual accounting. Will you say something about those difficulties, particularly whether they...
Mike Hathorn:
There are a number of short-term issues—education and training, for example. The introduction of new information technology systems, procedures and processes...
The Convener:
Lab
As your paper makes clear, the Institute of Chartered Accountants of Scotland's enthusiasm for the system is not widely shared as yet. You say that"it is que...
Mike Hathorn:
When resource accounting was first proposed in the UK, my committee was concerned that the timetable was far too short. We could see that a number of the dif...
The Convener:
Lab
So you suggest a two-year transitional period—although I accept that that is not set in stone.
Elaine Thomson (Aberdeen North) (Lab):
Lab
I would like to follow up on the point about training. You said that you cannot be sure of the number of extra accountants that might be required. Are you su...
Mike Hathorn:
It would be wrong for me to say, "One needs so many qualified accountants in addition to what we have." I would prefer to say that we need to recognise that ...
Elaine Thomson:
Lab
Are you saying that, in the past, many of the people who looked after accountancy in the public sector, however experienced and skilled they may have been in...
Mike Hathorn:
Yes.
Elaine Thomson:
Lab
Are you also saying that increased retraining and awareness of the impact of RAB will be required among non-financial senior management teams of public secto...
Mike Hathorn:
I believe so. That is the fundamental issue. Once the mechanics are sorted out, awareness of RAB will become important as politicians, policy makers and mana...
Elaine Thomson:
Lab
You have said that there is a need for implementation of several new IT systems in relation to finance. Successful implementation of IT is sometimes problema...
Mike Hathorn:
It is difficult to be totally helpful because that is a complex issue. The prerequisites depend on a clear assessment of the needs. The starting point for an...
The Convener:
Lab
You have made the fairly fundamental point that many managers continue to think that RAB has no benefits, although it has existed in the public sector for so...
Mike Hathorn:
This is perhaps a simplistic statement, but I would argue that that attitude exists at two levels. At a lower level—the detailed level of new systems—there i...
The Convener:
Lab
That was clearly the import of Dr Shaoul's paper, which we will come to in due course.
Mike Hathorn:
My committee has debated the issues and we understand the arguments. However, it can be difficult for managers who are asked to implement such programmes to ...
The Convener:
Lab
Andrew Wilson and Adam Ingram want to speak. Is it on this subject?
Mr Adam Ingram (South of Scotland) (SNP):
SNP
It is on the policy implications of what Mr Hathorn is talking about.There cannot be any other implication, can there? If there is a set of resources and—eve...
Mike Hathorn:
I quote from the resource accounting manual, which has highlighted five benefits of valuing and putting assets on the balance sheet. They vary from the simpl...
Mr Ingram:
SNP
I understand that, but it has put managers in the NHS under a great deal of pressure and has meant that they have taken decisions to reduce staffing or the a...
Mike Hathorn:
We agree. That is why we highlighted our concern that, unless policy makers understand the implications of capital charging and the movement in the value of ...