Written answers

Wednesday, 30 January 2008

Department of Finance

Public Service Accounts

8:00 pm

Photo of Fergus O'DowdFergus O'Dowd (Louth, Fine Gael)
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Question 94: To ask the Tánaiste and Minister for Finance if he is satisfied that no depreciation is charged in the accounts of the public service and implications this has for efficient costing of resource use and planning for the cost of replacement. [2153/08]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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As Deputy O'Dowd is aware, there are two forms of accounting in the public service. The accounts of Government Departments and Offices are prepared on a cash basis while Local Authorities and Commercial State-Sponsored Bodies, for example, prepare their accounts on an accrual basis which includes the charging of depreciation.

As the Deputy is aware, the Appropriation Accounts for central Government Departments and Offices are required under legislation to be prepared on a cash basis. In a cash accounting environment, the value of a capital resource is recognised and charged fully to the account in the year of acquisition. In addition, in cash-based accounts, the planning for the cost of replacement of capital items is done on a requirements basis and submitted for Vote approval. It should be noted that cash accounting does not provide the scope to build up a fund of money for depreciation for future spends either current or capital.

Under the Management Information Framework (MIF) Project new accruals-based accounting systems were rolled out across the civil service over the last four years. It is now possible for all Departments and Offices to capture more detailed information for the better management of spending programmes and to improve the scope of financial reporting. Drawing on the information available under the MIF, an information note (Note 3) in the Appropriation Account reports on the capital assets position and presents the position of Net Assets (original cost less accumulated depreciation). In addition, all Departments and Offices must now present an Annual Output Statement to Dáil Éireann which sets out the target outputs of Departments and Agencies for the resources provided and report progress on performance as compared with target the following year. These initiatives significantly improve the efficiency of resource use in Departments and offices.

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