18.This section requires the preparation of resource accounts (which will replace appropriation accounts under RAB), makes provision for the Treasury to determine the form of the accounts and requires the Treasury to appoint accounting officers to be responsible for the preparation of the accounts.
19.Subsection (1) requires any departments for which Parliament has approved an estimate for a particular financial year to prepare a resource account for that year. Although they are not government departments (and hence are not bound by the requirements of this clause) it is intended that the House of Commons (in respect of Members’ salaries), the House of Lords and the Parliamentary Commissioner for Administration will, when the move to RAB is complete, lay resource estimates before Parliament and produce resource accounts.
20.Resource accounts will detail in financial terms the use by departments of resources during the year (including their acquisition and disposal).
21.Subsections (2) to (4) provide that the Treasury shall direct the form of the resource accounts subject to the requirements that they shall present a true and fair view and conform to generally accepted accounting practice (GAAP) amended as necessary in the context of departmental accounts. In doing so the Treasury will have regard for the guidance issued by the Accounting Standards Board (or any successor). In practice this means that resource accounts will follow the normal accounting standards and conventions used in the private sector and elsewhere in the public sector modified only where necessary to take account of the particular requirements of departmental accounts. In addition subsection (3) requires that the Treasury issue accounts directions to require that Treasury guidance is followed with a view to ensuring that resource accounts contain explanations of differences between items appearing in estimates and the actual amounts appearing in the resource account.
22.The accounting policies underlying resource accounts, which will form the basis of the Treasury direction, will be set out in the Resource Accounting Manual  (published by The Stationery Office). The Financial Reporting Advisory Board (FRAB), which brings together representatives from the Treasury, departments, the National Audit Office, the Audit Commission, the Accounting Standards Board, industry and academia, must be consulted on all additions and changes (including proposals not to follow standard practice) to the Resource Accounting Manual.
23.Subsection (4) elaborates on the general requirements in subsection (3)(a) and 3(b) by requiring the Treasury to have regard to guidance issued by the Accounting Standards Board or any successor body responsible for setting the accounting standards for accounts prepared under the Companies Act 1985. It also requires the accounts to include three main statements:
	a statement of financial performance;
	a statement of financial position; and
	a cash flow statement.
24.The description of the statements is precisely that adopted by the Accounting Standards Board in its Statement of Principles for Financial Reporting (published in December 1999). This approach is intended to prevent the legislation becoming outdated quickly.
25.It is proposed that resource accounts will consist of five major statements together with supporting notes:
	A statement of outturn (showing actual outturn against the estimate);
	An operating cost statement, which is analogous to a profit and loss account in company accounts (the statement of financial performance);
	A balance sheet (the statement of financial position);
	A cash flow statement; and
	A statement relating costs to objectives.
The resource accounts for public sector pension schemes will adopt a different format (based on the requirements of private sector pension scheme accounts). The requirements for these resource accounts will also be detailed in the Resource Accounting Manual and will require consultation with the FRAB.
26.In addition to accounting information resource accounts will also have to include information, as required by Government Accounting (which is published by The Stationery Office), necessary to satisfy Parliamentary propriety. This will include, inter alia, a note of adjustments between estimated and actual outturn.
27.Subsection (5) requires all departments preparing resource accounts to send them to the C&AG for audit by 30 November of the financial year following that to which the accounts relate. This reproduces the timescale currently allowed to all departments, except for the Ministry of Defence (MoD), for appropriation accounts. MoD currently has a longer timescale in which to prepare their accounts but as this concession is now obsolete (MoD have in practice prepared their accounts to the same timescale as other departments for many years) the opportunity is being taken to bring MoD into line with other departments.
28.Subsection (6) requires the Treasury to appoint an official of a department (this will usually be the senior full-time official) as the department’s accounting officer. Subsection (7) places a responsibility on the accounting officer for preparing the departmental resource accounts and transmitting them to the C&AG for audit. Subsection (8) enables the Treasury to appoint other officials in a department as accounting officers for part of a resource account.
29.The intention behind these subsections is to carry into the resource accounting system the Treasury’s current powers to appoint accounting officers to be responsible for departmental accounts. They are not intended as a comprehensive statement of the duties and responsibilities of accounting officers (which will continue to be set out in “The Accounting Officer Memorandum” - which is reproduced in Government Accounting).
30.The distinction between the accounting officers covered by subsections (6) and (7) and those covered by subsection (8) is that the first type is responsible for the department’s resource account overall, consolidated where necessary (although he or she may also have operational responsibility for specific parts of the account) whereas the second type is responsible only for a part of the account, normally corresponding with one or more requests for resources (roughly equivalent to Votes under the current system) within the resource estimate. Most departments will only have one accounting officer but where there is more than one, all the accounting officers will sign the accounts and a statement of their respective responsibilities will be appended to the account.
Commentary on Sections Section 5: Preparation of resource accounts