B—l [Pt. IV]

EXPLANATORY MEMORANDUM The following notes are explanatory of the more important matters relating to the preparation of the balance-sheets and revenue accounts included in B-l [Pt. IV], 1947, which are prepared on an income and expenditure basis and present a more comprehensive statement of the financial operations of Departments and services than is possible in the cash statements included in paper B-l [Pt. I]. (i) Authority.—Section 57 of the Finance Act, 1932, requires the preparation of these accounts and their presentation to Parliament. (ii) Capital—(a) General: The amounts under this heading in the accounts usually represents the value of fixed assets at the conclusion of the financial year, and the amounts are divided to show loan capital separate from that provided from revenue or other source. (b) Public Works Loans : Loans for the Public Works Account are shown as Public Works Fund Capital in the appropriate accounts recording the expenditure. Redemptions of those loans are allocated by the Treasury to the accounts whose expenditure is represented by the least productive assets. (iii) Depreciation. —Treasury Instruction No. 79 specifies various rates of depreciation based on an estimated average life for different classes of assets. The rates are computed usually on the original capital cost. If the nature of a Department's depreciating assets calls for special rates, these are approved as required. (iv) Exchange.—As from Ist April, 1943, exchange has been charged to the various votes, &c., on all payments made overseas. Prior to this date exchange was charged to the Consolidated Fund, but was recouped in the case of payment made for the following purposes : for Telegraph Extension in the case of purchases made for the Post Office, and for Railways Improvement and Additions to Open Lines in the case of purchases made for the Railways. Exchange was also recovered from all separate accounts, both within and outside the Public Account, in respect of remittances for the purchase of materials and miscellaneous services. (v) Charges not Subject to Specific Appropriation.—ln pursuance of the general authority quoted in (i) above, certain charges such as administration, exchange of properties, assessed rental values, interest on capital and depreciation allowances, &c., are made between Government accounts through the Treasury Adjustment Account without cash payments or specific appropriation by Parliament. (vi) Interest. —In the accounts an average rate, at present 4 per centum per annum, is charged for all accounts with the exception of Housing Account. (vii) Rentals.—Some Departments occupying private premises actually pay rentals. Others occupying Government buildings are assessed annually with rental based on the average rate of interest, the cost or valuation of the property, and the class of building. (viii) Treasury Adjustment Account. —This is the equivalent of a Head Office Account " in branch accounting, and through it are passed inter-departmental transfers and the total of cash transactions for the year. Separate accounts (see vi) having their own cash balances do not utilize a Treasury Adjustment Account. (ix) Values. —When the provision of accounts and balance-sheets on a commercial basis by all Departments was first instituted about 1922, it was necessary to bring numerous properties and assets into account by means of a fair valuation. New assets since then, or additions, are usually recorded at actual cost with any depreciation provision shown either as a deducation or separately. (x) Non-publication of Balance-sheets. —Publication of a considerable number of balance-sheets has been discontinued because of shortage of staff and as a paperconservation measure.

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