By Vivienne Russell | 7 February 2012

Whole of Government Accounts need to include all bodies that affect the financial position of the government, according to the Public Accounts Committee.

The first set of audited WGA, relating to 2009/10, were qualified by the National Audit Office for failing to give a ‘true and fair’ picture of the government’s financial position. Specifically, the absence of the accounts of bodies such as Network Rail and the publicly owned banks meant the WGA departed from accounting standards and could not be passed, the auditors said.

In a report published today, the PAC hailed the publication of WGA as a major step forward, but was critical of the fact that the accounts were qualified.

PAC chair Margaret Hodge said: ‘The challenge is to improve the accuracy and extend the coverage so that there is proper transparency over the government’s spending commitments over time – not just in the Spending Review period. Government must then use the information to make better decisions and we will be able to judge them more effectively on value for money.’

She added that the WGA was out of date, having taken 20 months to prepare. ‘Countries such as France, the US and Australia can produce similar accounts in less than nine months, so this must get better,’ she said.

The committee urged the government to use the WGA to identify areas where it is financially exposed and develop plans for handling those risks.

It should also use the accounts to ensure effective responsibility for cost and value for money at the local level. The PAC highlighted the example of academies, which received £1.2bn of government spending and accounted for £2.2bn in assets in 2009/10.

The MPs noted that the quality of financial information submitted to the Treasury by academies was of poor quality and unaudited, while some academies failed to submit any financial information at all.

They said this ‘gap in accountability’ was likely to grow in importance as the number of academies is expanded and free schools and GP consortiums are rolled out.

Paul Mason, assistant director for professional standards at CIPFA, said: 'Notwithstanding some of the criticism in the Public Accounts Committee’s report, the Whole of Government Accounts is still a significant achievement.