ACCOUNTS, 1925-26, ACCOUNT of the gross and net expenditure and of the sums appropriated by Parliament for the expenses of the ORDNANCE FACTORIES, the cost of the productions of which has been charged to Army, Navy, Dominion Governments, &c., for the year ended 31 March, 1926, together with the MANUFACTURING ACCOUNTS for the same year, and the REPORTS of the COMPTROLLER AND AUDITOR GENERAL thereon. (In continuation of House of Commons Paper No. 43, 1926.) 34 (Pursuant to 29 & 30 Vict. c. 39 & 11 & 12 George V. c. 52.) Ordered, by The House of Commons, to be Printed, 4 March 1927. LONDON: PUBLISHED BY HIS MAJESTY'S STATIONERY OFFICE. To be purchased directly from H.M. STATIONERY OFFICE at the following addresses. 15, Donegall Square West, Belfast; Price 9d. Net. : ... : : : : Statement of Indirect Expenditure Statement of Completed Work and Semi-Manufactures of the year Deficit on Vote (Explanatory Paper) EXPLANATORY NOTE ON THE ORDNANCE FACTORIES ACCOUNTS. The Ordnance Factories Vote Account (pp. 6 to 11) is prepared under the Exchequer and Audit Departments Acts of 1866 and 1921, and shows the actual transactions chargeable against the various items set out in the Ordnance Factories Estimate, leading up to a cash account showing the total cash payments and cash receipts of the year. The Ordnance Factories Manufacturing Accounts (pp. 15 to 30) are prepared under Section 5 of the Exchequer and Audit Departments Act, 1921. They consist of (1) A Revenue Account, showing the income and expenditure of the year. (2) A Statement of Liabilities and Assets as at the end of the year. (3) A Statement explaining the increase or decrease in Net Capital. (4) Capital Accounts relating to (a) Land, Buildings, Machinery and Plant. (b) Stores in Stock. (5) A Statement of " Indirect "expenditure. (6) A Statement showing by customers the value of completed work and semi-manufactured work. (7) A Statement analysing the work of the Ordnance Factories by customers and under the principal classes of products and services. (8) A Statement analysing the net surplus or deficit on the Vote Account. The whole of the expenditure under (1) above, other than on Capital Account, is recoverable from the customers of the Factories in the year. This expenditure does not include any charge for rent of land or interest on capital. On the other hand, it includes charges for the maintenance of reserve capacity for war purposes; but towards these charges special contributions in aid are made by the Army, Navy, and Air Force, the amounts of which are shown on page 29. As more buildings and machinery are held on capital charge than are required for normal peace purposes they have been scheduled into three classes: A, those in full use; B, those regularly but not fully employed; C, those retained as reserve power with possible occasional use. Full depreciation is charged on buildings and machinery in Classes "A" and "B," but in the case of Class B half the depreciation charged forms an item in the special contribution in aid referred to above. No depreciation is charged on buildings and machinery in Class C. The costing system takes up the whole of the expenditure of the year, apart from the small under- or over-charges which arise in the course of its operation and which are carried forward to the next year's account for adjustment, see the item under- or over-charges to production in the Statement of Liabilities and Assets (page 16). (K3131) Wt 17118/PP846 700 5/27 H & SP Gp 68 Supplies Suspense Account.-Under the ordinary Parliamentary procedure a surplus on a Vote Account is surrendered to the Exchequer and a deficit requires a further Vote of Parliament. As explained below, however, the normal surplus or deficit on the Ordnance Factories Vote Account is of a special character, arising either out of the method of financing capital expenditure or out of temporary cash displacements of the year (e.g., wages earned in one year and charged in the Revenue Account of that year but paid in the next); and as it was recognised that the ordinary Parliamentary procedure was inapplicable to such surpluses and deficits, it was decided to create an Ordnance Factories Supplies Suspense Account," to which they could be carried. (See Public Accounts Committee Reports, 1890, 5th Report, paragraph 6; 1891, 3rd Report, paragraph 22; 1896, 2nd Report, paragraph 12.) 66 Capital expenditure on buildings and machinery is normally financed by incomings from depreciation charged in the Revenue Account; the cost prices of the Factory products accordingly include an item of charge in respect of such depreciation. The difference arising each year between the fluctuating outgoings (i.e., expenditure on new buildings and machinery) and the steadier incomings (i.e., depreciation charges) is carried to or from the Supplies Suspense Account. No transfer from the Supplies Suspense Account for such capital purposes may be spent, however, without the previous authority of Parliament as signified upon the Ordnance Factories Estimate of the year. The purchase of stores (outgoings) is approximately met by incomings from the charges for materials issued to the shops, &c.; any temporary differences between the outgoings and incomings of a year so arising are similarly carried to the Supplies Suspense Account. Any surplus or deficit arising from temporary cash displacements (see Statement analysing the surplus or deficit on the Vote, p. 30) is similarly carried to the Supplies Suspense Account. The maximum amount which may be held in the Supplies Suspense Account is authorized by the Treasury, and is at present 250,0001.; any excess beyond that maximum is surrendered to the Exchequer. |