The public administration and constitutional affairs committee (PACAC) has published a report of its inquiry, which found that while government accounting has improved, accounts are still not being read or used by MPs or citizens as much as they should be.

It stated: ‘In 2015–16, the Treasury instructed departments to adopt a new framework for their annual reports and accounts: whilst we welcome this framework, we do not believe it goes far enough. It is disappointing that the Treasury have not monitored any changes in the way that accounts have been used since their reforms.’

The committee said the accounts should report on the value for money of government services, the commitments made to Parliament by government and provide a credible record of expenditure and the balance sheet.

It concluded: ’Currently we believe that they are only meeting the last requirement.’

The report says that the consensus of evidence to the inquiry ‘makes it clear that many government departments’ annual reports and accounts remain badly written and difficult to understand or follow, despite recent reforms, and despite being prepared to a high technical standard.’

MPs heard that organisations like the King’s Fund and the Taxpayer’s Alliance say they find the accounts difficult to use and do not automatically turn to them to find out about the government’s actions, while academics said their format and content has not been designed for the purpose of democratic scrutiny.

‘Most of the available evidence suggests a very limited community of people actually use the annual reports and accounts,’ the report stated.

To address this, the committee recommends that departments report separately about each policy or service that they offer the public, so it is possible to tell how much was spent on individual services like child and adolescent mental health. It also wants the accounts to report the unit costs of those services, so that citizens could see the cost of a school place or a police officer visit.

In addition, to ensure Parliamentarians are able to hold ministers to account, the committee recommends that the accounts include a statement which sets out ministerial promises of funding and saving and what was achieved against that. To improve the credibility of the accounts, it wants the government to make sure that the performance information in the accounts is independently audited.

Departments should also report data about significant projects, such as Trident and HS2 (which is the largest infrastructure project in Europe), in their annual reports and accounts. This data, which should also be audited, should include spend to date for each project, spend in the year for each project, milestones met or not met and forecasted end date for the project. It should be provided for all projects that are significant in terms of the delivery of the government’s priorities or that have a lifetime budget that is above materiality.

The report also points out that the financial reporting advisory board for government accounting mainly includes representatives of those who prepare accounts, and the accountancy profession, and says it should be reformed to include users and their views on what they want from the accounts.

Bernard Jenkin, chair of PACAC, said: ‘Financial accountability lies at the heart of Parliamentary sovereignty and of democratic government. Parliament can only be what Gladstone described it as - the real authoritative steward of the public finances - if the government improves the accounts.’

PACAC’s report, Accounting for democracy: making sure Parliament, the people and ministers know how and why public money is spent is here.