Make the most of capital budgets and resources


By Victoria Barnard, FAN Advisor CIPFA

At CIPFA, through our various channels, we are seeing a steady increase in the volume of queries about capital expenditure, financing and accounting.  Some of these queries are extremely complex, reflecting the reality of modern local government, as new ways of purchasing, sharing and making money out of assets are explored in the hunt for better public services at a lower cost.  We get asked about complicated leasing arrangements, transparent and fair ways of reflecting assets in partnership accounting, and about the capital financing implications of numerous innovative schemes.

Furthermore, as austerity hits home, the capital financing drawdown on the revenue budget is scrutinised like never before, and accountants need to be able to answer the questions of senior managers and members.

However, we are now also seeing a rise in capital accounting queries. In recent years local authorities have seen significant turnover in their finance teams, as individuals move on or efficiencies hit home.  As a result, many finance professionals are finding their roles expanding to take on new areas.  Furthermore, as an area concerned with the largest values on the balance sheet, capital is particularly prone to substantial changes in accounting requirements.  For the same reason, it also attracts significant audit interest.  Whether you are suddenly asked to take on the role, or you are a more experienced practitioner of capital accounting, it’s one of the most daunting areas of the accounts in which to work. 

Recognising these increasing demands, CIPFA is offering additional support to finance professionals in the next few months. In September, the Finance Advisory Network is starting a series of events called ‘Local Authority Capital Explored’ which will cover the key concepts in capital accounting and financing.

Following this series, CIPFA Publications will launch Local Authority Capital Accounting – A Reference Manual for Practitioners.  The manual will demonstrate the requirements of capital accounting through fully worked and explained examples, covering all major transaction types and asset classes.  There will be top tips on the real-life application of the Code of Practice, including advice on the most effective use of financial systems, working with non-finance colleagues such as valuers, and getting through the external audit as smoothly as possible.