Here are the main changes made to the new edition of the Code of Practice on Local Authority Accounting in the United Kingdom 2016/17
This is the seventh edition of the Code to be prepared under International Financial Reporting Standards (IFRS), which have been adopted as the basis for public sector accounting in the UK. The 2016/17 Code has been developed by CIPFA/LASAAC and has effect for financial years commencing on or after 1 April 2016.
Local authorities in the United Kingdom are required to keep their accounts in accordance with ‘proper (accounting) practices’. This is defined, for the purposes of local government legislation, as meaning compliance with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom (the Code).
The Code specifies the principles and practices of accounting required to prepare a Statement of Accounts which gives a true and fair view of the financial position and transactions of a local authority. The Code is updated annually.
This 2016/17 edition of the Code introduces new, or amended, accounting standards or reporting requirements in a number of areas, in particular:
The Code includes confirmation (following confirmation in the Update to the 2015/16 Code) of changes as a result of the Accounts and Audit Regulations 2015 for English authorities and the Local Government (Accounts and Audit) Regulations (Northern Ireland) and minor amendments to reflect the introduction of Scottish Government Statutory Guidance on Accounting for Equal Pay and Severance.The Code also includes confirmation that the option to equity account for investments in subsidiaries, associates or joint ventures in the local authority single entity financial statements is not included in the Code under IAS 27 Separate Financial Statements (Equity Method in Separate Financial Statements); issued September 2014.
The 2016/17 Code sees the introduction of a new Appendix D listing the amendments to standards included in the 2016/17 Code.
The Code applies formally in Great Britain to local authorities, fire authorities (England and Wales), joint committees and joint boards of principal authorities. In Northern Ireland it applies to all district councils. The Code also applies to police and crime commissioners and other police bodies, as relevant.
In England and Wales, Code constitutes proper (accounting) practice under the terms of section 21(2) of the Local Government Act 2003. In Scotland, the Code constitutes proper accounting practice under section 12 of the Local Government in Scotland Act 2003. In Northern Ireland, the status and authority of the Code derives from regulation (2) the Local Government (Capital Finance and Accounting) Regulations (Northern Ireland) 2011 of the Local Government (Accounts and Audit) Regulations (Northern Ireland) 2006 and through the relevant accounts direction issued by the Department of the Environment (Northern Ireland).