Responding to COVID-19: insight, support and guidance
The new Code introduces the two new financial reporting standards – IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. These standards work to promote increased transparency of the effect of transactions on local authority finances. The intention is to help users better understand local authority financial statements and increase effective decision making, stewardship and accountability.
“Within the boundaries of effective financial reporting, CIPFA/LASAAC has been concerned to understand both the practical and technical aspects of the standard, and as a result both CIPFA and CIPFA/LASAAC have supported the work of government on statutory mitigation for particular investment vehicles”.
To help local authorities understand and prepare for the effects of these two new standards, CIPFA/LASAAC last year issued the agreed Code provisions on both standards alongside the 2017/18 Code. In December 2017, CIPFA issued early guidance, IFRS 9 Financial Instruments: An Early Guide for Local Authority Practitioners, to help support local authorities in their adoption of IFRS 9.
Both standards have the potential to have budgetary effects, particularly in terms of the timing of recognition of the relevant transactions. CIPFA/LASAAC has worked with the government and the devolved administrations to support the consideration of both the ongoing and transitional effect of IFRS 9 on collective investment vehicles and will keep this situation under review.