The CIPFA LASAAC Local Authority Code Board has released temporary proposals to update the Code of Practice on Local Authority Accounting in the United Kingdom for infrastructure assets. An urgent consultation on these proposals is now under way and comments are invited until the consultation closes on 14 June 2022 at 23.00.
The temporary proposals address an issue raised by auditors about the derecognition (removal of the carrying amount) of parts of local authority infrastructure assets as they are replaced. CIPFA LASAAC and CIPFA established a Task and Finish Group to find a solution to this issue and consider the outcome of any proposed changes to the code.
Following advice from the Task and Finish Group, CIPFA LASAAC has now issued temporary proposals for changes to the code relating to how these issues are reported. They include:
CIPFA LASAAC will consult on a longer-term solution later in the year.
Conrad Hall, Chair of CIPFA LASAAC and Corporate Director of Resources at the London Borough of Newham, said: "CIPFA LASAAC has taken the necessary pragmatic steps to temporarily resolve the issue so that accounts that have not yet received their audit opinions can close and local authorities can receive the assurances on the vital financial information they hold. The proposals should not mean any significant losses in high quality financial information."
Derek Yule, CIPFA Council Member and Chair of the Task and Finish Group, said: "The Task and Finish Group has produced draft guidance which will be issued imminently to supplement the outcomes of this consultation.
"The group welcomes the consultation on the temporary proposals as this will give us more time to consider fully the consequences of the options we have put forward. We are clear that local authorities should ensure they have effective depreciation policies, which will be essential to ensuring they have properly reflected the transactions."
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