Responding to COVID-19: insight, support and guidance
CIPFA/LASAAC has issued its annual consultation to seek local authority and other key stakeholders views on the changes to the Code of Practice on Local Authority Accounting in the United Kingdom (‘the Code’).
CIPFA/LASAAC needs responses from local authority accounts preparers to ensure that the proposals for change represent the key transactions in local authority accounts and that these changes work on a practical level. One of the main changes to be considered is the introduction of the new Fair Value Measurement Standard, IFRS 13.
This is a complex and much debated standard and is important as it has the potential to impact on all assets or liabilities measured or disclosed at fair value. However, CIPFA/LASAAC’s focus has been on the effect on property, plant and equipment assets where IFRS 13 would normally require measurements on an exit value basis and at highest and best use. CIPFA/LASAAC considers that the approach in the Code to measure the service potential of the assets used by authorities continues to be the best way forward only the measurement base for those assets that are declared surplus to an authority’s requirements will change as these assets are no longer providing services to the authority. They will be measured at fair value under the requirements of the IFRS 13.
Other changes to the Code include narrow scope amendments to IFRS, particularly including: accounting for pensions contributions and review of the reporting requirements for Heritage Assets. CIPFA/LASAAC is proposing to retain the relaxed approach to the measurement of the assets and it is proposing to reduce the some of the disclosure requirements.
CIPFA/LASAAC is keen to ensure that it assists local authorities produce financial statements that provide information that is relevant to the users. CIPFA/LASAAC last year initiated a review and consultation on the Simplification and Streamlining the Presentation of Local Authority Financial Statements. Following that review CIPFA/LASAAC requested that the How to Tell the Story publication be reissued. This publication sets out for chief finance officers and other senior officers the key messages in local authority accounts.
The simplification and streamlining review has now moved on to its second stage – which will focus on a fundamental review of how local authority performance is reported including the two performance statements (the Comprehensive Income and Expenditure Statement and the Movement in Reserves Statements) and the most effective form for a narrative report. CIPFA/LASAAC is asking more in depth questions in a further consultation which will feed into the review and support the detailed analysis which will be undertaken by roundtable workshops to be held at CIPFA later this year.
As well as the consultations on the Code there will be a third consultation on local authority financial reporting concerning the 'Service Reporting Code of Practice'. This consultation will focus on the clarifications to the definition of total cost and changes to the service expenditure analysis.
All three of these consultations are on the consultation pages of the CIPFA website: