The Code specifies the principles and practices of accounting required to prepare a statement of accounts that gives a true and fair view of the financial position and transactions of a local authority.
The Code is reviewed continually and is normally updated annually. The 2023/24 Code has been developed by the CIPFA/LASAAC Local Authority Code Board and has effect for financial years commencing on or after 1 April 2023. Earlier editions of the Code apply to previous financial years.
Following consultation from August to October 2023 CIPFA/LASAAC issued the 2023/24 Code of Practice on Local Authority Accounting in the United Kingdom in June 2023.
This Update to the 2022/23 Code is in relation to the treatment of service concession liability (PFI PPP liability) by authorities that choose to voluntarily adopt IFRS 16 Leases in 2022/23. While Section 4.3 of the Code and Appendix F require that the liability is valued by reference to IFRS 16, this update provides an option for these local authorities to defer implementation of this change until 2023/24, in line with financial reporting requirements in other parts of the public sector which have deferred implementation of IFRS 16 to PFI PPP arrangements. Note that the Update sets out an option but is not mandatory; local authorities that choose to voluntarily adopt IFRS 16 Leases in 2022/23 may elect to follow the unamended provisions in Appendix F.
The Update will need to be read alongside the 2022/23 Code. The amendments have been presented as tracked changes in red font.
Following a consultation in August to October 2022 CIPFA/LASAAC issued the 2022/23 Code of Practice on Local Authority Accounting in the United Kingdom in August 2022. Note that the issue of the 2022/23 Code was delayed following the emergency consultation on the Code when CIPFA/LASAAC decided to delay the mandatory implementation of IFRS 16 Leases in the Code until the 2024/25 financial year. CIPFA/LASAAC would, however, strongly encourage local authorities to voluntarily implement the standard and an Appendix F included in the 2022/23 Code to allow local authorities to do this.
The feedback statement for the consultation on the 2022/23 Code is available here. Publication of this statement was delayed while further work was carried out on various exceptional consultations on delays to the publication of accounts, issues arising in the reporting of infrastructure assets, and alignment with central government approaches to service concession reporting. Key matters consulted on included the treatment of service concession liabilities under IFRS 16, changes to which were subsequently reframed as part of a further deferral of mandatory adoption of IFRS 16 until 2024/25 while allowing voluntary implementation before then.
The Update to the Code and Specifications for Future Codes for Infrastructure Assets (the Update) provides amended specifications on the disclosure on gross cost and accumulated depreciation for infrastructure assets. The Update allows local authorities temporary relief from disclosing gross cost and accumulated depreciation until 31 March 2025.
The Update amends both the 2021/22 and 2022/23 Codes (and may apply to the accounts of local authorities where an opinion has not yet been given) and includes specifications for future Codes though these specifications will also be included in those Codes for completeness.
The Update will need to be read alongside either the 2021/22 or the 2022/23 Code the amendments have been presented as tracked changes in red font.
The Update also provides an Annex to Section 4.1 which sets out the historical development of the measurement specifications for infrastructure assets.
CIPFA will issue a Bulletin to provide guidance on this Update, but it is anticipated that this will be published in early January as it will also need to include the interaction with any future statutory prescription on infrastructure assets which if taken forward by government is likely to come into force as of 25 December 2022 (and earlier dates for Welsh authorities). When issued the Bulletin will be available on the CIPFA Bulletins page.
The Update requests that local authorities maintain information on gross cost and accumulated depreciation in a memorandum format even though disclosure is not required. This information may be required to be used in the longer-term solution for infrastructure assets and therefore as much as possible local authorities should maintain this memorandum information in accordance with the provisions of Section 4.1 of the Code.
The Temporary Relief for reporting infrastructure assets gross cost and accumulated depreciation will apply until the end of the 2024/25 financial reporting year and will be incorporated in both the 2023/24 and 2024/25 Codes. It is anticipated that the longer-term solution for the reporting of infrastructure assets will implemented from 1 April 2025.
Until the longer-term reporting requirements for infrastructure assets are in place in 2025/26 it is essential that local authorities consider the information systems and inventories of infrastructure assets and what potential improvements can be made to ensure that asset information is complete.
A local authority will need to identify any highways infrastructure components including carriageways (on its list or register), footways, structures, street lighting, street furniture, traffic management. The data should be reviewed, including its completeness, how it is maintained, updated and used and what information has previously been provided as part of the Whole of Government Accounts process. As an early review it should revisit any gap analysis it compiled previously for the measurement of the Highways Network Asset and how the position has changed since that date. The data will include asset management information such as inventory, condition and age data. The quality of data and processes used for measurement are likely to differ for different components. It will be important to understand this as soon as possible.
Under its governance framework, CIPFA/LASAAC remains the accounting standard setter for local authorities. The Code also continues to be the authoritative source of accounting guidance for local authorities across the UK.
Download the CIPFA/LASAAC Constitution for the Board's terms of reference.
The Financial Reporting Advisory Board (FRAB) and the Memorandum of Understanding between FRAB bodies can be found on the gov.uk website
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