Responding to COVID-19: insight, support and guidance

Code of Practice on Local Authority Accounting in the United Kingdom 2021/22

11-09-2020

The 2021/22 Code will apply to accounting periods starting on or after 1 April 2021. The proposed amendments in the 2021/22 Code cover changes relating to the implementation of IFRS 16 Leases and changes in accounting standards on which CIPFA/LASAAC wishes to seek stakeholders' views.  CIPFA/LASAAC is also seeking views on the impact of the Redmond Review on financial reporting for local authorities and on its strategic plan.

Note: the consultation closes on 23 October 2020

Issues considered in the consultation

The changes and feedback requested in the Invitation to Comment (ITC) for the 2021/22 Code relate to the following:

  • further developments on the implementation of IFRS 16, these include:

    • the treatment of housing revenue account tenancy agreements under leasing standards. Currently this is treated in Appendix F of the 2020/21 Code as being outside the scope of IFRS 16 and the treatment of housing tenancy agreements is not explicitly addressed in the 2020/21 Code. FRAB has queried this approach and further consideration is being given to accounting for housing tenancies under leasing standards. This will be the subject of a separate single-issue consultation which will be issued in November 2020.
    • the measurement of the service concession arrangement liability.
    • the accounting requirements for leases at peppercorn (or lease payments for nominal or nil consideration), by following the principles in the Code for the treatment of donated assets.
    • changes to IFRS 16 for COVID-19 related rent concessions issued by the IASB in May 2020.
  • other changes to accounting standards.
  • areas of augmentation to the Code’s provisions (though these are minor as CIPFA/LASAAC is keen that due to the implementation of IFRS 16 not to include any changes other than those which are necessary).

Implementation of IFRS 16 Leases in the 2021/22 Code

CIPFA/LASAAC consulted on the implementation plans for IFRS 16 in both 2018 and 2019. CIPFA/LASAAC is aware of the need for authorities to continue with preparations for successful implementation of the new requirements during 2021. To inform and support this the text agreed by CIPFA/LASAAC for IFRS 16 implementation was provided as Appendix F to the 2020/21 Code. This text may by subject to change by the issues outlined above, for completeness Appendix F is included below. The ITC does not specifically re-expose the proposals to consultation (other than the issues outlined above).

The Invitation to Comment (ITC) and exposure drafts of the 2021/22 Code

The Exposure Draft of the 2021/22 Code is provided as a number of files. They are listed in numerical order and follow the order of the section in the ITC in which an issue is discussed, not the section of the Code itself.

Invitation to Comment

Invitation to Comment on the 2021/22 Code

Exposure Drafts (EDs)

Exposure Draft B: The Adoption of Leases in the 2021/22 Code

Exposure Draft C: Amendments to Accounting Standards

Exposure Draft D: Augmentations to the Code’s Provisions

Note – the exposure drafts are titled to correspond to the ITC section format. There is no Exposure Draft A.

The agreed provisions on the adoption of IFRS 16 (included as Appendix F to the 2020/21 Code)

The Invitation to Comment also seeks views on:

  • the impact of the Redmond Review recommendations and commentaries on financial reporting and CIPFA/LASAAC’s strategic plan.
  • The future implementation of IFRS 17 Insurance Contracts
  • Specific issues relating to CIPFALASAAC’s strategic plan.

The Invitation to Comment summarises the proposed changes to the Code. Where CIPFA/LASAAC is interested in specific issues, consultation questions have been included in the ITC. However, CIPFA/LASAAC welcomes comments on any aspect of the draft 2021/22 Code. In order to assess comments properly, respondents are asked to support comments with clear accounting and financial reporting reasons and, where applicable, preferred alternatives. Respondents are asked to use this response sheet to respond to the consultation and so speed up the analysis.