Code of Practice on Local Authority Accounting in the United Kingdom: Guidance Notes for Practitioners - 2016/17 Accounts

cover - guidance notes


These Guidance Notes offer constructive advice and assistance to practitioners and external auditors on all aspects of the detailed application and implementation of the 2016/17 Code.




Dec 2016



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If you are a CIPFA Publications subscriber ... have you downloaded the Briefing Note to accompany this title?

These Guidance Notes are your expert support in dealing practically with the preparation of the year-end accounts.

Download the full Schedule of Changes for the Guidance Notes for this year.

This version provides detailed guidance on the key accounting changes introduced by the 2016/17 Code, and includes updates to:

• Presentation of Financial Statements (Module 3, Sections C to I) to reflect the new formats and reporting requirements for the Comprehensive Income and Expenditure Statement and the Movement in Reserves Statement and the introduction of the new Expenditure and Funding Analysis as a result of the Telling the Story review of the presentation of local authority financial statements. Module 3 also includes the Code amendments to reflect the December 2014 changes to IAS 1 Presentation of Financial Statements under the International Accounting Standards Board (IASB) Disclosure Initiative.

• Non-Current Assets (Module 4) to include a new Section P – The Highways Network Asset which reflects the requirements of Section 4.11 of the Code in respect of the new measurement requirements at Depreciated Replacement Cost for the Highways Network Asset, based on the methodologies in the CIPFA Code of Practice on the Highways Network Asset (the Highways Code). This new section of the Guidance Notes exemplifies the specifications of both the Code and Highways Code where they relate specifically to the accounting requirements for the Highways Network Asset, and provides practical assistance to enable authorities to comply with those accounting requirements.

• Accounting and Reporting by Pension Funds (Module 6, Section F) to include:

o updates to the format of the Fund Account and the Net Asset Statement to be consistent with the new Financial Reports of Pension Schemes – A Statement of Recommended Practice 2015

o confirmation of the new disclosure requirements for retirement benefit plan investments measured at fair value

o recommendations for a new disclosure on investment management transaction costs

o a new Annex setting out the application of other sections of the Code to the pension fund accounts.

• Narrative Reporting (Module 3, Section B) to reflect the requirements of the Accounts and Audit Regulations 2015 for English authorities in respect of the narrative statement.

• Concepts (Module 2, Section A) to reflect the changes in the 2016/17 Code relating to the new IPSASB Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities and to particularly reflect the description of public sector users and understandability of local authority financial statements.

• Housing Revenue Account Wales (Module 3, Section K) to reflect the move to the self-financing regime in Wales including the requirements of the General Determination of the Item 8 Credit and Item 8 Debit (Wales) 2015 (Item 8 Determination).

• Statements Reporting Reviews of Internal Controls (Module 3, Section O) for the changes to the Delivering Good Governance in Local Government: Framework (2016) published by CIPFA/Solace.

• Related Party Disclosures (Module 3, Section Q) to reflect an addition to the definition of a related party in section 3.9 of the Code (for changes to IAS 24 Related Party Disclosures) in relation to key management personnel which resulted from the Annual Improvements to IFRSs 2010-2012 Cycle.

• Dedicated Schools Grant (DSG) (Module 3, Section I) to include the latest on the disclosure requirements for DSG and has been developed with the Department for Education (DfE).

• The Example Financial Statements in the Appendix to Module 3 to reflect the 2016/17 Code’s reporting and disclosure requirements, including the new formats and reporting requirements for the Comprehensive Income and Expenditure Statement and the Movement in Reserves Statement, the new Expenditure and Funding Analysis and the new Income Analysed by Nature note. The Example Financial Statements also includes the new reporting requirements for the move to measuring the Highways Network Asset at DRC (ie the new accounting policies and the movements on the Highways Network Asset note).

• Module 10 – Other Accounting Themes (Section C) Informal Commentary and Clarification to include guidance on the order of events for approval and publication of the statement of accounts for local authorities in England as required by the Local Government, England and Wales Accounts and Audit Regulations 2015.

• Landfill Allowance and Other Trading Schemes (Module 2, Section D) to reflect the latest developments for the Carbon Reduction Commitment (CRC) Energy Efficiency.

Other updates to the 2016/17 Guidance Notes include:

• Module 4 – Non Current Assets:

o Sections A to E, amendments to reflect the 2016/17 Code’s changes to definitions, measurement and disclosure provisions (in Section 4.1 – Property, Plant and Equipment) resulting from the introduction of the new measurement requirements for the Highways Network Asset in Section 4.11 of the Code.

o Section B – Recognition: to provide further clarification on the recognition requirements for property, plant and equipment.

o Section C – Measurement after Recognition: to clarify the treatment of accumulated depreciation and impairment for items of property, plant and equipment (that are not part of the Highways Network Asset).

• Module 6 – Employee Benefits:

o Sections C to E – Termination benefits; Post-employment benefits, and Accounting for Contributions Arising from Pension Strain to reflect the impact of the Telling the Story changes to the Code which no longer requires local authorities to follow the reporting requirements of the Service Reporting Code of Practice (SeRCOP) when charging individual components of the pension asset/liability to service segments.

In addition, these Guidance Notes have been revised to take account of issues arising from practitioner queries raised through CIPFA’s technical enquiry service.

This publication is available in hard copy (presented as a loose-leaf update pack for your existing binder) and online.

The digital, online version is a bookmarked downloadable PDF of the publication that can be shared throughout your organisation.

Customers will need to register and log in to CIPFA’s website to access the publication.

Details of licensing arrangements for other categories of purchaser, which includes those organisations operating shared service arrangements, are available from CIPFA’s Publications Department.

A replacement binder/presentation box is also available to purchase.

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