From:                                   Rob Whiteman <cipfa@email.cipfa.org.uk>

Sent:                                    01 April 2020 13:21

To:                                        Moore, Ashleigh

Subject:                                CIPFA COVID-19 Bulletin

 

Weekly update on coronavirus

CIPFA | The Chartered Institute of Public Finance & Accountancy


CIPFA COVID-19 Bulletin

Key financial challenges

The most significant cost pressures that we’re seeing having an impact on councils are in social care, with an increase in the number of vulnerable people who will need support as the weeks go on. In addition to supporting the market for care providers, it may be necessary for authorities to re-establish some home-help services for vulnerable people who rely on family members who are self-isolating for their care. 

The business rates holiday that was announced in the Budget will provide some cash flow relief, but income pressures as a result of lost revenue through fees and charges are still causing substantial problems. Districts and borough councils especially are having to spend more quickly than they planned, all while losing income. We can see this causing cash flow issues that will have a significant impact on local authority finances into 2021/22.  

CIPFA Survey

As I mentioned in last week’s bulletin, CIPFA is looking to gather intelligence on the key technical financial issues for public finance practitioners, as well as on any policy issues where changes or flexibilities may be needed to manage COVID-19.

As of today this survey is live. You will receive a separate email containing a link to the survey, which will take approximately 10 minutes to complete. Please submit your responses by 6 April 2020.

Simplified financial reporting for 2019/20 accounts

The immediate milestone for local government is of course the preparation of the financial statements for 2019/20. Realistically, the level of resource available to prepare financial statements is either not available or, at best, severely depleted.

We have recognised that the requirement to fully prepare financial statements at this time is not tenable. The CIPFA/LASAAC Code Board therefore proposes to suspend the requirement to apply the Code of Accounting Practice for 2019/20 in its current format. This will be substituted with a forthcoming Code update which will set out a radically reduced (or simplified) set of financial statements.

This proposal will be subject to approval from the HM Treasury Financial Reporting Advisory Board. We are liaising urgently with the Financial Reporting Council, representatives of the audit profession, MHCLG and representatives of the devolved administrations for the required approvals.

We are exploring how the revised statements can account for the general fund, collection fund, and the Housing Revenue Account balance and also present a limited balance sheet. We hope to reveal our proposals in detail in early April.

COVID-19 advice portal for local authorities

Essential guidance for local authorities on all aspects of coronavirus support can be found on the GOV.UK website. It is being regularly updated and should act as the definitive reference point for councils: https://www.gov.uk/guidance/coronavirus-covid-19-guidance-for-local-government

Financial Advisory Network update

MHCLG is extending the accounts preparation timetable in England for principal authorities, with the proposed publication date of audited accounts being pushed back to 30 September 2020.

Indeed, the whole chain of publication requirements in Accounts and Audit Regulations 2015 is being amended, with the intention of amending the date for public inspection of draft accounts to be the first 10 working days of July. This will mean the accounts themselves will not need to be signed off until 30 June.

Revised Accounts and Audit Regulations have been drafted based on those dates, and these have been distributed for comments with the intention to lay them in Parliament shortly.

It is acknowledged, however, that the proposed revised timeline may still be a real challenge for authorities given the unprecedented circumstances being faced. Therefore the suggested timetable above may still be subject to further change. CIPFA will issue updates once the outcome is known.

Note that any deferral of the accounts publication date is likely to impact on the circulation and submission deadline for the 2019/20 NNDR3 form.

Revenues and Benefits update

It had been assumed the NNDR3 form would have been out before the system reports required running. Although the NNDR3 return has not yet been distributed, the draft form that CIPFA have seen will require the splitting of the Gross Rates Payable figure between current and prior year amounts for the first time, excluding any additional yield generated from the small business supplement.

Treasury and Pensions update

The Treasury Management Panel bulletin will be published shortly, including a list of treasury management related risks and advice on liquidity during the COVID-19 crisis.

The changes to business rates collection and other funding streams has created greater uncertainty over the amount and timing of cash flows collected by local authorities. Authorities should consider their investment portfolios, with a view to moving to a shorter term, more liquid position. Authorities should not be investing long term at this time, in case of unexpected expenditure or further unexpected loss of income streams. If authorities are demonstrating significant issues with cash flow, they should contact HM Treasury.

Frequently Asked Questions

Please share any questions or issues you’re experiencing to Joanne Pitt, CIPFA Local Government Policy Manager: joanne.pitt@cipfa.org


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