CIPFA General News

Local authority accounts to follow International Financial Reporting Standards

Local authorities are to prepare their accounts following International Financial Reporting Standards (IFRS) from 1 April 2010, it has been announced.

A two year programme to develop and implement a new IFRS-based code of practice for local authority accounting is now underway, the Chartered Institute of Public Finance and Accountancy has revealed.  The timetable is intended to ensure councils have sufficient time to prepare for this significant change to the basis on which they produce their accounts. It will also allow a ‘first principles’ review of the contents of local authority accounts to be undertaken in order to identify the scope for simplification.

A key feature of the programme is working closely with the Department for Communities and Local Government and the devolved administrations to ensure that accounting issues that might impact adversely on councils’ finances are identified and potential solutions developed as early as possible before the introduction of the new standards.

The timetable will also ensure that councils can learn from the experience of both the private sector and central government in moving to the new basis for accounting.  CIPFA is working with HM Treasury to ensure that the lessons learned from preparing central government’s IFRS-based Financial Reporting Manual are taken on board when preparing the new accounting code of practice, and that local authorities can provide the information needed to prepare the whole of government accounts.

Nick Bennett, Public Sector partner at Scott-Moncrieff and Chair of CIPFA/LASAAC* said:

“This is a challenging but achievable timetable that will ensure local authority financial reporting maintains its current high standards.  The 2010/11 timetable announcement provides certainty for councils, and we look forward to working with all key stakeholders to ensure that IFRS are implemented in the most appropriate way for local authorities across the United Kingdom.”

The announcement forms part of CIPFA’s ongoing programme to support the public sector’s move to International Financial Reporting Standards.  The programme includes a series of training events to assist the central government and health sectors move to the new standards. This will now be extended to address the specific needs of local government.

* The CIPFA/LASAAC (Chartered Institute of Pubic Finance and Accountancy / Local Authority (Scotland) Accounts Advisory Committee) Local Authority SORP Board is responsible for development of the Statement of Recommended Practice (SORP) for local authority accounts.  Under various local government acts the local authority SORP constitutes a ‘proper accounting practice’.