Assurance with Your Accounts Laura Fallon

As all local authority accountants will know the upcoming few months can typically be a busy, and sometimes daunting, time. The day job will typically be pared back as much as possible so that everyone can work hard at the preparation of final accounts. As our clients will be aware Arlingclose is here to provide assistance with some of the most difficult parts: your financial instruments and capital financing requirement calculations.  

For those authorities that may be looking for some more in depth help Arlingclose can bring our expertise to these complicated areas, helping you to sleep soundly at night. Having correctly prepared accounts and working papers should help mitigate against the risk of audit nightmares (to extend the sleep analogy) and make things smoother and more efficient for everyone all round. 

Financial instrument accounting is complicated anyway, particularly for certain products or processes such as bonds, loans made at a below market rate of interest and loans that have been restructured (to name a few!). As a local authority your job is more difficult than your private sector counterparts, because commonly transactions have to be done in a private sector context and then separately reversed out somewhere else under local authority specific rules. Things like the Capital Financing Requirement or Minimum Revenue Provision (Loans Fund Repayments in Scotland) are things that only local authorities have to worry about! 

IFRS 9 (brought in in 2018/19) introduced further requirements. These include the need for an Expected Credit Loss calculation on many investments, and the need to categorise assets and liabilities into amortised cost, fair value, or fair value through other comprehensive income and (separately) into whether they are level 1, 2 or 3. A further categorisation needs to be made on the balance sheet as to whether things are short or long term or (for investments) cash and cash equivalents. There’s a lot to think about! 

IFRS 16 on leases will be compulsory for next year’s accounts (although early adoption is possible, I have yet to meet a local authority who has been this enthusiastic), but will this year require disclosures in the ‘Impact of Accounting Standards Not Yet Adopted’ section of the accounts. Some work in this area, especially for authorities with large index linked PFI schemes, will thus be required. 

Help we can offer includes an ‘Accounts Assurance’ service. This is designed as essentially an in-depth check of what has been prepared, and an opportunity to correct errors and make sure things are being done properly. As well as checking over the more complicated calculations, a second pair of eyes can also spot simpler but easily missed errors such as figures in notes that don’t match the main statements, text that doesn’t match the tables and figures which should reconcile but don’t.  

Arlingclose can also offer bespoke assistance wherever it is required. This can be in producing a full schedule of current and future double entries for the more difficult financial instruments, providing on-site (or remote) individual assistance or providing tailored training to staff. Authorities may find this of particular use where staff resources are stretched or where many staff are new to the year-end process.  

For more information on how Arlingclose can assist with accounts closedown please contact Laura Fallon on or 07702 788303.

Related Pages

Expected Credit Loss Calculations

Valuing Shares

Year End Accounting Service