Coronavirus has turned all of our worlds’ upside down this month and this is no less true than for local authority accounts. In an exceptional move the CIPFA/LASAAC Code Board announced on Friday that they would be suspending the requirement to apply the Code of Practice and replacing it with a simplified version. Although yet to be agreed, what is proposed is the presentation of a limited balance sheet and revised statements for the General Fund, Collection Fund and Housing Revenue Accounts. Disclosure notes are likely to be minimised this year and the implementation of IFRS 16 has been delayed from next year to the year after. The deadline for producing draft accounts has been moved back a month to the end of June. These sensible changes will be welcome news for anyone whose job rolls have been diverted to the more pressing issues of keeping the nation well, fed, housed and solvent during the pandemic.
Arlingclose will be continuing to assist local authorities with the provision of fair values for financial instruments and the Expected Credit Losses (ECLs) required under IFRS 9. Although less disclosure notes will reduce some of the workload fair values and ECLs will impact on the balance sheet, general fund and other fund balances so the calculation of them will still be required. If accounts are back to normal in 2020/21, prior year comparative figures are also likely to be needed.
In particular we can help with calculating the fair value of shares owned in unlisted companies and calculating ECLs for loans made to charities or local businesses for service rather than treasury management purposes. Calculating these was never easy, with judgements required about future profits and costs, or the risk and size of future defaults. Covid-19 has driven profits down and the risk of default up for just about everyone (unless you are a supermarket or online streaming service) but somehow quantifying this when it has occurred so near year end will be a big challenge. We are also able to offer an assurance service to check through the capital finance and treasury management aspects of your accounts and we can help with any bespoke assistance that is required.
All our methodologies are tried and tested; we assisted many local authorities through the transition to IFRS 9 last year with no auditor challenges. Our methodologies and assistance can help you avoid tangles with your auditor or storing up problems for the future: making your accounts one less worry in these difficult times.
For more information please contact Laura Fallon at firstname.lastname@example.org or 07702 788303.