CIPFA: the code of practice on Local Authority accounting in the United Kingdom 2011/12 code update and 2012/13 code

Comments from ACCA to the International Accounting Standards Board, September 2011.


Overall, the updates and changes made are comprehensively dealt with, albeit there are a few editorial points which will be do doubt picked up in the final draft. Also, we agree with the decision to wait until the IASB has finalised its conceptual framework before any updates to the Code are made.


We have commented on a number of specific issues below.   

We agree with the amendments made (questions 1-13) in section A development items which will be included in the 2011/12 code up date and the 2012/13 code.

In relation to section B and the development items which will be included in the 2011/13 code, we agree with views expressed in questions 14-18. In the longer term the public sector would benefit from consistent practice in the production of management commentaries. We also agree with proposals that the future management commentary should be based on reporting requirements outlined in the FREM. 

In our view sustainability reporting is a developing area. Given the introduction of the International Integrated Reporting Committee (IIRC) and its recent consultation it would be inappropriate to include any provisions on sustainability reporting at this present time. However, developments should be carefully monitored and the Code revisited when there is more clarity on this emerging reporting area. We agree with the opinion outlined in question 19.

We agree with the proposals set out for both accounting for financial instruments (IFRS 7) and IASB conceptual framework reporting (questions 20-22). 

In relation to transport infrastructure assets and the practical issues that local authorities will face (question 23), we don’t envisage any significant practical issues for local authorities, although recognise that financial information and measurement systems will have to change. Given that some authorities have already undergone this process there is an opportunity to share the lessons learnt from these authorities more widely.

We agree with proposals outlined in question 24 that the Code should permit local authorities to move to measuring transport infrastructure assets at depreciated replacement cost (DRC) in accordance with the requirements of the Code of Practice on Transport Infrastructure Assets. Also, in our view the first model permitting authorities to measure their transport infrastructure assets on a DRC basis would be the preferred option so as to bring local authorities in line requirements of the Transport Infrastructure Code for Whole of Government Accounts (WGA) as quickly as possible. We therefore support option one as set out in question 25.