The role of the Financial Reporting Advisory Board (FRAB) is “to ensure that government financial reporting meets the best possible standards of financial reporting by following Generally Accepted Accounting Practice (GAAP) as far as possible”.  The FRAB includes representatives from the accountancy profession in the private and public sectors, academia and government bodies.  The board meets regularly to consider proposed changes to policy and practice. 

Key topics discussed during the meeting were:  

• The application of IFRS 13 ‘Fair Value Measurement' to value property, plant and equipment.  A paper was presented proposing that public sector assets that are not used to provide services directly to the public, and which are not subject to any service or other constraints that would restrict the ability of the reporting entity to sell the asset, should be measured at fair value in accordance with IFRS 13.
• Simplifying and streamlining annual reports and accounts (see below).
• Local authority accounting for schools and the interaction with IFRS 10 Consolidated Financial Statements. 
• An update on European Public Sector Accounting Standards and discussion of the consultation published by Eurostat.
• Government Financial Reporting Manual (FReM) 2013 – 14 and 2014 – 2015.
• Accounting for local authority transport infrastructure.

The board minutes are accompanied by a paper ‘FRAB (119) Draft Code of Practice on Local Authority Accounting 2014-15 with Annexes’.  This discusses the results of a consultation in July 2013 on a draft of the 2014/15 Code of Practice on Local Authority Accounting in the UK (“the Code”) and proposed consequential changes to the draft as a result.  The paper also discusses the responses to another consultation in July 2013 regarding proposals to simplify and streamline the presentation of Local Authority financial statements. 

There were no significant changes to the draft of the Code as a result of the consultation.  However the application of IFRS 13 is to be considered further by CIPFA/LASAAC in January and final amendments made to the Code.  The consultation responses also indicated that a number of local authorities would not be able to comply with the adoption of a depreciated replacement cost measurement for transport infrastructure assets by 2015/16.  A decision was made that these measurement requirements would be formally adopted in 2016/17 and this would be confirmed in the 2014/15 Code.

The key responses to the consultation to simplify and streamline the presentation of Local Authority financial statements were:

• Most of the respondents agreed with the comments in the consultation papers that the financial statements were too long and considered that they were overly complex for their users.  Respondents identified a need for further deliberation about who the users and potential users of financial statements are and the resultant difficulties that result on decisions of materiality.
• A significant number of respondents were concerned that the performance statements do not clearly present the key financial performance measure that local authorities measure and monitor themselves against i.e. the General Fund and Housing Revenue Account surplus or deficit.
• The CIPFA Service Reporting Code of Practice (which specifies the financial reporting requirements for the costs of services and is also used to report service cost in government statistical returns) and the segmental reporting note both add to the reporting burden and the complexity of the financial statements.

Click here for detailed minutes and other supporting documents on HM Treasury website.