Local authorities in the United Kingdom are required to keep their accounts in accordance with ‘proper practices’. This includes compliance with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom prepared by the CIPFA/LASAAC Local Authority Accounting Code Board (CIPFA/LASAAC).

The proposed developments for the 2018/19 Code are:

• IFRS 9 Financial Instruments
• IFRS 15 Revenue from Contracts with Customers
• Narrow scope amendments to International Financial Reporting Standards (IFRSs)
• Legislative and policy developments.

The approach to the adoption of both IFRS 9 and IFRS 15 was detailed by CIPFA/LASAAC as part of their consultation for the 2017/18 Code.  The agreed position is set out in a separate publication – Forthcoming Provisions for IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers in the Code of Practice on Local Authority Accounting in the United Kingdom 2018/19. The Invitation to comment focuses on two areas for consideration on the approach to adoption of IFRS 9:

• whether certain housing rents debtors might meet the definition of purchased or originated credit-impaired financial assets, and
• CIPFA/LASAAC’s decision not to mandate the use of the simplified approach to impairment for all trade receivables or contract assets that result from transactions within the scope of IFRS 15 and that contain a significant financing component and all lease receivables that result from transactions that are within the scope of IAS 17 Leases and whether there are any consequences as a result of this decision.

With respect to IFRS 15, the amendments set out in Forthcoming Provisions for IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers in the Code of Practice on Local Authority Accounting in the United Kingdom 2018/19 remain largely unchanged.  However, CIPFA/LASAAC are seeking views on its approach to the disclosure framework under IFRS 15 in the Invitation to Comment.

The following narrow scope amendments to IFRSs are proposed to be included in the 2018/19 Code (subject to their EU adoption):

• Amendments to IAS 7 Statement of cash flows (disclosure initiative)
• Amendments to IAS 12 Income Taxes (Recognition of Deferred Tax Assets for Unrealised Losses)
• Amendments to IAS 40 Investment Property (Transfers of Investment Property)
• Annual Improvements to IFRSs 2014-2016 Cycle
• IFRIC 22 Foreign Currency Transactions and Advance Consideration

The Invitation to comment also includes an appendix highlighting the proposed approach to the adoption of IFRS 16 Leases, the work of the CIPFA/LASAAC sub group on IFRS 16 and details on the timetable for future consultation of that standard.

Comments are requested by 6 October 2017.

Click for (all links to the CIPFA website):

• Press release
• The 2018/19 Code of Practice on Local Authority Accounting in the United Kingdom - Invitation to comment