The proposals intend to address issues raised by auditors in relation to the derecognition of parts of infrastructure assets when replacement expenditure is undertaken. The issue arises principally because of difficulties in generating decision-useful information in relation to these types of assets which meets the needs of accounting standards. There are also related issues for the reporting of gross historical cost and accumulated depreciation.

CIPFA LASAAC and CIFPA's Accounting and Financial Reporting Forum have established a Task and Finish Group to assist with the resolution of this issue.  Upon the advice of the Task and Finish Group, CIPFA LASAAC has proposed a temporary solution, with changes to the code for the reporting including proposals to:

• confirm the accounting consequences of derecognition, i.e. that the effect on the carrying amount is nil (on the presumption that replaced parts are fully depreciated)
• temporarily adapt the code to remove the reporting requirements for gross historical cost and accumulated depreciation
• provide extra guidance on how depreciation may be applied for infrastructure assets

This proposal is a temporary solution which will allow CIPFA LASAAC to consult on a longer-term solution later in the year.  

Comments are requested by 14 June 2022.

A press release, the Invitation to comment and a copy of the exposure draft are available on the CIPFA website.