Responding to COVID-19: insight, support and guidance

Code of Practice on Local Authority Accounting in the UK Consultation on the Impact of COVID-19

12-01-2021

Please note that this consultation closed on the 12 March 2021

This consultation on the Code of Practice on Local Authority Accounting in the United Kingdom (the Code) relates to two issues: Housing Revenue Account tenancies and leasing standards, which cover issues from the current code to the 2022/23 code when IFRS 16 Leases is implemented, and COVID-19-related rent concessions (which may relate to the current and 2021/22 codes).

This consultation will close on 12 March 2021.

Issues considered in the consultation

Housing tenancies and leasing standards

Note that this consultation focuses principally on IFRS 16 Leases but also considers the impact under IAS 17 Leases. The changes and feedback requested in the Invitation to Comment (ITC) on the code relate to the following:

  • whether the leasing standards apply to housing revenue account tenancy agreements (ie whether they meet the definition of a lease (under both IAS 17 and IFRS 16)
  • if the leasing standards do apply, whether they are operating or finance leases
  • dependent on the classification decided on, what disclosure requirements will be needed by the users of local authority financial information relating to housing tenancies and the related assets

CIPFA LASAAC has included the attached presentation to provide a short summary of the consultation as it relates to housing tenancies and leasing standards.

COVID-19-related rent concessions

As CIPFA LASAAC has decided to defer the implementation of IFRS 16 to 1 April 2022, it is keen to understand whether it would be useful to local authority stakeholders if provisions were included in the Code to provide guidance on the accounting treatment for COVID-19-related rent concessions. UK GAAP under FRS 102 Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime already provides such guidance and so the proposed amendments to the 2021/22 Code (and possibly as an update to the 2020/21 Code) cross refer to this treatment. This might be useful to local authorities with subsidiaries that apply FRS 102 and that have received such rent concessions.

The Invitation to Comment (ITC) and exposure drafts of the Code

The exposure drafts of the proposed amendments to the 2022/23 Code with regard to housing tenancies and leases and the 2021/22 Code for COVID-19-related rent concessions are provided as two files. They are listed in numerical order and follow the order of the section in the ITC in which an issue is discussed, not the section of the Code itself.

The Invitation to Comment summarises the proposed changes to the Code. Where CIPFA LASAAC is interested in specific issues, consultation questions have been included in the ITC. However, CIPFA LASAAC welcomes comments on any aspect of the draft 2021/22 Code or 2022/23 Codes. In order to assess comments properly, respondents are asked to support comments with clear accounting and financial reporting reasons and, where applicable, preferred alternatives. Respondents are asked to use electronic formats to respond to the consultation and so speed up the analysis.