Accounting for the Highways Network Asset

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This accounting guidance reflects the decision taken by CIPFA/LASAAC to measure local authority Highways Network Asset (HNA) at Depreciated Replacement Cost and in accordance with the Code of Practice on the Highways Network Asset.

This publication exemplifies the specifications of the Accounting and Highways Codes where they relate specifically to the accounting requirements for the HNA and is intended to supplement the Accounting Code by providing practical assistance to enable authorities to comply with those accounting requirements.

When combined with the updated Code of Practice on the Highways Network Asset and the associated Code of Practice on the Highways Network Asset: Guidance Notes, this publication will provide practitioners with the tools they need to effectively implement the new measurement and accounting requirements.

The overall aim of this publication is to assist practitioners in the preparation of financial statements, in so far as it relates to the HNA. The guidance will enable authorities to:

• be aware of the background/principles behind the changes regarding the move to measuring the HNA at current value
• understand the key principles of the Accounting and Highways Codes
• understand the accounting requirements for the HNA including the initial recognition, in year movements, measurement and derecognition requirements, the presentation and the disclosure requirements for the HNA
• consider the valuation processes for different elements of the HNA
• account for the change in the measurement requirements for the HNA (transition arrangements)
• understand the engineers' processes sufficiently to critically assess the reasonableness of the estimations for the financial statements, and
• identify practical implementation issues.

This publication provides detailed illustrations including example journal entries, accounting policies and exemplification of the reporting requirements on transition.

To further assist practitioners, a comprehensive example showing the detailed journal entries required to establish the adjusted opening 1 April 2016 balances for the HNA and the 2016/17 in-year transactions is provided. An example Property, Plant and Equipment note, Movement in Reserves Statement and HNA note based on the information used in the comprehensive example is also provided in the publication.

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