Code of Practice on Local Authority Accounting in the United Kingdom Guidance Notes for 2020/21 Accounts (online)

This is the online version of the publication. It is also available in hard copy (presented as a loose-leaf update pack for your existing binder). The online, digital version is a bookmarked downloadable PDF of the publication that can be shared throughout your organisation. Customers will need to register and log in to CIPFA's website to access the publication.

This year's edition of the Guidance Notes provides detailed guidance on the key accounting changes introduced by the Code of Practice on Local Authority Accounting in the United Kingdom (the Code) 2020/21, and includes:

• Amendments to implement and emphasise the application of amendments to IAS 1 and IAS 8: Definition of Material. For example, the importance of ensuring that material information is not obscured for users is specified in Section 2.1. Reference to this is also made in Section 4.1 Property, Plant and Equipment; Section 6.4 Post-Employment Benefits; and Section 7.3 Financial Instruments: Disclosure and Presentation Requirements.
• Implementation of Amendments to IAS 19 – Plan Amendment, Curtailment or Settlement in Section 6.4 Post-Employment Benefits, including reference to materiality requirements and specification of factors to consider in making an initial proxy assessment of quantitative materiality.
• Reference to arrangements for the application of accounting standards arising as a consequence of the UK’s withdrawal from the EU.
• Legislative amendments including:
  • England: The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2018 relating to investments in specified pooled investment funds that are measured at fair value through profit or loss (FVPL), and back payments following unequal pay.
  • Wales: The Accounts and Audit (Wales) (Amendment) Regulations 2018 including dates for the preparation and submission of accounts; and The Local Authorities (Capital Finance and Accounting) (Wales) (Amendment) Regulations 2018.
  • Scotland: Finance Circular 7/2018: Financial Instruments; Finance Circular 1/2019: Accounting for Equal Pay; and Finance Circular 4/2019: Capital Receipts to Fund Transformational Projects. These include specification of disclosures to be provided in the financial statements.
• Amendment to Section 6.5 Accounting and Reporting by Pensions Funds to align specific investment asset line item descriptions in the net asset statements with the Pensions SORP.
• Amendments relating to financial instruments:
  • fair value through profit or loss financial instrument entries are specified as included in the financing and investment income and expenditure line
  • clarification regarding the extent of exemption from impairment allowance treatment relating to some balances with other public sector bodies
  • clarification that the interpretation regarding LOBOs does not relate to compound embedded derivatives if separation of the exempted derivative is not permitted by IFRS 9
  • clarification that the modification of financial liabilities follows the principles specified for modification of financial assets
  • allowance for soft loans to be specified at below zero (ie negative) interest rates.
• Other amendments including:
  • fees and charges for services under statutory requirements specified include Housing Revenue Account tenancy rental income 
  • references to RICS valuation guidance publications updated 
  • signage used at foot of the Comprehensive Income and Expenditure Statement should be clearly identified  
  • recognition that the presentation of a disclosure of movements in property, plant and equipment for the year may differ from Whole of Government Accounts practices.

The example financial statements have been updated to reflect the changes described above.

In addition, these guidance notes have been revised to take account of issues arising from queries raised by practitioners.

This publication is available in hard copy (presented as a loose-leaf update pack for your existing binder) and online.

Details of licensing arrangements for other categories of purchaser, which includes those organisations operating shared service arrangements, are available from CIPFA's Publications Department.

A replacement binder/presentation box is also available to purchase.