Code of Practice on Local Authority Accounting in the United Kingdom 2020/21

This is the digital, online version of the Code, a searchable HTML and bookmarked, downloadable PDF of the publication that can be shared throughout your organisation. The Code is also available in hard copy.

Local authorities in the UK are required to keep their accounts in accordance with 'proper (accounting) practices'. Public sector organisations responsible for locally delivered services are required by legislation to comply with the terms of the Code of Practice on Local Authority Accounting in the United Kingdom (the Code). This 2020/21 edition of the Code has been developed by CIPFA/LASAAC and has effect for financial years commencing on or after 1 April 2020.

The Code specifies the principles and practices of accounting required to prepare financial statements which give a true and fair view of the financial position and transactions of a local authority. The Code applies to local government organisations across the UK including local authorities, police bodies, fire services and other local public service bodies.

This edition of the Code introduces a number of important amendments relating both to context and an understanding of requirements. Changes include:

• Implementation and emphasis of IFRS amendments relating to the application of materiality, and the requirement to avoid obscuring material information.
• Implementation of Amendments to IAS 19 – Plan Amendment, Curtailment or Settlement; with guidance on initial proxy assessment of quantitative materiality.
• Legislative amendments for England, Wales and Scotland.
• Amendments to reporting by pension funds to align with presentation practices under the Pensions SORP.
• Amendments relating to financial instruments.

Importantly, the 2020/21 Code includes a new appendix which sets out the agreed reporting text for the implementation of the deferred IFRS 16 Leases standard. This appendix will apply from 1 April 2021 and it will allow local authority accounts preparers to make effective preparations for the implementation of the standard in the 2021/22 financial year. Note that early adoption of IFRS 16 is not permitted, with the exception of Transport for London.

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