IFRS 16 Leases: A Guide For Local Authority Practitioners 2023 Edition

This publication provides guidance on IFRS 16 Leases for 2022/23, which is applicable to those authorities deciding to voluntarily implement the requirements of Appendix F of the Code (which includes the specifications applicable to those entities implementing IFRS 16 as of 1 April 2022). It will also be of interest to those intending to apply as of 1 April 2023 and those mandatorily implementing as of 1 April 2024.

The publication is important and should be considered at the earliest opportunity because of the prevalence of leasing in local government and the risk that the changes could have a budgetary impact if not managed effectively.

This guidance on IFRS 16 provides comprehensive coverage of the proposed requirements for lessees. Although there have not been significant changes to the requirements for lessors, the guidance also includes extensive commentary on this area.

The guidance covers in particular:

• identifying arrangements that meet the accounting definition of a lease
• determining the term of a lease where there are options to extend or terminate for lessees:
  • recognising right-of-use assets and lease liabilities and their initial and subsequent measurement
  • reassessment of lease liabilities and treatment of lease modifications
• for lessors, distinguishing between finance and operating leases and accounting accordingly
• dealing with sale and leaseback transactions
• presenting lease transactions and balances in the financial statements
• disclosure of information about leases in the notes to the accounts
• harmonising with statutory accounting requirements
• the mechanics of making the transition in the 2022/23 financial statements (including the application of transitional provisions and the preparation of relevant disclosure notes).