CIPFA has established a Task and Finish Group to address an issue regarding the derecognition of parts of infrastructure assets following 'replacement' expenditure. This is a complex and serious issue. The group will consider the issues arising and how it might assist in their resolution. Such assistance might take the form of producing additional guidance on this issue or including clarifications in the accounting code.
Update to the Code and Specifications for Future Codes for Infrastructure Assets
CIPFA LASAAC has now issued the Update to the Code and Specifications for Future Codes for Infrastructure Assets (the Update) which may be accessed from the CIPFA LASAAC pages of the website. The Update provides amended specifications for 2021/22 and the 2022/23 Code and other relevant reporting years. The Update allows local authorities temporary relief from disclosing gross cost and accumulated depreciation for infrastructure assets until 31 March 2025.
CIPFA update statement on infrastructure assets reporting – 19 August 2022
The CIPFA LASAAC Local Authority Accounting Code Board (CIPFA LASAAC) issued an update statement on the outcomes of its consultation on infrastructure asset reporting on 27 July 2022.
To assist local authorities and other stakeholders, CIPFA would like to provide the following updates.
Updates to the Code of Practice on Local Authority Accounting in the United Kingdom
CIPFA LASAAC is currently considering the approval of an update to the Code of Practice on Local Authority Accounting in the United Kingdom (the Code) following the outcomes of the consultation on the removal of the need to report gross cost and accumulated depreciation in line with its proposals in its consultation documents and as suggested in the 27 July outcome statement. This will be subject to CIPFA LASAAC’s full due processes and will therefore require approval separately by CIPFA and LASAAC, and in full consideration of the advice of the government’s Financial Reporting Advisory Board. Subject to the decisions made following CIPFA LASAAC’s due process, it is anticipated that the update to the Code will be available mid-September 2022.
Statutory prescription
CIPFA has worked with government and the devolved administrations on the possibility of statutory prescription regarding the transaction for the derecognition of parts of infrastructure assets that have been replaced or restored. Although a matter for government and the legislative process, CIPFA understands that the Department for Levelling Up, Housing and Communities is considering legislative prescription to support local authorities. Government will update on the position in the near future.
CIPFA LASAAC update statement on the outcomes of its consultation on infrastructure asset reporting Issues, 27 July 2022
CIPFA LASAAC has issued an update statement on the outcomes of its consultation on infrastructure asset reporting.
Timetable infrastructure assets guidance and possible code amendments
CIPFA set up this urgent task and finish group to assist with the resolution of the issues discussed above. CIPFA LASAAC has considered the consultation responses and a new timetable will be issued shortly.
If you would like to contribute to the work of the group, please contact policy.technical@cipfa.org
Terms of reference for the task and finish group
There is an agreed Terms of Reference for the task and finish group.
Urgent consultation on temporary changes to the code to resolve infrastructure assets reporting issues
The CIPFA LASAAC Local Authority Code Board has announced an urgent consultation on temporary proposals to update of the Code of Practice on Local Authority Accounting in the United Kingdom for infrastructure assets. Interested parties are invited to respond to the proposed changes.
Consultation webinar
The consultation was discussed at a webinar on 26 May 2022.
Draft Bulletin 12 Accounting for Infrastructure Assets
CIPFA has taken the unusual step of issuing draft guidance.
This is because CIPFA’s Task and Finish Group on Infrastructure Assets would appreciate accounts preparers’ and other stakeholders’ views on the approach to the guidance before it is formalised. The Bulletin accompanies the CIPFA LASAAC Urgent consultation on temporary changes to the code to resolve infrastructure assets reporting issues. It is intended to assist with the understanding of the consultation but also to provide guidance on how it might be applied.
CIPFA’s Task and Finish Group would be interested in accounts preparers’ and other stakeholders’ views on the following questions.
Questions
- Does the Bulletin have a reasonable expectation of the information that will be available?
- Are there any areas where more guidance can be provided (please provide examples)?
- Are there any areas where more exemplification is required (please describe)?
- Do you have any examples which you consider may be helpful for local authorities?
CIPFA would note that guidance of necessity can only be set at a high level.
Please send your responses to Policy.Technical@cipfa.org
Note that this consultation is closed but the Bulletin will be developed in the light of further Code developments and the issued raised in the CIPFA LASAAC update statement on the outcomes of its consultation on infrastructure asset reporting.
Description of the issue
CIPFA was asked to provide a description of the infrastructure assets issue for local authority stakeholders, which has led to delays in audits of a significant number of local authorities. Download the description.
Previous meetings
First meeting, 23 March 2022
The Joint Task and Finish Group on Infrastructure Assets met to discuss the identify the issues to be resolved and discuss various options for their resolution. Group members have been asked to outline proposed options for resolution in more detail.
Second meeting, 5 April 2022
The group considered a number of options at the second meeting, with one particularly promising as a solution. Members are providing detailed views to support development of the option. The group would encourage local authorities to consider in detail the financial information they hold on their infrastructure assets. It is of the view that local authorities should ensure they have an effective depreciation policy for those assets.
Third meeting, 24 April 2022, and CIPFA LASAAC single issue meeting, 27 April 2022
The Task and Finish Group continue to pursue options for resolution. However, CIPFA LASAAC has instead agreed in principle to issue a consultation paper on a temporary solution so that local authorities and auditors can progress the issue and to ensure that there are no unintended consequences emanating from any options pursued. A more in-depth consultation on the issue will follow as a part of the consultation on the 2023/24 code. It is anticipated that the consultation on the temporary solution will be issued in early May 2022.