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.
Description of the issue
Concerns were raised by local government auditors that authorities may not be applying component accounting requirements appropriately to infrastructure assets. The issue raised by auditors is in relation to the derecognition (removal of the carrying amount) of parts of infrastructure assets when replacement expenditure is undertaken. There are also related issues for the reporting of gross historical cost and accumulated depreciation. Download the full description.
Terms of reference for the task and finish group
There is an agreed Terms of Reference for the task and finish group. If you would like to contribute to the work of the group, please contact policy.technical@cipfa.org
Longer Term Solution
Timetable for infrastructure assets guidance and possible code amendments
Once agreed by CIPFA LASAAC a new timetable will be issued shortly.
Short Term Solution
Statutory Provisions
England - The Local Authorities (Capital Finance and Accounting) (England) (Amendment) Regulations 2022 SI 1232/2022 applies until 31 March 2025.
Wales - The Local Authorities (Capital Finance and Accounting (Wales) (Amendment) Regulations 2022 SI 1254/2022 (W.255) applies until 31 March 2025.
Scotland - Local government finance circular 8/2024 - accounting for infrastructure assets: temporary statutory override applies until 31 March 2025.
Update to the Code
CIPFA LASAAC issued the Update to the Code and Specifications for Future Codes for Infrastructure Assets (the Update) in November 2022. 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.
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 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.
Urgent consultation, 12 May 2022
The CIPFA LASAAC Local Authority Code Board announced an Urgent consultation on temporary changes to the code to resolve infrastructure assets reporting issues. The consultation was discussed at a webinar on 26 May 2022.
Infrastructure assets webinar slides 26 May 2022.
CIPFA LASAAC update statement, 27 July 2022
CIPFA LASAAC has issued an update statement on the outcomes of its consultation on infrastructure asset reporting.
CIPFA Infrastructure Assets Survey, 27 April 2023
CIPFA undertook a Survey on the Impact of the Move to Improve the Reporting of Infrastructure Assets including a (possible) move to a Depreciated Replacement Cost Measurement Basis. CIPFA wanted to further understand the impact changing the reporting of information for infrastructure assets and is developing a long-term solution for this.
Highways Network Asset 2017/18 Toolkits
Valuation Toolkit (with 17-18 rates)