The Chief Accountant presented a report outlining proposed accounting policies to be adopted for the 2018/19 financial year and to be used in the preparation of the Statement of Accounts for the financial year ending 31 March 2018. These had been prepared in line with the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Code of Practice on Local Authority Accounting in the UK 2018/19 (the Code).
The Chief Accountant explained that the CIPFA Code of Practice on Local Authority Accounting provided a definition of accounting policies which, essentially, set out that accounting policies should be the cornerstone of good financial control and should explain how an organisation applied accounting standards and legislation. He went on to explain that, whilst there was little discretion in which accounting policies to adopt, there was some flexibility in the accounting methods that could be followed.
There had been substantial changes to the 2018/19 CIPFA Code of Practice on Local Authority Accounting which had come into effect for financial years beginning 1 April 2018. These changes were in the areas of Revenue recognition and Financial Instruments due to the adoption, by the Code, of International Financial Reporting Standard (IFRS) 15 - Revenue from Contracts with Customers and IFRS 9 - Financial Instruments. The adoption of these new IFRSs in the 2018/19 Code constituted a change in accounting policy which would normally require restatement of the previous year’s accounts, but the Code contained provisions for transitional arrangements which only required adjustments to 1 April 2018 opening balances rather than full prior-year restatement.
As a result of the adoption of IFRSs 15 and 9 in the 2018/19 Code, the Council’s own Accounting Policies for 2018/19, presented at Appendix 1 to the report, had been updated to ensure they remained in line with the 2018/19 Code requirements, and details of the changes were provided.
At the time of writing the report, the Ministry for Housing, Communities and Local Government had just published the results of a consultation on a statutory override for Local Government in relation to accounting for IFRS 9. This meant that some charges to the accounts as a result of adopting IFRS 9 should be statutorily reversed. Because of this consultation outcome, CIPFA had delayed publication of the CIPFA’s Code of Practice on Local Authority Accounting in the UK 2018/19 Guidance Notes for Practitioners. Therefore, the Council’s current accounting policy was based on the original legislation and draft guidance. Once published, should the new legislation and guidance require any change to the Council’s accounting policies, a further report would be brought to a future meeting of the Audit Committee.
It was good practice to consider and adopt the accounting policies in advance of the production and approval of the draft accounts. By statute, preparation of draft accounts had come forward to 31 May following the relevant year end, for financial years 2017/18 onwards. At the same time, the audited statements needed to be published by 31 July following the relevant financial year end; the Council had successfully prepared the 2017/18 accounts to the new timetable.
RESOLVED – That the accounting policies, as set out at Appendix 1 to the report, be adopted for closure of the 2017/18 Accounts.