Susan Love

Responding to a consultation on the update to the Code of Practice on Local Authority Accounting for 2024/25, ACCA has said that greater understanding is required of the readiness of local authorities in adopting IFRS 16 on accounting for leases. Especially given the challenges faced by the bodies, from both a fiscal and preparatory perspective.

ACCA highlights the need for a collaborative approach given local challenges, complex regulatory landscapes, constraints of resources and the financial stability of certain councils. This includes the recognition of the burdens associated with local audit and accounts preparation as well as widening budget gaps.

Glenn Collins, head of technical and strategic engagement, ACCA said: “In the face of limited resource constraints – including staff shortage and spending cuts – the potential repercussions of local authorities adopting IFRS 16 may be that timely reporting is unfeasible.”

On other aspects of the consultation issued by the CIPFA LASAAC Local Authority Accounting Code Board, ACCA supports the inclusion of summary financial information as it cultivates comparability and transparency for stakeholders of the accounts, especially taxpayers.

ACCA says that the summary financial information should be consistent with the information presented in the local authority’s audited financial statements. Where a different amount is presented, it should be accompanied by a reconciliation.

Jessica Bingham, regional lead, Policy & Insights, ACCA, said: “It would be good to see the incorporation of guidance on how local authorities’ financial statements can be better presented digitally in order to amplify transparency.”

ACCA applauds the approach adopted on sustainability reporting. Ms Bingham added: “We suggest implementing sustainability reporting in a phased approach to help local authorities familiarise with the disclosure requirements, build capacity and implement reporting systems.”

Susan Love, ACCA Scotland’s strategic engagement lead, said: “We know the challenges Scottish councils face and we continue to stand ready to support CIPFA/LASAAC, local authority preparers, and their auditors in Scotland in responding to the challenges ahead.”