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International Financial Reporting Standards

International Financial Reporting Standards. Background. HM Treasury announced in the 2007 budget report that UK public sector will move to International Financial Reporting Standards Why Change? Consistency and comparability in the global economy

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International Financial Reporting Standards

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  1. International Financial Reporting Standards

  2. Background • HM Treasury announced in the 2007 budget report that UK public sector will move to International Financial Reporting Standards • Why Change? • Consistency and comparability in the global economy • Following private sector best practice (listed companies have produced IFRS compliant accounts since 2005)

  3. Timetable

  4. Summary Implementation Timetable for Local Government 30 June 2011 –First IFRS accounts approved by members IFRS transition date Need comparatives at this date Full disclosure at this date TODAY 31/03/10 31/03/11 01/04/09 Prepare Code Preparation Implementation Prepare Code Comparatives First IFRS accounts

  5. Summary Implementation Timetable for Local Government • Date of Transition - 1st April 2009 • IFRS 1 requires 3 IFRS compliant Balance Sheets: • 1st April 2009 • 31st March 2010 • 31st March 2011

  6. Key Focus Areas Urgent Priority Medium Priority Lower Priority PFI Stocks (Inventory) Government Grants Post Balance sheet events Format of Accounts Income Recognition Related Party Disclosures Leases Financial Instruments Fixed Assets Accounts Disclosures Provisions Investment Properties Impairments Intangible Fixed Assets Employee Benefits Group Accounts Source: Grant Thornton

  7. Guidance Available The Chartered Institute of Public Finance and Accountancy (CIPFA) is developing the detailed guidance to allow local authorities to implement IFRS. N.B. Not all the guidance is in place, some will not be available until after May 2009.

  8. Areas with a significant impact for Devon and Cornwall Police • Employee Benefits - Untaken leave • Format of Accounts • Fixed Assets & Investment Properties • Leases • Intangible Fixed Assets

  9. Employee Benefits • There is a new requirement to accrue for holiday and flexi leave earned in the financial year but untaken at the balance sheet date. • A project is under way to quantify the impact for Devon and Cornwall Police of : • Police Staff leave & flexi leave • Police Officers leave & time on card

  10. Employee Benefits Implications for Devon and Cornwall Police Accounting for untaken leave may have a significant (one off) impact in the year of introduction, as the cost will be an additional charge against the income and expenditure account. There is a larger pro-rata impact for Police Authorities as compared with other local authorities because staffing represents a higher portion of the budget.

  11. (Cont’d) • Consultation is taking place with the government on whether: • cost should not be a charge against the council tax • if the cost is a charge against the council tax - phasing of the impact. • (Decision expected September 2009-January 2010)

  12. Format of Accounts • Main Changes: • Changes to the names of the main accountancy statements • Changes to the content and format of notes • Implications - staff resources required in year of introduction (2010/11)

  13. Fixed Assets & Investment Properties • Main Issues: • Valuation at fair value • Component Accounting • Valuations to be undertaken more frequently • Implications - additional cost of more frequent and more detailed valuations

  14. Leases • Main Issues: • Equipment Leases • Property Leases • All leases to be re-evaluated to test if they are finance or operating leases. • Implications - • no significant revenue budget implications • staff resources to evaluate existing and future lease agreements

  15. Intangible Assets Allows capitalisation of costs that previously must be charged to revenue, for example, internally generated software/systems. Detailed guidance is lacking at present. Implications - may impact on treatment of Programme costs.

  16. Implementation Plan • WHO? • Project Board - Director of F&R & Treasurer • Implementation Team • Advisory Consultants • HOW? • Project Plan & Implementation Timetable • Risk Assessment • Impact Assessment • Links to Devon County Council Project

  17. Work in hand • Project to assess impact of accounting for leave entitlement not taken • Revaluation of fixed assets in 2009/10 to incorporate IFRS requirements • Project plan and risk assessment to be complete by 30 April 2009

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