Major government departments are set to opt out of planned ‘shadow’ accounting under IFRS, scheduled in preparation for a final switch to international standards.

The Department of Health and the Ministry of Defence are understood to have issues about being ready in time.

Government had planned to move its accounting system to IFRS, but delayed making the final switch this year after it became clear that the DoH and the MoD were not ready for the changeover.

Instead, it was thought the departments would produce shadow accounts under IFRS. But both departments are in discussions with the Treasury to also opt out of this.

‘With the DoH, it is different structurally to other government departments, so shadow accounting in IFRS would be a bit more difficult,’ a source familiar with government accounting said.

A spokesman for the Department of Health refused to confirm or deny whether the department had begun its shadow accounting exercise.

A Treasury spokesman said government intended to move to IFRS in 2009/10, as announced in the 2008 Budget. ‘It is expected that a large number of departments will introduce shadow accounting prior to its introduction,’ he said.