Treasury under fire over IFRS schedule

As if the
Treasury did not
have enough trouble to contend with a little known board of advisers has decided
that enough is enough and made plain its clear irritation at the way the
implementation of international accounting standards is being handled by
government.

At issue is the timetable for introducing IFRS to all government departments.
The Financial Reporting Advisory Board, says it was always too tight and if only
they had been consulted properly they would have told everyone.

Elwyn Eilledge, chairman of FRAB, said in a recent report: ‘The planned
timetable for the implementation of IFRS was always challenging, but the board
was not given the opportunity to debate this prior to the Treasury’s
announcement.

‘When the board reviewed the progress towards implementing IFRS, including
the development of PFI accounting guidance, it concluded that the 2008/09
timetable was not realistic for some major departments, and advised that the
implementation date be changed.’

The clash over the IFRS timetable however is rooted in FRAB clashing with
government over accounting for PFI.

FRAB’s review of government accounts ended in advice that the Treasury
withdraw a technical note which allowed government to keep large amounts of debt
at some distance form its balance sheet.

Government did not heed FRAB’s advice and sought to find a way of avoiding
the embarrassment of backtracking on its own rules.

This was done by announcing last year a move to IFRS by 2008/09 – without
first discussing this with FRAB.

The hasty decision means the timetable is unlikely to be met, Deloitte
partner Ken Wilde pointed out. But the Treasury ignored FRAB altogether when it
made the announcement in 2007.

‘Given the role of FRAB it would have been sensible to ask us. We might have
told them the proposed deadline would be too tight,’ Wilde said.

But FRAB has offered advice on which standards might help with PFI, but
warned that there will be inconsistent accounting in the public sector for at
least another year.

Something not likely to help government in what is clearly becoming difficult
times.