Question mark over councils’ readiness for IFRS

Question mark over councils' readiness for IFRS

Local authorities are likely to be hardest hit by a move to international financial reporting standards by the government

Treasury officials confirmed that government will move from UK GAAP to
International Financial Reporting Standards last week but there is uncertainty
as to whether councils are ready for this. ‘There shouldn’t be any problems with
moving to IFRS but it would be problematic for the local authority sector, which
is not particularly geared up for this,’ a source said.

Deloitte partner Ken Wild said the decision to change also comes at a time
when the controversial and costly Private Finance Initiatives (PFI) issue is
still up in the air.

‘Government would need to work out how to account for PFI within IFRS, since
the international rules don’t make any allowances for off-balance sheet
figures,’ he said .

Last year a working party looked into a range of assumptions used in
complying with Treasury accounting standards.

The group compiled a report which highlighted grave problems in the way in
which the Treasury records its PFI transactions.

‘[The working party’s] thinking was that if the anomalies between the old UK
accounting and the Treasury’s technical note [on PFI] were removed, the impact
would lead more onto the books. The move to IFRS is going to take us in the
direction of that thinking,’ said Wild.

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