RegulationAccounting StandardsHealth and MOD not ready for IFRS switch

Health and MOD not ready for IFRS switch

FRAB found that in 23 cases out of a sample of 47, PFI projects did not appear on either government's books or that of the contracting operator

Government plans to switch to IFRS could be put back a year as the Ministry
of Defence and the Department of Health have admitted they will not make the 1
April deadline.

The switch would have seen about £30bn in PFI projects brought onto the
balance sheet.

The Financial Reporting Advisory Board – a government accounting advisory
panel – described the delay as ‘disappointing’ but maintained a sense of urgency
for moving to IFRS, citing 23 cases out of a sample of 47 in which PFI projects
did not appear on either government’s books or the contracting operator.

FRAB chairman, Elwyn Eilledge, instead recommended to a cross-party select
committee yesterday that government departments consider shadow accounting using
IFRS, instead of immediately switching over to IFRS next month, so as to ‘keep
up the momentum’.

Deloitte partner and member of FRAB, Ken Wilde, said there were a number of
departments who were really geared for IFRS.

‘But a number of departments have no idea… and my worry is that they haven’t
got to grips with it. A better position would be to go into shadow accounts, and
move over [to IFRS] on a proper timescale. The private sector had five years to
do this and the public sector has only been given one,’ Wilde said.

The delay will mean the Treasury will continue to hang onto a technical
guidance rule, which allows it to keep debt off the balance sheet, instead of
scrapping the rule as promised last year.

Further reading:

Northern Rock breaks ‘40%’ sustainable investment rule

PFI skewed public sector deals

Off balance sheet Rock would be ‘outrageous’

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