CIPFA issues guidance on streamlining accounts
0The Chartered Institute for Public Finance and Accountancy has produced new guidance to help council finance officers slash the length of annual accounts and reduce the amount of work needed to produce them.
The institute has compiled a 76-page document to help practitioners streamline accounts documents, make them clearer and to increase the efficiency of the closedown process.
The document, which is currently in pre-publication format, has been developed in response to an increase in the number of international accounting standards with which local authorities now have to comply.
In her introduction to the new guidance, CIPFA president Sarah Howard said: “Despite the quality and timeliness of local government financial reporting, we know that there is work to do to better translate the story of the financial sustainability of individual authorities and to build trust with local stakeholders by giving clear, simple and relevant information.
“In this publication we begin the journey of rebuilding that trust, to strike a better balance between compliance with standards and providing clearer, simpler and more transparent information, focusing on things that matter most in a local authority context.”
Peter Worth, director of Worth Technical Accounting Solutions undertook the detailed drafting of the guidance, and chaired the working party of volunteers whohelped draw it up.
Speaking to Room151, he said: “The big area covered deals with materiality – you can identify the non-material disclosures and drop those out.”
Hesaid that sharpening the wording of the document could help reduce the length of documents significantly.
Worth added that councils should look to avoid repeating information that is already available in other statutory documents.
He said: “The Housing Revenue Account is a classic example.
” HRA accounting practices require disclosures of valuation movements on property and plant and equipment, so those don’t need to be repeated in the annual accounts.”
Theguidance points to examples where councils have used some of the techniques contained in the document in order to reduce the length of their accounts.
City of Westminster Council reduced the length of its accounts from more than 230 pages to 180, and reduced the number of disclosure notes from 64 to 42, while Chichester District Council cut its document from 90 pages to 69, it said.
On the closedown process, the guidance recommends a project managemen approach, to ensure that the load is spread across finance teams within councils.
Worth said: “Traditionally, the chief accountant would go off into a darkened room and produce the accounts on their own.
“You can’t do that nowadays because you are reliant on information from valuers, actuaries, internal auditors – you can’t just work in isolation.
“We are suggesting the better authorities delegate the oversight to someone lower than chief accountant.”
Worth also said that the rise of the internet age gave councils more opportunities to present accounts in a more understandable way, using a greater range of colours and presenting them in a landscape, rather than a portrait format.
