The Financial Reporting Advisory Board (FRAB) has supported the recommendation from CIPFA and the Local Authority Scotland Accounts Advisory Committee (LASAAC) to delay implementation of the IFRS 16 leases standard.
Last month, CIPFA/LASAAC proposed that implementation of the standard be delayed for two years, following an “exceptional consultation” on the code of practice that governs local authority accounting. The consultation had been established to help alleviate delays to local audit in England.
FRAB announced today (8 April) that it agrees with a deferral until 1 April 2024. However, it added that the code “had to allow and should encourage local authorities to adopt the standard before this date should they wish to”.
Conrad Hall, CIPFA/LASAAC chair, said: “The decision to defer IFRS 16 is a pragmatic response due to the severe delays in the publication of audited local authority statements in England. The decision should not be viewed as a commentary on the usefulness of the information derived from the implementation of the standard.”
Hall confirmed that CIPFA/LASAAC would delay implementation of IFRS 16 until 1 April 2024 (with this date referenced in the 2024/25 code). However, both the 2022/23 and 2023/24 codes will allow for adoption as of 1 April 2022 or 2023.
Rob Whiteman, CIPFA CEO, said that the institute supported the move. “The decision is a necessary one and has been made in the interests of the sector. The deferral should reduce resource pressures in the local audit framework while there are ongoing audit timeliness issues.”
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