Room151 has launched a survey to gauge the sentiment in local government on two important issues: the IFRS 9 statutory override and the consultation on Minimum Revenue Provision (MRP).
The survey is targeted at treasury managers, section 151 officers, finance directors and other senior finance officers. It can be accessed here.
IFRS 9, the standard covering financial instruments, took effect in local government from the 2018-19 financial year. However, there were concerns that this could significantly impact councils that have holdings in pooled investment funds.
Following a consultation, the government agreed to a five-year statutory override of IFRS 9’s requirements relating to fair value movements on pooled investment funds. This arrangement is due to expire in 2023-24 and so the government will have to decide if IFRS 9 will then be implemented fully or if the override should be extended or made permanent.
Similarly, there have also been concerns over the strict adoption of MRP, which is the minimum amount that a council must charge to its revenue budget each year to set aside a provision for repaying external borrowing.
The government believes that some councils are not complying with their MRP duty and issued a consultation that closed on 8 February. It is proposing to tighten up the wording in the regulations to ensure that authorities fully comply.
However, there have been suggestions in the local government sector that this could lead to service cuts and loss of affordable housing.
The Room151 survey will examine both the IFRS 9 statutory override options and the impact of MRP in depth. Questions include the current value of council investments in pooled funds, whether respondents support an extension of the statutory override and the cost to councils of making full MRP in line with government guidance.
The deadline for responses is Friday 20 May.
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