Two treasurer society presidents have indicated their preference for the current five-year IFRS 9 statutory override to be made permanent following the government’s latest consultation on the issue.
The temporary override of IFRS 9’s requirements relating to fair value movements on pooled investments expires on 31 March 2023. A government consultation, launched on 11 August, suggested three options: allow the override to elapse; extend it for a time-limited period; or make it permanent.
Chris Tambini, president of the Society of County Treasurers, told Room151: “The statutory override has successfully protected local authorities from volatile market movements. We would welcome some certainty on this, so rather than another time-limited extension we would support a permanent extension.”
Tambini, who is also the director of corporate resources for Leicestershire County Council, pointed out that local authorities are different to other organisations that IFRS 9 applies to in that they have a statutory responsibility to set a balanced budget.
“We do understand that the government will not want to encourage risk-taking by keeping the override, but believe that recent changes to the Prudential Framework have curtailed any unnecessary risk-taking.”
The statutory override has successfully protected local authorities from volatile market movements. We would welcome some certainty on this, so rather than another time-limited extension we would support a permanent extension.
Financial volatility
Tambini’s view is echoed by Alison Scott, president of the Society of District Council Treasurers and shared director of finance at Three Rivers District and Watford Borough councils.
Scott told Room151 that she had some sympathy for the underlying principles behind IFRS 9, but had concerns about short-term volatility in financial markets leading to pressures on budgets.
“On balance, I would prefer the override to be permanent,” she said.
A Room151 survey in May found that treasury managers and section 151 officers were overwhelmingly in favour of the override either being made permanent (68% of respondents) or extended for a time-limited period (19%).
The deadline for responses to the consultation is 6 October 2022.
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