Alison ScottAD Local GovernmentCIPFA

IFRS – are you ready?

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Local Government Timetable

2009 2010 2011

2009/10 IFRS Comparatives

2010/11 First year of IFRS reporting

Transition date

Opening IFRSbalance sheet

(1 April 09)

Comparative IFRS year end

2009/10 comparatives

First IFRS year end2010/11 Annual report

(and 2009/10 comparatives)

TODAY

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What it Means in Summary

Significant differences

Some differences No significant differences

Format of financial statementsComponentsNon-current assets held for saleCapital grants?Borrowing costs?LeasesGroup accounts boundaryEmployment benefits

Prior period adjustmentsFuture changes to accounting policiesSegmental reportingInvestment propertyPension fund accountsIntangible assetsImpairment lossesDisclosures generally

PFI (SORP adopted)Financial instruments (SORP adopted)Stocks ProvisionsPost balance sheet events

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Possible Government Mitigation

● Property leases:

●Reclassification of operating leases as finance leases

●Reclassification of finance leases as operating leases?

●Reclassification of leases in lessors accounts?

● Accruing for holiday pay and other employment benefits?

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Impact of Codes

Financial performance Practicalities of conversion

Impact on bottom line and Council tax (note discussions with CLG and devolved administrations)Stakeholder expectationsFuture planning and policyPrudential borrowing

Availability of adequate resourceData gaps, e.g. contracts and leasesEmbedding into budgetingSystems and processesImpact on faster closeScale of the task

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Practical implications

Processes Systems People

• Accounting policies & procedures

• Updated & new controls• New valuations• Impairment modelling• Increase data collection• Management reporting• Budgeting process

• Accounting and consolidation systems enhancement

• Data gaps• New systems required • Update chart of

accounts• New procedures• Training

• Communication strategy• Training strategy• Project Management

support• Resource / skills to

manage the change • Corporate governance• Embedding knowledge –

new policies and processes

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CIPFA Suggested Timetable

Step Timing1. High level impact assessment ASAP by May 20092. Identify changes to accounting policies ASAP by May 20093. Identify key staff ASAP by May 20094. Train key staff Ongoing throughout5. Identify systems and procedural changes March – July 20096. Identify information required for restatement March – Sept 20097. Develop skeleton statement of accounts March – Sept 20098. Obtain information required to restate 1/4/09 BS March – Sept 20099. Identify likely impact on budgets (if any) March – Sept 200910. Implement systems and procedural changes July 2009 – Jan 201011. Train all relevant staff and key members Ongoing from July 200912. Restate 1/4/09 balance sheet July – December 200913. Compile 2010/11 budgets and later on IFRS basis

Oct 2009 – Jan 2010

14. Testing of systems and procedural changes July 2009 – March 201015. Restate 2009/10 accounts April – December 201016. Produce 2010/11 accounts on an IFRS basis April – June 2011

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Planning Tips

● Identify key players

●HR, Property, legal

● Prioritise

● Impact Assessment

● Identify key steps

● Member involvement

● Review

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Example Plan Extract

Restate opening balance sheet

Property Plant and Equipment

Leases

Identify lease arrangement information

risk assessment

restate where necessary

Identify other arrangements

assess against IFRIC 4

restate where necessary

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Key actions

● Steering group with overall responsibility for IFRS

● Communicate the importance of the project

● Allocate sufficient resources to the project

● Understand what IFRS will mean for key data and information requirements and systems

● Brief stakeholders and manage expectations

● Incorporate into internal management reporting – ‘business as usual’

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IFRS – Are You Ready?

questions/comments