On Apr. 6, 2023, UK GVT published its feedback following the previous consultation on the local authorities regulations, as result of the effects of the introduction of IFRS 9.
Document dated Apr. 6, 2023, received Apr. 19, and was then summarized on Apr. 23.
Following concerns from sector, UK GVT previously introduced a statutory override (the Override) to mitigate the various risks highlighted by the sector, ending Mar. 31, 2023.
To inform the future of the Override post March 2023, UK GVT conducted consultation asking for views on options for the Override, in terms of an extension or permanence.
Within consultation period, there were 104 respondents who provided their comments.
UK GVT also recognized that economic issues arising from Covid-19 pandemic, may limit authorities’ options to divest investments, with further financial pressures now.
Having considered the consultation responses, UK GVT, as a pragmatic approach, will now put in place a temporary extension to extend the Override for a further two years.
The Override will now last until Mar. 31, 2025, but other than extending the period to which the Override applies, no other changes will be made to the terms of the facility.
UK GVT now expects all authorities to carefully consider both their current and future investments, including whether volatility and risk can be managed without detriment to service delivery and sustainability while complying with proper accounting practices.
On Aug. 11, UK GVT consulted on future of IFRS 9 statutory override.
UK GVT launched a consultation to seek views on proposed changes to the Local authorities (capital finance and accounting) (England) regulations 2003 - IFRS 9.
Consultation dated Aug. 11, 2022, received Aug. 31 and summarized on Sep. 2, 2022.
Background
In 2018, following sector concerns regarding the adoption of international financial reporting standard 9 (IFRS 9) into Code of practice on local authority accounting (the code), UK GVT introduced a statutory override to mitigate the highlighted risks.
Authorities had expressed concern that reporting changes brought in by IFRS 9 would mean fair value movements in certain assets would need to be reflected in budgets.
Would have particularly affected investments in pooled investment funds: increased volatility to budgets could impact service delivery or place burdens on taxpayers.
Statutory override mitigates risks, requiring authorities to remove effects of fair value movements of pooled investment funds from budgets and record in unusable reserve.
The statutory override was time-limited to 5 years, from Apr. 1, 2018 to Mar. 31, 2023.
At that time, UK GVT said it would keep use of the statutory override under review.
Consultation
UK GVT is now carefully considering options: allow the existing statutory override to expire; extend statutory override for additional period of time; or make it permanent.
Aims to collect views of authorities and other stakeholders, and additional information needed to understand financial risks associated with continuing statutory override or reverting to the code, to fully understand the potential financial and other impacts.
Effectiveness
The consultation closes at 11:45pm on Oct. 7, 2022.
Apr. 2023 UK GVT Feedback
On Apr. 6, 2023, UK GVT published its feedback following the previous consultation on the local authorities regulations, as result of the effects of the introduction of IFRS 9.
Document dated Apr. 6, 2023, received Apr. 19, and was then summarized on Apr. 23.
Following concerns from sector, UK GVT previously introduced a statutory override (the Override) to mitigate the various risks highlighted by the sector, ending Mar. 31, 2023.
To inform the future of the Override post March 2023, UK GVT conducted consultation asking for views on options for the Override, in terms of an extension or permanence.
Within consultation period, there were 104 respondents who provided their comments.
UK GVT also recognized that economic issues arising from Covid-19 pandemic, may limit authorities’ options to divest investments, with further financial pressures now.
Having considered the consultation responses, UK GVT, as a pragmatic approach, will now put in place a temporary extension to extend the Override for a further two years.
The Override will now last until Mar. 31, 2025, but other than extending the period to which the Override applies, no other changes will be made to the terms of the facility.
UK GVT now expects all authorities to carefully consider both their current and future investments, including whether volatility and risk can be managed without detriment to service delivery and sustainability while complying with proper accounting practices.
