Are you ready for the Code?

The new Code of Practice on Local Authority Accounting (The Code) came into effect from 1st April 2010. This has introduced significant changes to the way that local authority property assets are valued, held and treated in the balance sheet and is requiring authorities to adapt their processes, approaches and procedures.

The recent report published by the Audit Commission, "Countdown to IFRS, Implementation in Local Government" found that only one authority in seven was on track to deliver IFRS and one in five was having serious difficulties.

The transition towards The Code has revealed a number of fragile procedures and bad habits around the generation of authorities' asset registers. As a consequence it is essential that authorities are using this opportunity to take a fresh and critical look at their processes, approaches and procedures, including:

• Asset categorisation
• Lease classification
• Asset valuation approach, impairment and revaluation cycle
• De minimis
• Asset Register / Terrier / Title checks
• Desktop boundary checks
• Terms of Engagement of Valuation services
• How the asset valuation process supports strategic asset decisions

To coincide with the arrival of the Code and to support local
authorities during the transitional phases, CIPFA Property has
launched its new Asset Register Health Check. This involves:

• Spot check on current practices, processes and systems
• Review appropriate response to changes resulting from IFRS
• Identify past ?bad habits?
• Highlight loss of knowledge of procedures or assets through
  staff reductions

What does it involve?
The Asset Register Health Check is a two stage process:
Stage 1:

• Pre visit document review to include;
• Asset Register
• Valuation Report
• Valuation instructions

Stage 2:
Interview with Property/Finance representatives. Asset spot checks on sample cross section, to include at least one of:

• Community asset
• Investment asset
• Asset held for sale
• PPE asset
• Surplus asset