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Safety in numbers

31 Dec 08

Gareth Davies looks at the body that makes sure Scottish local authorities develop and use proper accounting practices

Have you ever wondered what your local authority does, how it is funded and how it manages your money?

If the answer is No, you almost certainly aren’t alone, which is something that the Local Authority (Scotland) Accounts Advisory Committee (LASAAC) is constantly seeking to change.

Scotland’s 32 local authorities are responsible for providing a wide ranging variety of services to the public including education, social work, waste management, planning services, economic development, roads, sports facilities, libraries, fire and police services. In addition many authorities still have responsibility for social rented housing.

In providing these services Scottish local authorities spend approximately £11 billion of public money a year. Of this, some £2.2 billion (20 per cent) is

raised from council tax. The rest is provided by the Scottish Government, either as revenue support grant or assigned non-domestic rate income.


LASAAC is the body which is responsible, with Scottish Government approval, for developing proper accounting practices for Scottish local authorities. In carrying out its duties LASAAC meets four times a year. It has 14 members and is funded equally by five bodies: ICAS, ACCA, CIPFA, the Scottish Government and Audit Scotland.

Each body has representatives on the committee and this provides LASAAC with a wide variety of professional expertise and experience to call on. In particular the three current ICAS representatives all have experience as external auditors of local authorities. This provides a counterpoint, and balance, to the directors of finance on LASAAC who present a local authority practitioner’s viewpoint.

LASAAC’s primary mechanism for developing accounting practices is through involvement and influence in the development of the UK-wide Local Authority Statement of Recommended Practice (LA SORP) which is issued by the CIPFA-LASAAC Local Authority SORP Board.

The LA SORP is, under existing arrangements, designed to comply with UK GAAP (generally accepted accounting practice) and is formally approved by the Accounting Standards Board (ASB) prior to issue.

In developing the SORP LASAAC considers the legislative framework within which local authority accounting exists and seeks to advise the Scottish Government of the impact of any changes in accounting standards.

Furthermore LASAAC responds to a wide variety of consultation papers and will issue accounting guidance on specific issues, for example on accounting for the common good funds administered by Scottish local authorities.

The environment that LASAAC works in is, however, changing. The LA SORP for 2009/10, which will apply for the year from 1 April 2009, is expected to be the last version that is approved by the ASB.

While the 2009/10 SORP will be largely UK GAAP compliant it is anticipated that, subject to a consultation exercise, accounting for PFI schemes will comply with international financial reporting standards (IFRS). This is part of the wider UK Government move towards full IFRS for the whole public sector. Local authority accounts are expected to be fully IFRS compliant for the 2010/11 financial year. Most other government bodies are implementing IFRS in 2009/10.

A consequence of this is that the current LA SORP arrangement with the ASB will cease. The SORP will be replaced by a local authority code of practice which will be reviewed and approved by the Financial Reporting Advisory Board (FRAB). FRAB is the independent board which works with the UK Treasury to produce central government’s annual accounts manual.

This means that, for the first time, local and central government reporting requirements will be overseen by the same body.

LASAAC is keen to ensure that it continues to fulfil its role in a professional, relevant and challenging manner.

One way of achieving this is to ensure that a new generation of accounting professionals have an opportunity to be involved in the development of local authority accounting.

Benefits to the individual of such involvement include career development, the gaining of expertise and skills in a complex area and establishing new contacts. Employers prepared to support involvement also gain from early warning of new developments, influence at a high level and a higher commercial profile from association with a respected and recognised accountancy committee. n

Gareth Davies is policy and technical officer for CIPFA in Scotland..

Page No: 76


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