Scotland’s local authority accounting advisory body has
published a handbook to help councillors and other public body governors
navigate their way through the long and complex financial documents that come
before them.
Holding to account is timed to take particular stock of the obligation on Scottish local authorities to prepare accounts in compliance with international financial standards from 2010/11. But the report also aims to make public financial documents generally less perplexing for those unschooled in number crunching.
It has been prepared by the Local Authority (Scotland) Accounts Advisory Committee, which develops and promotes proper accounting practice and is made up of the Scottish Government, Audit Scotland, CIPFA and other chartered and certified accountants’ associations.
The new standards, the report says, will make it easier to compare performance across the public sector, and also in due course with the private sector. But it adds that: ‘The financial statements will still be challenging to interpret, particularly for non-accountants.
‘Nevertheless, the audited accounts are a crucial mechanism for reporting to the public how local authority resources have been applied. Audited financial statements contain a wealth of information about the stewardship of public resources and the financial health of local authorities.
‘Never has it been more important to have access to consistent and high-quality information about the financial position of local authorities.’
The handbook, which is couched in non-technical language, covers a comprehensive range of issues, from financial governance and external audit to payroll, cash flow, pensions and asset valuation. It also provides an extensive glossary of accountancy jargon and offers sample questions to ask in reviewing financial statements.
Don Peebles, CIPFA Scotland’s policy and technical manager, said that while the guidebook had been written with elected councillors in mind, it was likely to prove useful to members of governing bodies in many other public organisations.
‘In fairness to elected members, the move to international standards is a significant change, so the time is right to link that change to the importance of financial reporting as part of the essential governance role of local authority members,’ he sa
