All over England, accounts closing meetings have been convened and closing programmes have been dusted down. Auditors are boning up on a new set of inquisitorial questions. But to what purpose — other than boasting ‘my use-of-resources score is better than yours’?
Can we really deny that local authorities’ published accounts have become a nonsense? It’s true that in the 1980s there was an epidemic of creative accounting by what the first Audit Commission chair Sir John Banham termed ‘the delinquent authorities’. Better regulation and standardisation were certainly needed. But now the cure is surely worse than the long-conquered illness.
Just look at how we account for the Private Finance Initiative. Guidance on the Statement of Recommended Accounting Practice lists pages of ‘indications that the property is an asset of the purchaser’. Indications? After spending millions of pounds of consultancy fees to go off balance sheet, is the best we can do a list of symptoms that could represent anything from a common cold to being deceased?
Or we could retain another set of consultants to tell us how to account for the results achieved by the first consultants.
But it’s all those notes that really raise hackles. We are adding notes for the sheer delight of it. Essentially we are providing a massive chunk of indigestible information bound to deter all but the most perverse individuals. Is it a satisfactory situation to be producing telephone directory-sized accounts that at best purport to be about indications?
Economic catastrophe has made us realise the sense of clear, simple reporting and the dangers of over-complex flummery. Out with ‘collateralised borrowing obligations’, in with ‘loans’. So how about ‘out with applying imported accounting concepts that affect only limited areas of local authority activity’, in with ‘understandable accounts’?
While it is true that there are lots of alternative ways to discover financial information about a local authority, there’s something reassuring about a decent set of accounts. Why spend so much time and effort producing something nobody wants to read?
Paul Cook, Deanshanger, Northants
CIPFA policy and technical director Ian Carruthers replies: Following the strong support for the simplification proposals in our Back to basics report last year, we are now working to make local government accounts based on international financial reporting standards both shorter and more understandable as Paul Cook suggests.
