I was bemused and then angered by the article in which Bharat Shah from the Audit Commission warned local government of the impending deadline for preparing accounts to the new International Financial Reporting Standards, and the dire consequences of not doing so (‘Running out of time’, February 19–25).
For whose benefit is IFRS being introduced? It is certainly not the local taxpayer. Even those who understand the mass of extra reporting that accounts now contain – and that IFRS will greatly increase – would struggle to see how this improves their understanding of their council’s financial affairs.
And what a time to introduce it. Local government is facing the most difficult financial circumstances for a generation and finance departments are being distracted by having to spend time and considerable sums of money on meeting the reporting standards. Someone’s got their priorities wrong here, and I have sympathy with treasurers who are struggling to meet the commission’s requirements.
So what does IFRS add to the sum of human happiness? Shah gives the game away in the article. Local government has been given an extra year to meet IFRS ‘to ensure there would be no effect on council tax’. If there is a real need for the new standards, then surely they should have a real impact on the financial affairs of a council? And how better to do that than to affect local taxation?
However, we all know that the reporting change has come about only because of the argument that there will be some benefit in having spurious comparability between sectors and countries in financial reporting.
I do wish the Audit Commission would come into the real world of managing local authority finances, and not hector councils to spend time and money on something that will add nothing to the quality of local financial management or the wellbeing of local people.
Tim Render
Hinkley, Leicestershire
