By Mandy Bretherton | 1 April 2012
The aim of the infrastructure code isn’t just to help councils finish their Whole of Government Accounts. It should also to help them manage their assets better
In the current financial climate, any assistance council finance directors can get to use their resources more efficiently should be welcomed with open arms.
One of the main aims of the local authority Code of Practice on Transport Infrastructure Assets, published in March 2010, is to enable councils to use the same data for financial reporting and asset management purposes.
The code provides guidance on the development and use of financial information to support asset management, financial management and reporting of local highways infrastructure assets. It was prepared at the request of the government and is being used to report the assets on a current value basis in Whole of Government Accounts. The gradual transition to reporting on this basis will be completed for the 2012/13 WGA, which should contain no historic cost-based reporting.
But from local authorities’ point of view, it also enables them to manage their assets far more efficiently. By complying with the code, they will be able to carry out full lifecycle planning. This will help them to develop cost-effective maintenance programmes that optimise capital expenditure over the asset life, based on depreciation and deterioration modelling.
The first stage in the transition to WGA was to include certain infrastructure asset values in 2009/10. The overall WGA for 2009/10 were published in November 2011 and were welcomed by a Commons Public Accounts Committee hearing on December 5 as a major step forward in improving transparency and accountability.
Following an analysis of responses for 2009/10, a number of changes were made to both the supporting materials and WGA returns to minimise errors.
Compared with 2009/10, the information returned in 2010/11 was better in both quantity and quality, which was encouraging. Work is under way to review the information provided to avoid potential problems and identify pitfalls for future completion.
Local authorities were also asked to complete a ‘readiness’ questionnaire to help gauge whether they were on track for 2011/12. The table below shows the average estimated percentage of work completed in readiness for WGA along with the percentage of authorities completing the gross replacement cost information for 2010/11 for each asset type.
This shows that for the biggest category of infrastructure assets – carriageways – authorities had completed 73% of the work required to successfully comply with the code. Of the 142 authorities who completed the questionnaire in relation to carriageways, 27 (19%) estimated that they had completed half or less of the work required, which is of concern.
However, of more concern were the 64 who did not complete the questionnaire. Not only will they probably struggle to complete the WGA-required information, but they are also likely to be failing to benefit from improved asset management and effective use of resources.
As the WGA requirement for full implementation of the code in 2012/13 draws near, work is under way to ensure that authorities will be in a position to comply. Two vital areas are land valuation and the calculation of structures’ depreciation replacement costs, the new accounting basis. The WGA local government consolidation pack/collection exercise issued by the Department for Communities and Local Government and devolved administrations (known as the ‘L Pack’) will confirm arrangements for these for 2011/12.
In the meantime, CIPFA is continuing to support authorities to meet the WGA requirements via both the Highways Asset Management Planning Network and the Finance Advisory Network.
Finance directors should see the Infrastructure Code as an opportunity to improve capital planning for their organisation and yet many are treating it just as an accounting exercise to comply with WGA. There is a need for wider understanding within the finance community of the benefits of the Code.
Not only can it improve capital planning but it can also help to build relationships with colleagues within highways asset management and aid understanding of the basis of all the numbers between now and the first
full audit.
Mandy Bretherton is technical manager for local government finance at CIPFA
The aim of the infrastructure code isn’t just to help councils finish their Whole of Government Accounts. It should also to help them manage their assets better
In the current financial climate, any assistance council finance directors can get to use their resources more efficiently should be welcomed with open arms.
One of the main aims of the local authority Code of Practice on Transport Infrastructure Assets, published in March 2010, is to enable councils to use the same data for financial reporting and asset management purposes.
The code provides guidance on the development and use of financial information to support asset management, financial management and reporting of local highways infrastructure assets. It was prepared at the request of the government and is being used to report the assets on a current value basis in Whole of Government Accounts. The gradual transition to reporting on this basis will be completed for the 2012/13 WGA, which should contain no historic cost-based reporting.
But from local authorities’ point of view, it also enables them to manage their assets far more efficiently. By complying with the code, they will be able to carry out full lifecycle planning. This will help them to develop cost-effective maintenance programmes that optimise capital expenditure over the asset life, based on depreciation and deterioration modelling.
The first stage in the transition to WGA was to include certain infrastructure asset values in 2009/10. The overall WGA for 2009/10 were published in November 2011 and were welcomed by a Commons Public Accounts Committee hearing on December 5 as a major step forward in improving transparency and accountability.
Following an analysis of responses for 2009/10, a number of changes were made to both the supporting materials and WGA returns to minimise errors.
Compared with 2009/10, the information returned in 2010/11 was better in both quantity and quality, which was encouraging. Work is under way to review the information provided to avoid potential problems and identify pitfalls for future completion.
Local authorities were also asked to complete a ‘readiness’ questionnaire to help gauge whether they were on track for 2011/12. The table below shows the average estimated percentage of work completed in readiness for WGA along with the percentage of authorities completing the gross replacement cost information for 2010/11 for each asset type.
This shows that for the biggest category of infrastructure assets – carriageways – authorities had completed 73% of the work required to successfully comply with the code. Of the 142 authorities who completed the questionnaire in relation to carriageways, 27 (19%) estimated that they had completed half or less of the work required, which is of concern.
However, of more concern were the 64 who did not complete the questionnaire. Not only will they probably struggle to complete the WGA-required information, but they are also likely to be failing to benefit from improved asset management and effective use of resources.
As the WGA requirement for full implementation of the code in 2012/13 draws near, work is under way to ensure that authorities will be in a position to comply. Two vital areas are land valuation and the calculation of structures’ depreciation replacement costs, the new accounting basis. The WGA local government consolidation pack/collection exercise issued by the Department for Communities and Local Government and devolved administrations (known as the ‘L Pack’) will confirm arrangements for these for 2011/12.
In the meantime, CIPFA is continuing to support authorities to meet the WGA requirements via both the Highways Asset Management Planning Network and the Finance Advisory Network.
Finance directors should see the Infrastructure Code as an opportunity to improve capital planning for their organisation and yet many are treating it just as an accounting exercise to comply with WGA. There is a need for wider understanding within the finance community of the benefits of the Code.
Not only can it improve capital planning but it can also help to build relationships with colleagues within highways asset management and aid understanding of the basis of all the numbers between now and the first
full audit.
Mandy Bretherton is technical manager for local government finance at CIPFA
