From 1 April 2016, transport infrastructure assets, or the highways network asset (HNA) as it is now known, will need to be measured at depreciated replacement cost. This major change will affect all authorities with an HNA. Given that it is not anticipated that district councils will have an HNA, the change will predominantly affect highways authorities that are counties, unitaries or London and metropolitan boroughs.
There is no requirement to restate the 2015/16 figures; this was confirmed in an update to the 2015/16 accounting code, a decision met with a collective sigh of relief.
To assist successful implementation, a range of practical support is available for authorities, including events, guidance and centrally provided tools.
The CIPFA Finance Advisory Network ran a popular series of one-day workshops focused on HNA and is covering HNA in its closedown series. Not only have these helped practitioners to understand the process, but also they have helped to tease out practical issues that can be clarified in the series of briefings being produced by CIPFA.
Updated code
The Code of Practice on Transport Infrastructure Assets has been updated and is being consulted on during March. While the principles and measurement requirements will not change, the name of the code has changed to the Code of Practice on the Highways Network Asset (HNA Code) and it reflects CIPFA/LASAAC’s decisions.
The format has been changed, with the paragraphs in bold forming the HNA code and explanatory statements in standard type. This has been done to highlight the key elements of the HNA code and its links with the accounting code.
The Highways Asset Management Financial Information Group continues to produce its supporting materials, which include the valuation and structures toolkits. These are developed to help organisations comply with the measurement requirements and provide a consistent approach. At the time of writing, these were awaiting final sign-off from the Department for Transport. The toolkits require local inputs such as inventory data and it is important to consider the processes used to ensure that the data is up to date and accurate. With locally provided rates, an audit trail of how they are derived will be required.
CIPFA is engaging with key stakeholders such as external auditors, where assurance on the accounting estimates and consistency is a key issue.
Central assurance process
To manage the risk, save costs and reduce duplication, CIPFA has sought funding from the Department for Transport to commission a central assurance process of the centrally provided supporting information. This will provide a foundation for local authority section 151 officers to enable them to demonstrate that the valuation estimates are reasonable. The process will also support the work of auditors in determining what additional audit assurance they may require.
The guidance notes to the HNA code are also being updated and early accounting guidance is also in the process of being finalised.
So, it is time to get ready for the change. Once you have decided that you have an HNA, make use of all the resources available to you and ensure that your local inputs to the central toolkits are as up to date as possible and evidenced.
