A key objective of the Redmond Review was to ensure the statutory framework for local authority financial reporting supports the transparent disclosure of financial performance and enables users to hold local authorities to account.
The Chartered Institute of Public Finance and Accountancy (CIPFA) shares this objective in the work it undertakes as a standard-setter.
Council accounts can be complex to understand for the layperson. Sir Tony Redmond’s review includes a recommendation to produce a simplified statement of service costs to promote accountability, which will use information from the year-end accounts to focus on performance. Sir Tony also proposes a focus on longer-term financial sustainability – vital in the post-COVID era. The report contains illustrations of what the new statement might look like, though the actual format will need to be developed in consultation with sector stakeholders.
The report also recommends a review by CIPFA/Local Authority (Scotland) Accounts Advisory Committee (CIPFA/LASAAC) into the statutory accounts to determine opportunities for further simplifying presentation, particularly in relation to the differences between statutory financial treatments required for budget-setting purposes and accounting requirements of international financial reporting standards.
CIPFA/LASAAC’s strategic plan seeks to ensure the key messages of financial statements are easily accessible to users of local authority accounts. It will be well positioned to consider the impact of both the development of a summarised financial performance report and the increased impetus to reduce disclosures as a result.
The proposed financial reporting requirements support more effective communication of financial performance to local taxpayers. CIPFA supported the principle of a such a statement and recognises and welcomes the important role we are set to play in moving this agenda forwards.
Rob Whiteman is chief executive officer of CIPFA