ADD2338 Compliance with IFRS 9 – Financial Instruments
Executive summary
The Greater London Authority (GLA) and its trading arm, GLA Land and Property Ltd (GLAP), are required to comply with International Financial Reporting Standard (IFRS) 9 – Financial Instruments with effect from the 2018-19 financial year. IFRS 9 replaces International Accounting Standard 39 - Financial Instruments: Recognition and Measurement and updates the accounting treatment and risk disclosures to be included in financial statements by entities which hold financial instruments.
IFRS 9 requires GLA and GLAP to undertake expected credit loss calculations and fair value assessments of loans and equity investments. These calculations are complex, sector specific and require expert knowledge of market conditions. This decision seeks approval for specialist accounting advice to ensure that the Authority’s financial statements are IFRS 9 compliant.
Decision
That the Assistant Director of Finance & Governance approves spend of up to £50,000 on technical accounting advice to ensure compliance with the accounting requirements of IFRS 9 – Financial Instruments.
Part 1: Non-confidential facts and advice
The GLA and GLA Land and Property Ltd (“GLAP”) have a statutory duty to prepare financial statements that are compliant with the Code of Practice on Local Authority Accounting (the LA Code) in the United Kingdom and IFRSs as adopted by the European Union, respectively. IFRS 9 has been adopted by both the LA Code and the European Union and is applicable to the GLA’s and GLAP’s 2018/19 financial statements.
IFRS 9 requires GLA and GLAP to undertake expected credit loss calculations and fair value assessments of loans and equity investments. These calculations are complex, sector specific and require expert knowledge of market conditions. Technical accounting assistance is required to ensure that the Authority’s financial statements are compliant with the new IFRS 9 classification and measurement requirements.
GLA and GLAP obtain accounting advice that is IFRS 9 compliant thereby ensuring that the statutory accounts are free from material misstatement and provide a true and fair view of the respective entities financial position.
Quotes will be sought from three top-tier accountancy firms so as to secure value for money.
|
Activity |
Timeline |
|
Accountancy firm engaged |
March 2019 |
|
Report submitted by accountancy firm |
April 2019 |
Appropriate allocations will be made from the Finance & Governance budget for 2019-20.