IFRS 16 leases postponed for 2019/20 accounts
27 March 2020: the Treasury has sent out letters to central government finance departments explaining that the implementation of IFRS 16 Leases is to be postponed for the 2019/20 accounts.
ICAEW supports this postponement and we recommend that the administrative deadline for publishing accounts is delayed by five months to 31 December. Accounting principles should be maintained but we believe that some targeted one-off measures, perhaps reducing accounting disclosures, may be additionally beneficial.
Over the last few weeks, the Treasury has made a series of extraordinary announcements to combat the economic malaise brought about by the COVID-19 virus, not only for the economy as a whole but also for individuals.
While a lot will be written about the announcements themselves, there is also a direct impact on the finance teams of many government departments, hospitals and local authorities. In normal circumstances, any major policy announcement that implies large expenditure would be scrutinised, stress-tested, fully costed and budgeted for. That process and governance has been completely put aside. The policy has been announced and implemented straight away, facilitating payments to millions of people.
Add to this the restrictions on staff working in the office plus payment systems that may not function via remote access, there is little wonder that finance teams up and down the country are under significant strain.
What can be done to ease the pressure on finance departments?
One way to help finance departments is to review the upcoming financial reporting requirements for the 2019-20 year end. For the March year end, most government bodies work towards a July publication date.
Producing year end accounts is a busy time for any finance department but preparing them over the next two months may be a stretch too far for some. The Treasury is currently reviewing what can be done about relaxing requirements within annual reports and accounts, bearing in mind the need to reduce burdens on departments whilst also maintaining accountability in reporting.
We wait to see what the results of that Treasury review will be, but it goes without question that high quality financial information is even more important than ever in these uncertain times.
Discover further IFRS 16 resources and support from ICAEW