To report to the Audit and Corporate Governance Committee on the progress on implementing International Financial Reporting Standards.

The Acting Head of Financial Services, presented a report on the progress on implementing International Financial Reporting Standards (IFRS) as requested at the previous meeting. She referred to the Hereford and Worcester Financial Managers Group, paragraph 5 of the report refers, which had been set up to work jointly on IFRS issues and informed the Committee that the Group had adopted the Chartered Institute of Public Finance and Accountancy (CIPFA) Project plan on the issues. The Group had also set up five sub groups to consider Assets and Capital, Financial Statements and Policies, Employee Benefits, Joint Benefits, and Leases. The sub groups would then report to the main group.

Councillor AM Toon declared a personal interest  as a governor of Whitecross High School. Paragraph 8(a) (i) refers.

The Chairman, Councillor ACR Chappell, referred to the fact that the Primary Care Trust (PCT) was having IFRS introduced ahead of the Council  and that hopefully we can learn from the Herefordshire PCT. He also referred to the probable need to employ more financial staff as a consequence of the implementation of the IFRS system. The Director of Resources stated that any financial personnel with the necessary experience in working with IFRS currently command higher rates of pay. He would be flagging up the need for additional support with the Joint Management Team. He would be working closely with the PCT.

Regarding Councillor Toon’s query on the accuracy of school asset records with regard to IFRS, the Acting Head of Financial Services informed Members that school asset accounting would be closely monitored to ensure compliance with the new accounting procedures.

The Director of Resources stated that an item would be appearing on the Herefordshire Schools Forum agenda regarding IFRS and that his staff would also be working with the Schools Bursars Group on IFRS matters. With regard to a Member’s question on whether the new accountancy standards would provide efficiencies, he stated that bodies like CIPFA had concerns on that issue.

On a contracts issue the Assistant Chief Executive Legal and Democratic reminded Members that it was a legal requirement that European companies should be asked to tender for certain contracts if contracts were above European procurement figures.

The Acting Head of Financial Services referred to Private Finance Initiatives (PFI) Accounting being very complex and emphasised the probable need to employ expert advice in this area.

The Director of Resources informed Members that he would be putting in place a corporate training event for Members on IFRS issues by using one of the allocated Resources Directorate training days. Councillor Chappell recognised the need for Members to appreciate the IFRS system and how property issues of the Authority are affected.

Councillor RH Smith made reference to the recently revised Medium Term Financial Management Strategy and asked if the £766,000 ‘capacity’ in 2009/10 would be affected by IFRS. The Director of Resources informed members that the ‘bottom line’ impact of IFRS was not yet known on that issue but that he would report back to the Committee as soon as the issue became clear.

RESOLVED:   That

(i)                 a standing report be made on the current position with regard to the implementation of the IFRS; and

(ii)               the report be noted.