The Financial Reporting Advisory Board (FRAB) today published its 17th annual report. The report highlights that the year reflected in the report saw some of the difficulties faced in changing accounting guidance when related to fundamental questions about how the public sector approaches aspects of reporting – in particular control and the use of fair values.
The resolution of the issue of control of schools following a concerted effort to come to consistent well-evidence conclusions has established principles that will provide a model for other areas of the public sector that have to deal with similar questions. With respect to fair value, the issue of whether or not to apply fair value accounting to public sector assets has not been resolved, and in order to reach a satisfactory conclusion a more holistic debate on asset values may be required to ensure that users of public sector accounts get the most appropriate information.
Commenting on this year’s report, Kathryn Cearns, the FRAB Chairman, said:
The issues faced in resolving control and the use of fair values in reporting indicate the need for substantial forward planning and debate in order to apply new accounting standards in the public sector in a timely fashion.
With few new standards expected in the next few years, however, there will be a shift in focus to simplifying and streamlining statutory accounts in the public sector in order to better meet the needs of users and in responding to the development of European Public Sector Accounting Standards that may be established for all EU countries.
The board is encouraged by the increased profile of public sector financial reporting, and the greater use that is being made of information by decision-makers. The FRAB is ready and willing to support the Treasury and the other Relevant Authorities in continuing this positive development and in ensuring that the UK does not lose any of the advances made in reporting if EU standards are brought into force.