10 JUL 2019
IFRS 16 Leases is a new accounting standard that sets out the principles for the recognition, measurement, presentation and disclosure of leases and replaces IAS 17. It is effective from 1 January 2019.
The RICS Public Sector Valuation Group is in regular contact with HM Treasury and the Chartered Institute of Public Finance and Accountancy (CIPFA), and has been requested by HMT to alert valuers undertaking the valuation of government property assets for accounting purposes in accordance with The HM Treasury's Financial Reporting Manual (FReM) to their recently published IFRS 16 Leases Application Guidance to aid implementation of the new accounting standard in the public sector.
However, UK public sector bodies which use IFRS accounting standards have deferred adoption of the standard until the financial year beginning 1 April 2020. This includes central government bodies, local authorities and the NHS. Two central government bodies – the Department for Digital, Culture, Media and Sport and Department for Transport – will early adopt IFRS 16 from 1 April 2019, as may some public corporations and other organisations.
The HM Treasury IFRS 16 guidance focusses on the public sector application of IFRS 16, and not the application of the standard itself, and sets out the basis for the public sector adaptations and interpretations.
It does not seek to duplicate the extensive guidance and illustrative examples already included in IFRS 16, nor take away the judgements each entity will be required to make when applying IFRS 16.