Accounting Standards

CIPFA set to issue guidance on council-owned companies

The new guidance will cover governance arrangements for local authority trading companies

The Chartered Institute of Public Finance and Accountancy (CIPFA) has announced its plans to issue guidance related to council-owned companies.

Specifically, the new guidance will cover governance arrangements for local authority trading companies and is set to be released in autumn of this year.

This announcement comes after recent revelations in both Croydon and Nottingham which showed how a lack of good governance and effective financial management can cause serious damage to the resilience of public services.

Rob Whiteman, CEO of the CIPFA, said: “Since 2011, LATCs have come to deliver a wide range of services across the country.

“Despite this, recent public interest reports show there is a lack of clear guidance to support such arrangements and a lack of data on the possible risk to the financial resilience of the sector.”

He added: “While not a formal code of practice, this guidance will build on the best examples the sector has to offer to develop greater trust in public financial management and reduce the financial and reputational risks for councils who own companies.”

Luke Hall MP, the minister for regional growth and local development, said: “We have recently seen residents in Croydon and Nottingham being severely let down by failed council commercial ventures.

“I therefore welcome this guidance from CIPFA that will help all councils in their duty to manage taxpayers’ money responsibly in regard to local authority trading companies.”

 

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