Commentary on Sections Summary Sections 21, 22 and 16: Accounting practices, “Revenue Account”, “Capital Expenditure”
35.The new system will as far as possible take standard local authority accounting practices and concepts as its starting point, thereby avoiding the need for special definitions in the legislation.
36.The legislation will provide a framework for identifying the accounting codes which are to constitute ‘proper practices’ (section 21(2)). The codes so identified will have that status for the purposes of the capital finance system and other existing legislation.
37.Some special accounting treatments may be needed for the purposes of the capital system and there will be power for the Secretary of State or National Assembly for Wales to specify accounting practices by regulation (section 21(1)).
38.Section 16 deals specifically with the definition of ‘capital expenditure’. Again, the normal accounting definition will apply, but there is power to amend this, for individual authorities (by direction) or more generally (by regulations). That power to widen the definition will be used very sparingly, but regulations are likely, as now, to classify computer software development costs as capital expenditure. Directions will again be given only in exceptional circumstances, which could, as now, include cases where authorities are faced with significant redundancy costs.