It is almost a year since the collapse of the Icelandic banks, a period in which the Chartered Institute for Public Finance & Accountancy’s treasury management code has come under intense scrutiny.
The code sets the framework under which councils operate their treasury management functions. Immediately after the collapse of the banks we reviewed the code
and determined that, with its emphasis on risk above reward, it was basically sound but should be reviewed as the lessons emerged.
Both the Communities & Local Government select committee and the Audit Commission reviews agreed the underlying framework was sound but improvements could
be made to reflect the lessons learned as a result of Iceland.
Simultaneously with the publication of the Audit Commission’s spring report into councils’ investments in Icelandic banks, we published a treasury management bulletin containing interim advice and outlining our proposals for strengthening the code. Key changes proposed included strengthened scrutiny and monitoring arrangements and additional advice on the use of credit ratings and the role of treasury management advisers.
The code is now out for final consultation before being published in late autumn. While no investment will ever be completely safe, the revised code will strengthen the
framework and reduce future risk.
Alison Scott, assistant director for local government, Chartered Institute of Public Finance & Accountancy