Report by International Public Sector

Accounting Standards Board (IPSASB)

Mike Hathorn

Chair

IPSASB

IFAC IPSASB

2IPSASB UPDATE

Overview

• Background

• Recent exposure drafts & pronouncements

• Revised strategic themes

• Current projects

• Proposed new projects

IFAC IPSASB

3IPSASB UPDATE

IFAC IPSASB

IPSASB• Develops International Public Sector Accounting

Standards (IPSASs) - cash and accrual

• 24 Accrual Basis IPSASs and a Comprehensive Cash

Basis IPSAS

• Facilitates convergence of national and international

public sector standards

• Financial support from World Bank, ADB, UN, EC,

Canadian, Chinese, NZ and Swiss governments, CICA

• Relocation to Toronto

IFAC IPSASB

4IPSASB UPDATE

IPSASB Process

• Meetings 3 times per year

• Open to the public

• Materials available to those registered

• Transparent consultative due process with minimum 4 month exposure periods

IFAC IPSASB

5IPSASB UPDATE

Available on the IPSASB Web Site:

• All IPSASs (24 accrual plus 1 cash basis)

– (including Spanish and French translations)

• All current Exposure Drafts and other publications

• IPSASB Meeting Highlights

• IPSASB E-Mail

• IPSASB Agenda Papers (before each meeting)

FREE OF CHARGE AT: WWW.IPSASB.ORG

IFAC IPSASB

6IPSASB UPDATE

IPSASB Members 2007

Accounting Profession -15 members

UK (Chair), Argentina, Australia, Canada, China, France, India, Israel, Japan, Mexico, Netherlands,New Zealand, Norway, South Africa, USA

Public Members -3

Italy, Switzerland, USA

ObserversADB, EU, IASB, IMF, INTOSAI, OECD, UN, UNDP, World Bank

IFAC IPSASB

7IPSASB UPDATE

Adoption

• UN System (28 bodies)

• OECD, NATO (21 bodies), EC, IFAC,

INTERPOL

• 58 countries have agreed processes or have a

project in place to adopt IPSASs or align with

IPSASs

IFAC IPSASB

8IPSASB UPDATE

Recent exposure drafts and pronouncements

• ED 32, “ Financial Reporting under the Cash Basis of

Accounting-Disclosure Requirements for Recipients of

External Assistance”.

• IPSAS 22, “Disclosures of Information about the General

Government Sector”

• IPSAS 23, “Revenue from Non-Exchange Transactions

(Taxes and Transfers)”

• IPSAS 24, “Presentation of Budget Information in

Financial Statements”

• Revision to 11 accrual basis IPSASs and revised Preface

IFAC IPSASB

9IPSASB UPDATE

IPSAS 23: Non-exchange Revenue

(1)

• IPSAS 23 issued in January 2007

• Key principles of ED 29 retained

• Some modifications of emphasis, presentation

and format in areas such as:

– Social security contributions

– In-kind services

– Transitional provisions

IFAC IPSASB

10IPSASB UPDATE

IPSAS 23: Non-exchange Revenue (2)

• Asset/liability approach

• Assets recognized from non-exchange transactions initially measured at fair value at date of acquisition

• Stipulations -conditions and restrictions

• Conditions - both performance and return obligations

– Unfulfilled conditions give rise to liabilities

• Five year transitional provision for taxes/Three years for other non-exchange transactions

IFAC IPSASB

11IPSASB UPDATE

Revised Strategic Themes

• Conceptual framework for public sector

• Public sector specific issues including

convergence with statistical bases where

appropriate

• IFRS convergence

• Promotion & communication

IFAC IPSASB

12IPSASB UPDATE

Conceptual Framework (1)

• Objective to develop a public sector conceptual

framework

• Collaborative project with National Standard-

Setters

• Divergence from IASB framework only where

necessary to reflect public sector differences

• Stand-alone framework will be more than an

interpretation

IFAC IPSASB

13IPSASB UPDATE

Conceptual Framework (2)

• IPSASB Co-ordination and Leadership

• Process: Consultation Papers followed by

omnibus ED

• Four groups of Consultation Papers

• First Consultation Papers late 2007/early 2008

• ED: 2011

• Full framework: 2012

IFAC IPSASB

14IPSASB UPDATE

Conceptual Framework (3)

Group 1 Consultation Papers

• Objectives of financial reporting (United

Kingdom ASB)

• Scope of financial reporting (South African ASB)

• Qualitative Characteristics (Norway NIPA)

• Reporting Entity (Australian AASB)

IFAC IPSASB

15IPSASB UPDATE

Service Concessions

• Collaborative project involving NSS and Other

Bodies, including the OECD

• Primary resources to be provided by US GASB

• IFRIC Interpretation (IFRIC 12) deals only with

operators

• Survey

• Close collaboration with IASB/IFRIC (IFRIC

representative on subcommittee)

IFAC IPSASB

16IPSASB UPDATE

Likely New Projects for Initiation in 2007

• Firm decision to be made at March 2007 IPSASB Meeting

– Heritage Assets

– Financial Instruments

– Business Combinations

– Fair value

– Non-current Assets Held for Sale and Discontinued

Operations

– Updating of existing IPSASs

International Federation of Accountants

www.ifac.org

IFAC IPSASB

18IPSASB UPDATE

ATTACHMENTS

IFAC IPSASB

19IPSASB UPDATE

Budget Reporting

• IPSAS 24 “Presentation of Budget Information in

Financial Statements” accrual basis

• Amendments to Cash Basis IPSAS – additional

section 1.10 “Presentation of Budget Information in

Financial Statements”

IFAC IPSASB

20IPSASB UPDATE

Budget Reporting

• Prior – budget information comparison encouraged

only if on same basis

• Entities making budgets publicly available (does not

require public availability)

• Basis of preparation does not need to be the same

• Comparison is on the basis of the budget

• Effective date January 1 2009 – earlier adoption

encouraged

IFAC IPSASB

21IPSASB UPDATE

Budget Reporting

• Comparison of actual amounts to both original and final budget (separate financial statement if not same basis)

• Explanation of material differences - financial statements or x-ref public documents

• Reconciliation of budget based actual with financial statement actual when bases differ

• Explanation of differences between original and final budget - financial statements or x-ref public documents

IFAC IPSASB

22IPSASB UPDATE

Disclosure of External

Assistance (Cash Basis)

• OECD and Multilateral Development Banks -harmonize/reduce compliance costs

• Differing views

• Approved revised ED:

– required and encouraged disclosures

– field testing ED

IFAC IPSASB

23IPSASB UPDATE

Social Policy Obligations

• Reservations over extent of liability recognized &

mirroring of existing approaches

• Reservations reinforced by majority view in FASAB

Preliminary Issues Paper

• Change of approach to presentation and disclosure

(would exclude recognition)

• Present obligation for cash transfers when all

eligibility criteria have been met

IFAC IPSASB

24IPSASB UPDATE

Social Policy Obligations

• Disclosed liability: present value of future cash

flows to all eligible participants at reporting date

• No present obligation in respect of individual goods

and services (e.g. education and health)

• Not a fiscal sustainability statement

• Acknowledgement of importance of fiscal

sustainability statements and will be addressed

initially in conceptual framework project

• Approach early step - not last word

IFAC IPSASB

25IPSASB UPDATE

Heritage Assets

• Currently no requirement to recognize

• If recognize, disclose based on IPSAS 17

• Permitted to use IPSAS 17 measurement approach

• Range of Responses to February 2006 Consultation Paper

• Project brief to March meeting

• Separate ED/Standard or amendment to IPSAS 17?

IFAC IPSASB

26IPSASB UPDATE

General Improvements Project

• December 2003 - IASB’s Improvements Project –

reduce or eliminate alternative, redundancies and

conflicts

• Deal with some convergence issues

• Black and grey letters equal authority

• Clarify hierarchy

• Make other improvements