Public Sector Specific Financial Instruments

  • Public Sector Specific Financial Instruments

    Project Status

    The IPSASB approved a project brief in December 2013.


    Ross Smith

    Task Force

    The current members of the Task Based Group are Jeanine Poggiolini, Thomas Müller-Marqués Berger, Guohua Huang, Kenji Izawa and Stuart Barr.

    Objective(s) of project

    To develop accounting guidance for public sector specific financial instruments.


    The project will focus on issues related to public sector specific financial instruments which are outside the scope of those covered under current IPSAS 28–30.


    Issues the project intends to consider include (but are not necessarily limited to)

    • Monetary gold
    • Currency and coin in circulation
    • Special Drawing Rights
    • Memberships/investments in international organizations (such as the International Monetary Fund)
    • Statutory receivables and payables

    Task Force progress / Board discussions to date

    June 2014: The IPSASB considered an Issues Paper on the following public sector specific topics:

    • Statutory receivables;
    • Statutory payables; and
    • Securitizations.

    A central bank working group established by the IMF, World Bank and the Bank for International Settlements, is considering issues prevalent in financial reporting for central banks and government finance departments. Staff is working to communicate with this group to understand the issues being considered and with the hope of identifying qualified individuals to join the task force being established for this IPSASB project.

    Staff presented research and findings related to:

    • Taxes;
    • Government Transfers;
    • Fines and Penalties;
    • Fees; and
    • Social Benefits.

    These types of transactions are generally non-contractual and arise through laws, legislation and/or regulation.

    Staff presented an analysis of the current IPSAS literature and highlighted key issues and areas where gaps exist for each topic in the IPSASB’s literature.

    A summary of the main areas where gaps exists are:

    • Statutory Receivables—Lack of guidance for subsequent measurement, impairment and derecognition;
    • Statutory Payables—Lack of guidance for subsequent measurement, derecognition/impairment when accounting for non-contractual payables and in some cases lack of guidance for initial recognition; and
    • Securitizations—Contractual in nature with guidance existing in IPSAS 6-8 and IPSAS 28-30. Concern was expressed about “future flow” securitizations where entities securitize rights to items that are not recognized in the entity’s financial statements such as future taxation or rights to administer and collect fees.

    The IPSASB determined that developing a specific view was not appropriate at this time and that staff should continue to develop options for inclusion in the CP

    Since the topics currently within the scope of the project are varied and do not have a natural conceptual connection, the IPSASB considered whether a single CP should be developed or whether multiple CPs would be more appropriate. The IPSASB agreed to continue to develop a single CP. This will allow constituents to consider and respond to all issues at one time. Initial draft chapters of the CP will be considered at the IPSASB meeting in September 2014.

    March 2014: The IPSASB considered an issues paper on public sector specific financial instruments, following the approval of a project brief at the December 2013 meeting.

    The issues paper prepared by staff focused on the following:

    •  Monetary gold;
    • Currency and coin in circulation; and
    •  International Monetary Fund (IMF) quota subscriptions and Special Drawing Rights (SDRs).

    Other issues in the scope of the project, such as statutory receivables and statutory payables (as well as securitization schemes in the public sector), will be covered at the June 2014 meeting.

    Staff presented research findings on accounting by a sample of central banks. The IPSASB also noted that these instruments are not limited to central banks and a transactional rather than entity-specific approach should be undertaken.

    The IPSASB noted variation in accounting for transactions related to these instruments. Given the importance of these transactions in the public sector, the IPSASB indicated that further research should consider the following:

    • Accounting for banknotes and coins in circulation: specifically how to account for items not yet issued/circulated, impairment and derecognition, and development costs for new series of notes and coins;
    •  The similarity of monetary gold to cash; and
    • The situation where governments in distress use the IMF loan facilities and SDRs to increase reserve assets (as IMF quota subscription members), to provide better insight on how these liquidity instruments are used.

    Further, the IPSASB emphasized it would be useful to establish the project task force to help understand the technical accounting issues.

    The IPSASB discussed the outputs of the project and agreed that the goal is to develop one or more IPSASs.

    December 2013: The IPSASB considered a project brief on accounting for public sector specific financial instruments. For work planning purposes the project is intended to address public sector specific financial instruments issues. However, as noted in the project brief, the issues identified do not meet the current definitions of a financial instrument, financial asset and/or financial liability in IPSAS 28, Financial Statements: Presentation.

    The IPSASB considered the scope of the project. It was agreed to address the following issues:

    • Monetary Gold
    • Currency and coin in circulation
    • IMF Special Drawing Rights (SDRs) and reserve position in the IMF
    • Statutory receivables
    • Statutory payables

    The IPSASB specifically considered whether to include concessionary loans and financial guarantees issued in non-exchange transactions in the scope of the project. It was agreed by the IPSASB that these issues should not be in the scope, because there are requirements and guidance in IPSAS 28–30, and the implementation date for those standards was January 1, 2013. Further, it was agreed that this project would remain separate from any work related to maintaining alignment with International Financial Reporting Standards in, IPSAS 28–30.

    The IPSASB noted that it was difficult to determine if the scope of issues was exhaustive at this time and therefore decided to proceed with an initial research phase of the project. This initial phase is anticipated to be completed by the end of 2014 and culminate with the issuance of a consultation paper and a revised project brief.

    The IPSASB considered a proposal to make the current Task Based Group (TBG) a Task Force (TF) based on the complexity of some of the issues identified and the lack of accounting literature available. The IPSASB agreed with the staff proposal to attempt to add 1 to 2 members outside of the IPSASB to the TBG to form a TF. These members would be expected to have specific experience related to central bank accounting and/or accounting for IMF SDRs/reserve position in the IMF.



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