Press Releases/News Alerts
IFAC's International Public Sector Accounting Standards Board Proposes New Guidance to Strengthen Financial Reporting by Governments
The International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants (IFAC) is expanding its guidance in two significant areas: accounting for intangible assets and entity combinations. It has published two new exposure drafts (EDS)-ED 40, Intangible Assets and ED 41, Entity Combinations from Exchange Transactions, which propose important new guidance for professional accountants working in government and other public sector entities.
"During the current economic crisis, governments around the world have been acquiring business entities that might otherwise be liquidated. These EDs propose financial reporting requirements that will ensure that these transactions are reported in a consistent and transparent manner, ensuring that governments remain accountable for their actions," explains IPSASB Chair Mike Hathorn.
The issuance of the exposure drafts is part of the IPSASB's global convergence program that will substantially converge International Public Sector Accounting Standards (IPSASs) with International Financial Reporting Standards (IFRSs) approved at December 31, 2008 The project is scheduled for completion by December 31, 2009.
ED 40 proposes an IPSAS that converges with the International Accounting Standards Board's (IASB) International Accounting Standard 38, Intangible Assets. ED 40 also incorporates guidance on website costs set out in the Interpretation 32 of the IASB's Standing Interpretations Committee, entitled Intangible Assets - Web Site Costs. It also includes guidance on intangible heritage assets.
Because ED 41 addresses entity combinations that are similar in nature to those in the private sector, it is converged with the IASB's IFRS 3, Business Combinations. Entity combinations that arise from non-exchange transactions are being addressed in a separate public sector-specific project.
The exposure drafts are being issued concurrently because ED 40 addresses issues related to intangible assets acquired in an entity combination arising from an exchange transaction. Both exposure drafts contain limited changes from the relevant IFRS; these changes are mainly to ensure consistency with other IPSASs and to address specific public sector issues.
"Converging IPSASs with IFRSs, where appropriate for the public sector, is one of the key objectives of our standards development program," states Hathorn. "These two exposure drafts propose clear financial reporting requirements for an entity in the public sector in order to ensure that the private and public sectors report similar activities in a consistent fashion."
How to Comment
Comments on EDs 40 and 41 are requested by August 15, 2009. The EDs may be viewed by going to www.ifac.org/EDs. Comments may be submitted by email to EDComments@ifac.org and firstname.lastname@example.org. They can also be faxed to the attention of the IPSASB Technical Director at +1 (416) 977-8585, or mailed to the IPSASB Technical Director at 277 Wellington Street West, 4th Floor, Toronto, Ontario M5V 3H2, Canada. All comments will be considered a matter of public record and will ultimately be posted on the IFAC website.
IFAC (http://www.ifac.org/) is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 158 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce. Through its independent standard-setting boards, IFAC sets international ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to encourage high-quality performance by professional accountants in business.
1The Standing Interpretations Committee of the IASB was replaced in March 2002 by the International Financial Reporting Interpretations Committee.