IPSASB Issues Revised Cash Basis IPSAS

New York, New York English

The International Public Sector Accounting Standards Board® (IPSASB®) has published a revised IPSAS, Financial Reporting under the Cash Basis of Accounting (the Cash Basis IPSAS). The amendments address some of the main barriers to adoption of this standard.  

This revised version of the Cash Basis IPSAS implements the proposals made in Exposure Draft 61, Amendments to Financial Reporting under the Cash Basis of Accounting. These amendments recast from mandatory to voluntary:

  • Preparation of consolidated financial statements;
  • Disclosure of information about external and other assistance; and
  • Disclosure of information about payments made by third parties.

The amendments also ensure that the standard’s requirements and encouragements are better aligned with requirements in relevant accrual IPSAS issued since 2008.

The revised version takes effect on January 1, 2019, with earlier adoption encouraged.

“These amendments respond to the views of preparers by removing some of the obstacles to adoption of the Cash Basis IPSAS,” said IPSASB Chair Ian Carruthers. “Robust financial reporting on a cash basis can be an important foundation for broader improvements in public sector financial management. However, the revisions make clear that the IPSASB views the Cash Basis IPSAS as an important stepping stone on the journey to full accrual accounting rather than an end in itself.”

First issued in 2003, and modified in 2006 and 2007, the Cash Basis IPSAS is the only IPSASB pronouncement that deals with the cash basis of accounting. 

About the IPSASB

The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through the development of accrual-based International Public Sector Accounting Standards® (IPSAS®) and other guidance for use by governments and other public sector entities. It receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

About the Public Interest Committee

The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.

IAASB October 2017 Meeting Highlights Podcast

English

Highlights from the October 24-26 2017 meeting in New York, NY.

  • 00:14 – Introduction: Matt Waldron, IAASB Technical Director
  • 00:40 - Highlights: Arnold Schilder, IAASB Chair
  • 03:09 – ISA 540 (Revised): Rich Sharko, IAASB Member
  • 06:03 – ISA 315 (Revised): Fiona Campbell, IAASB Member
  • 09:26 – IASB Liaison and Emerging Forms of External Reporting: Marek Grabowski, IAASB Member
  • 15:16 - Closing Remarks: Matt Waldron, IAASB Technical Director
Meeting Highlights Listen & Subscribe in iTunes

IPSASB Seeks Comments on Social Benefits Accounting Proposals

New York, New York English

The International Public Sector Accounting Standards Board® (IPSASB®) has released for public comment Exposure Draft (ED) 63, Social Benefits, which addresses accounting for the delivery of social benefits, such as retirement, unemployment, and disability.

 These proposals aim to improve consistency, transparency, and reporting by public sector entities of social benefit schemes, which account for a large portion of government expenditure in most jurisdictions.

Existing International Public Sector Accounting Standards® (IPSAS®) do not provide requirements or guidance on how to account for social benefits, leaving users without the information needed to assess government performance.

“Social benefits are a major expenditure for most governments, and the absence of an IPSAS standard for these programs is a noted gap in the Board’s literature,” said IPSASB Chair Ian Carruthers. “The proposals in ED 63 will enhance accountability and transparency and improve decision making in this critical public interest area.”

ED 63 defines social benefits and proposes requirements for the recognition and measurement of social benefit schemes. It also proposes disclosure requirements that provide additional information for users to evaluate the effect of social benefits on future government finances.

Comments on the Exposure Draft are requested by March 31, 2018.

How to Comment
To access the Exposure Draft and its summary At-a-Glance document, or to submit a comment, visit the IPSASB website at www.ipsasb.org. Comments on the Exposure Draft are requested by March 31, 2018. The IPSASB encourages IFAC member organizations and regional accountancy organizations to promote the availability of this Exposure Draft to their members and employees.

About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through the development of accrual-based International Public Sector Accounting Standards® (IPSAS®) and other guidance for use by governments and other public sector entities. It receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.

Exposure Draft 63, Social Benefits

The International Public Sector Accounting Standards Board (IPSASB) has issued Exposure Draft 63, Social Benefits.

The Exposure Draft addresses accounting for the delivery of social benefits, such as retirement, unemployment, and disability, aiming to improve consistency, transparency, and reporting by public sector entities of social benefit schemes, which account for a large portion of government expenditure in most jurisdictions.

Published:
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IESBA September 2017 Meeting Highlights and Decisions

New York, New York English

This summary of decisions of the International Ethics Standards Board for Accountants (IESBA) is for information purposes only. Except for approval of documents for public exposure and issuance of final pronouncements, decisions reported are tentative, reflect only the current status of discussions on projects, and may change after further deliberation by the IESBA.

A short audio summary podcast of the main outcomes of the meeting is also available on the IESBA website.

Structure of the Code

The IESBA further deliberated significant comments received on the Exposure Draft of Phase 2 of the project, Improving the Structure of the Code of Ethics for Professional Accountants—Phase 2 (Structure ED-2). As part of its deliberation, the IESBA considered a first draft of revisions to the proposed text included in Structure ED-2 and consistency refinements to the agreed-in-principle text of Phase 1. Topics discussed include: the usage of the terms “may” and “might” and their descriptions in the restructured Code; distinguishing between “firm” versus “network firm,” primarily in the International Independence Standards; and the proposed effective date. The IESBA broadly supported the direction of the Structure Task Force’s proposals. The IESBA asked that the Task Force continue to liaise with the Safeguards Task Force to undertake a consistency review of the proposed texts to be included in the restructured Code before the next meeting.

Next Steps: At the December 2017 meeting, the IESBA will consider the final drafts of the texts of Phases 1 and 2 of the restructured Code, with a view to approval.

Review of Safeguards in the Code

The IESBA further deliberated significant comments received on the Exposure Draft of Phase 2 of the project, Proposed Revisions Pertaining to Safeguards in the Code—Phase 2 and Related Conforming Amendments (Safeguards ED-2), and related Task Force responses. The IESBA also was briefed on the outcome of the Task Force’s July 2017 teleconferences with regulatory stakeholders who responded to Safeguards ED-2, and the IFAC Small and Medium Practices Committee. As part of the discussion, the IESBA considered a first draft of revisions to proposed Section 600, Provision of Non-assurance Services to an Audit Client, as well both conforming and consistency changes to safeguards-related provisions in other sections of the proposed restructured Code.

Among other matters, the IESBA discussed the adequacy and appropriateness of the provisions for evaluating and addressing advocacy threats; and whether additional guidance is needed in the Code to explain two things:

(1)   The meaning of the term “appropriate professional” used in examples of actions that might be safeguards.

(2)   How professional accountants and firms should determine whether an action is effective in reducing a threat to an acceptable level, and therefore qualify as a safeguard.

Next Steps: At the December 2017 meeting, the IESBA will consider a final draft of the safeguards provisions and related conforming amendments, with a view to approving them for inclusion in the restructured Code.

Review of Part C of the Code

Applicability

The IESBA further deliberated significant comments received on the Exposure Draft, Proposed Revisions to Clarify the Applicability of Provisions in Part C of the Extant Code to Professional Accountants in Public Practice (Applicability ED), and related Task Force responses.

The IESBA supported the Task Force’s proposed revisions, which incorporated the feedback received from IESBA members during its June 2017 meeting. Topics discussed include matters relating to the project scope and the nature of the illustrative examples of how the Applicability provisions in Part 2, Professional Accountants in Business, of the restructured Code would operate in the context of the work of professional accountants in public practice.

At the December 2017 meeting, the IESBA will consider a final draft of the applicability provisions, with a view to approving them for inclusion in the restructured Code.

Restructuring

The IESBA considered revisions to the proposed restructured text of the provisions in extant Part C, Professional Accountants in Business, included in the March 2016 close-off document, in reference to the comments received from respondents to Structure ED-2 and Safeguards ED-2. The IESBA was generally supportive of the Task Force’s proposals, subject to any further structure- or safeguard-related refinements.

At the December 2017 meeting, the IESBA will consider a final draft of the restructured text, with a view to approval for inclusion in the restructured Code.

Responding to Non-Compliance with Laws and Regulations (NOCLAR)

In light of the comments received from respondents on Structure ED-2, the IESBA considered revisions to the proposed restructured text relating to its NOCLAR pronouncement. The IESBA was generally supportive of the Task Force’s proposals, subject to any further structure- or safeguard-related refinements.

At the December 2017 meeting, the IESBA will consider a final draft of the restructured text, with a view to approval for inclusion in the restructured Code.

Long Association

In light of the comments received from respondents on Structure ED-2 and Safeguards ED-2, the IESBA considered revisions to the proposed restructured text relating to its Long Association close-off document. The IESBA was generally supportive of the Task Force’s proposals, subject to any further structure- or safeguard-related refinements.

Next Steps: At the December 2017 meeting, the IESBA will consider a final draft of the restructured text, with a view to approval for inclusion in the restructured Code.

Professional Skepticism

The IESBA considered significant comments raised by respondents on the May 2017 Exposure Draft (ED), Proposed Application Material Relating to Professional Skepticism and Professional Judgment, and related Task Force responses. The IESBA broadly supported the direction of the changes to the proposed application material in response to the feedback from respondents, subject to refinements and consideration of whether the description of the term “professional judgment” has been fully aligned with that in the International Auditing and Assurance Standards Board (IAASB)’s standards.

The IESBA also was briefed on comments made during the September 2017 IESBA Consultative Advisory Group (CAG) meeting, and by some respondents to the ED regarding the IESBA’s longer term professional skepticism initiative. The longer term initiative will explore, among other matters, whether aspects of the concept of professional skepticism apply to all professional accountants, including those who are not auditors or assurance practitioners.

At the December 2017 meeting, the IESBA will consider a revised draft of the proposed application material relating to professional skepticism and professional judgment, with a view to approval for inclusion in the restructured Code. The IESBA will also receive an update on the longer term professional skepticism initiative.

Future Strategy and Work Plan

The IESBA considered the results from the April 2017 Strategy and Work Plan survey and the IESBA Planning Committee’s initial analysis and preliminary considerations relating to the survey responses. The IESBA also considered the input received from the CAG regarding priority topics to address in the next strategy period. The IESBA broadly supported the Committee’s initial analysis, and provided feedback on potential topics for prioritization and related considerations in developing the draft strategy consultation paper.

Next Steps: At the December 2017 meeting, the IESBA will consider a first draft of the consultation paper.

Joint IAASB-IESBA Session

Recognizing the increasing need for coordination between the IAASB and IESBA, the two boards held a joint sessions for the first time. Among other matters, the two boards were briefed on areas requiring or potentially requiring coordination, and a proposed approach to coordination, which they broadly supported subject to refinements. The boards agreed to form a joint working group to address the objectivity of engagement quality control reviewer. They also discussed how best to achieve alignment of their future strategies and work plans while respecting their independence, including how to align their strategy periods.

The boards agreed to meet again in joint session in the second half of 2018.

Next Meeting

The next physical meeting of the IESBA will be held in Livingston, Zambia, December 4-8, 2017.

IFAC Initiates CEO Search

New York, New York English

The International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in more than 130 countries, is seeking an outstanding individual to become its next Chief Executive Officer. The successful candidate will join IFAC in late 2018 to allow for an orderly transition and will succeed current CEO Fayezul Choudhury when he steps down on December 31, 2018.

The successful candidate for the CEO role must have a keen interest in and deep personal commitment to IFAC’s mission: to serve the public interest by promoting the value of professional accountants worldwide; speaking out on public interest issues where the accountancy profession’s expertise is most relevant; developing strong professional accountancy organizations and accounting firms; and supporting the development, adoption and implementation of high-quality international standards.

The IFAC CEO must also exhibit superior leadership, management skills, a proclivity for strategic thinking, diplomatic and ethical behavior in both personal and professional life, and a future-focused attitude that will continue to drive IFAC’s strategy.

The CEO is expected to provide leadership in identifying and formulating policy positions on important issues impacting the global accountancy profession as well as critical public interest issues and will conduct outreach to build consensus on significant matters. The CEO works in close cooperation with IFAC’s volunteer leadership to support the organization’s mission and is responsible to the IFAC Board.

The international executive search firm Korn Ferry has been retained for the search and is partnering with IFAC to actively engage IFAC member organizations, the accountancy community, and other stakeholders in the recruitment process, encouraging a diverse and international applicant base. IFAC is initiating the recruitment process now to allow time for a comprehensive search and seamless transition.

Interested candidates should contact Korn Ferry Senior Client Partner Chuck Eldridge at chuck.eldridge@kornferry.com or Association Sector Leader Lorraine Lavet at Lorraine.Lavet@kornferry.com. For reference, the profile for the IFAC CEO can be found here.

About IFAC
IFAC 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 more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

Professional Skepticism: Short-term project

Objective

To develop application material relating to professional skepticism (PS) and professional judgment (PJ), in the context of audits, reviews, and other assurance engagements. This short-term project is expected to be finalized at the December 2017 IESBA meeting. 

“Professional skepticism” (PS) has been a cornerstone of the professional accountancy profession for decades. While it sounds good, there is no generally accepted definition of what PS means for the profession as a whole.

IAASB's Group Audits Task Force Issued a Project Update

New York, New York English

The International Auditing and Assurance Standards Board (IAASB)’s Group Audits Task Force has issued a Project Update. The Project Update outlines the issues under consideration in the revised International Standard on Auditing (ISA) 600, Special Considerations‒Audits of Group Financial Statements, and other projects that address additional international standards. This includes: ISA 220, Quality Control for an Audit of Financial Statements, and International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements. The Project Update also explains the linkages between these projects as they relate to group audit issues.

Key Takeaways

  • ISA 600 deals with special considerations that apply in audits of group financial statements (group audits). Many of the requirements of ISA 600 are, therefore, drafted in the context of requirements in other standards. The IAASB recognizes that there is a strong linkage between the IAASB’s work to clarify and strengthen ISA 600 and the projects to revise other standards, in particular ISQC 1, ISA 220, and ISA 315 (Revised).
  • Some foundational issues to be dealt with in the ISA 600 revisions need to be first considered and addressed in these other projects, i.e., such that the Group Audits Task Force can appropriately build on the revised requirements and application material in making necessary revisions to ISA 600.
  • The Group Audits Task Force is working cooperatively with the task forces responsible for the revisions of ISQC 1, ISA 220, and ISA 315 (Revised) and providing input as proposed revisions to these standards progress. This interaction with the other task forces will enable the Group Audits Task Force to be well positioned to reflect the revisions to these other standards in the context of ISA 600, and provide the additional context of the special considerations relevant to their application to group audits.

IPSASB eNews: October 2017

Toronto, Ontario English

The International Public Sector Accounting Board (IPSASB) held its third meeting of the year from September 19-22 in Toronto.

Social Benefits

The IPSASB approved Exposure Draft (ED) 63, Social Benefits, which will be issued at the end of October with the consultation period running until March 31, 2018. ED 63 proposes the obligating event approach, in which liabilities are recognized when the eligibility criteria for the next benefit (including being alive) is satisfied. The ED also includes an optional insurance approach and stipulates that entities are required to disclose projected cash flows for schemes for the next five years.

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Cash Basis IPSAS

The IPSASB approved a revised standard, Financial Reporting under the Cash Basis of Accounting (the Cash Basis IPSAS). The revisions, which are intended to make implementation of the Cash Basis IPSAS easier, recast as encouragements rather than requirements: the preparation of consolidated financial statements, disclosure of information about external assistance, and payments made by third parties. The revised Cash Basis IPSAS will be applicable from January 1, 2019 with early adoption encouraged.

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Strategy and Work Plan Consultation

The IPSASB discussed a firstdraft of its consultation document forthe Strategy and Work Plan 2019–2023, which it expects to issue in January 2018. The consultation document was informed by outreach and engagement with constituents, the IPSASB’s oversight body the Public Interest Committee, and the IPSASB Consultative Advisory Group. The IPSASB plans to hold regional roundtables in the first half of 2018 to ensure broad engagement with constituents on the consultation document.

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Leases

For measurement of concessionary leases, the IPSASB decided that the lessor’s underlying asset should be measured in accordance with the relevant IPSAS. The IPSASB directed staff to further analyze three options of accounting for the subsidized component of concessionary leases by lessors. The three options are to recognize the subsidized component of a concessionary lease (i) as a liability (unearned revenue), (ii) directly in net assets/equity, or (iii) not to recognize the subsidized component. Under options (i) and (ii), an expense for the subsidized component would also be recognized by a lessor, while an expense for the subsidized component would not be recognized under option (iii).

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Public Sector Measurement

The IPSASB decided that measurement of heritage and infrastructure assets should be addressed in the Public Sector Measurement project and has directed the Task Force and staff to develop a consultation paper that includes a preliminary exposure draft. This exposure draft will propose an approach to measurement and will include advice on addressing public sector-specific needs, as well as the extent to which IFRS 13, Fair Value Measurement, should be drawn upon.

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Infrastructure Assets

The IPSASB agreed upon an approach for the Infrastructure Assets project, which involves further research to determine the difficulties preparers encounter when applying IPSAS 17, Property, Plant and Equipment. After this research phase, a final project proposal will be presented with envisaged outputs. Staff will update the CAG and IPSASB on the progress of the research at the December 2017 meeting.

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2017 Handbook Available for Download

The 2017 Handbook of International Public Sector Accounting Pronouncements is now available for electronic download on the IPSASB website. The 2017 Handbook includes the new standards IPSAS 39, Employee Benefits and IPSAS 40, Public Sector Combinations. Hard copy editions will be available for purchase in November.

Meeting Podcast

A podcast highlighting key points of the September 2017 meeting is now available.

Next Meeting

The next meeting of the IPSASB will be in Toronto from December 5-8. The Consultative Advisory Group will hold its second meeting of the year in Toronto on December 4. For more information, or to register to attend a meeting as an observer, visit the IPSASB and CAG websites.

Upcoming Dates
  • December 31, 2017: Consultation period for ED 62, Financial Instruments, ends
  • January 15, 2018: Consultation period for Consultation Paper, Revenue and Non-Exchange Expenses, ends
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