The IPSASB considered draft IPSAS 42, Social Benefits. The IPSASB made minor changes prior to approving IPSAS 42, which will be published in late January 2019. IPSAS 42 fills one of the last significant omissions in IPSASB’s literature. 

IPSAS 42 has an effective date of January 1, 2022. The IPSASB considered that this would allow sufficient time for preparers to make arrangements for the standard’s requirements. The effective date for IPSAS 42 is also intended to align with the effective date of application guidance on collective and individual services and emergency relief.

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The IPSASB considered draft Exposure Draft (ED) 67, Collective and Individual Services and Emergency Relief, which proposes application guidance to IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets. Detailed discussion focused on emergency relief, with the Board distinguishing between emergency relief that is an ongoing activity of government, and emergency relief that responds to specific events. The IPSASB approved ED 67, which will be published in late January 2019.

ED 67 proposes that no provision for collective or individual services is recognized. Under certain circumstances emergency relief that responds to specific events may give rise to a provision. Entities apply IPSAS 19 in deciding whether to recognize a provision.

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The IPSASB discussed the responses to ED 66, Long-term Interests in Associates and Joint Ventures (Amendments to IPSAS 36, Investments in Associates and Joint Ventures) and Prepayment Features with Negative Compensation (Amendments to IPSAS 41, Financial Instruments).

The IPSASB approved the amendments proposed in ED 66 with no significant changes. The IPSASB also agreed to an effective date of January 1, 2022 in order to align with the effective date for IPSAS 41.

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The IPSASB supported the initial analysis of Public Sector Specific Financial Instruments (PSSFI) developed by its Financial Instruments Task Force. This analysis outlined which PSSFI meet the definition of a financial instrument in IPSAS 28, Financial Instruments: Presentation, for which non-authoritative guidance will be developed. Where an asset or liability does not satisfy the definition of a financial instrument, the Task Force will continue to evaluate the appropriate guidance for development.

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The IPSASB reviewed and modified newly developed application guidance for historical cost, replacement cost, fair value, and the cost of fulfillment. The IPSASB confirmed that it would issue a Consultation Paper including an outline ED, Public Sector Measurement. This will allow constituents to consider the IPSASB’s preliminary views on issues such as borrowing costs, transaction costs and fair value and to provide views on the format and structure of the envisaged IPSAS. 

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The IPSASB approved the scope of a draft ED that will provide requirements and guidance for transactions within the scope of  IFRS 15, Revenue from Contracts with Customers, and transactions that can be addressed through the Public Sector Performance Obligation Approach (PSPOA). In its discussions, the IPSASB also clarified the definition of ‘a binding arrangement’ and considered the terminology in IFRS 15 from a public sector perspective, deciding that the term ‘purchaser’ should replace ‘customer’.  In light of this decision, Staff will consider a suitable title for the draft ED. 

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Grants and Transfers - Time Requirements
The IPSASB tentatively decided that transactions with enforceable mechanisms that can be activated by the resource provider should be accounted for under the PSPOA. Revenue arising from transactions that are not enforceable is to be recognized when the revenue is receivable by the recipient. The intentions and expectations of resource providers are to be communicated via enhanced display and disclosure. Staff will develop options for consideration at the March 2019 meeting. The IPSASB also decided to stop using the term ‘term requirements’, as it implies enforceability when there may be none.

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The IPSASB reviewed a roadmap for further development of the Leases project in light of responses to ED 64, Leases. The IPSASB decided:
a) To confirm the tentative decision made in September to adopt the lessee accounting requirements in ED 64, Leases, subject to decisions on lessor accounting and concessionary leases;
b) Not to publish lessee accounting requirements based on ED 64 in the near future; and
c) To create a Task Force to consider all the issues raised by respondents.

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The IPSASB approved its Strategy and Work Plan 2019-2023 and an accompanying Consultation Summary. Both documents are planned for publication in February 2019. The finalized Strategy and Work Plan communicates the IPSASB’s strategic objective and five underpinning themes, as well as its forward Work Plan for the 2019-2023 period. The Consultation Summary highlights the key changes resulting from the consultation process, including the action arising from both written submissions and feedback from four regional roundtables.

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A podcast highlighting key points of the December 2018 meeting is now available here.

The next meeting of the IPSASB will be in Washington D.C., USA from March 12-15, 2019. For more information, or to register as an observer, visit the IPSASB website.

Good progress was made on the landmark Social Benefits IPSAS with a view to approval in December. The IPSASB made important decisions on disclosures, including to require a breakdown of expenditure on material schemes, narrative about whether a scheme meets the insurance accounting criteria, and a description of the demographic and economic factors that influence the expenditure on a scheme. The Obligating Event approach has been renamed the General Approach.

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The IPSASB discussed a draft ED, Collective and Individual Services and Disaster Relief, proposing additional guidance to IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets. The IPSASB agreed to include relevant definitions in IPSAS 19, and decided that the ED should cover emergency relief more broadly, not just disaster relief.

The IPSASB decided that the Public Sector Performance Obligation Approach could be applied to non-exchange grants and transfers. Staff will further consider when a liability should be recognized, what constitutes enforceability and develop examples.

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The IPSASB discussed the responses to ED 65, Improvements to IPSAS, 2018. The IPSASB agreed to most of the amendments proposed in ED 65, with little or no change. However, the IPSASB agreed to amend paragraph 76 of IPSAS 16, Investment Property, to provide guidance on measuring investment property under construction at fair value initially, rather than deleting the paragraph as proposed in the ED. The IPSASB also agreed to an effective date of January 1, 2021 for the new cash flow disclosure added to IPSAS 2, Cash Flow Statements. The IPSASB approved Improvements to IPSAS, 2018.

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The IPSASB decided on the approach for development of Exposure Draft (ED), Measurement. The ED will define major measurement bases and provide guidance on, and how to derive measures, under these bases. Individual IPSAS will specify where these measurement bases are to be used. Next steps include development of application guidance for historical cost, replacement cost, fair value, and the cost of fulfillment and identification of generic measurement-related disclosures. The majority of the text of IFRS 13, Fair Value Measurement, will be adopted as application guidance in IPSASB’s literature. The IPSASB also further developed the Consultation Paper (CP), Public Sector Measurement. 

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The IPSASB considered the terminology in IFRS 15, Revenue from Contracts, from a public sector perspective. The IPSASB decided that the term ‘binding arrangement’ should replace ‘contract’. However the terms ‘consideration and exchange’ and ‘goods and services’ will be retained. Staff will provide alternatives to ‘customer’. Explanatory text will note that the ‘expected cost plus margin method’ for estimating stand-alone selling prices can be used for goods and services that are provided on a cost-recovery basis. The Board decided that the ability to reduce future funding would be included as a potential enforcement mechanism.

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The IPSASB considered the responses to ED 64, Leases for the first time. There was overall support for ED 64’s proposal for the ‘right-of-use model’ on lessee accounting. The IPSASB tentatively decided to adopt the model in the IPSAS on Leases. The IPSASB acknowledged the diversity and complexity of constituents’ views on the proposals on lessor accounting and concessionary leases and decided to extend the timeline of the project in order to allow a detailed discussion of all the issues raised by respondents.

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The IPSASB supported the approach, which its Financial Instruments Task Force is following for Public Sector Specific Financial Instruments. This involves the development of non-authoritative guidance in the core Financial Instruments standards where the transaction meets the definition of a financial instrument in IPSAS 41, Financial Instruments, and  non-authoritative guidance outside the core Financial Instruments standards where that definition is not met. Following a face-to-face Task Force meeting in October 2018, Task Force recommendations will be presented to the IPSASB at future meetings.  

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The 2018 Handbook of International Public Sector Accounting Pronouncements is now available for electronic download on the IPSASB website. The 2018 Handbook includes the revised Cash Basis IPSAS. Hard copy editions will be available for purchase in November.

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The IPSASB discussed feedback received on the Strategy and Work Plan 2019-2023 consultation; including input from the four regional roundtables and the 53 formal comment letters submitted. Overall, the IPSASB concluded that the inclusive approach followed in developing the consultation proposals, and the open outreach process using roundtables during the consultation period, have contributed to the strong support for key proposals. The IPSASB will continue to work to finalize the Strategy and Work Plan 2019-2023 by discussing it with the Consultative Advisory Group and The Public Interest Committee over the next month, and will look to approve the Strategy and Work Plan at its December 2018 meeting. 

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The IPSASB seeks nominations from individuals, or representatives from organizations, interested in serving as a member of the IPSASB Consultative Advisory Group (CAG). Nominations are due by October 31, 2018. More information on the role of the CAG and the types of skills and experience nominees should have can be found here: https://www.ipsasb.org/cagnom

A podcast highlighting key points of the September 2018 meeting is now available:

• Audio version
• Video version

The next meeting of the IPSASB will be in Kuala Lumpur, Malaysia from December 4-7, 2018. The CAG will meet on December 3, 2018, also in Kuala Lumpur. For more information, or to register as an observer, visit the IPSASB website.