The International Public Sector Accounting Standards Board® (IPSASB®) has issued Exposure Draft (ED) 82, Retirement Benefit Plans.
The objective of this ED is to propose the accounting, presentation, and disclosure requirements for the financial statements of a retirement benefit plan. This should increase the transparency and accountability of public sector entities regarding obligations owed to public sector employees and other eligible participants who are members of the retirement benefit plan, and of any deficit in the plan.
The IPSASB held its first meeting of the year in New York on March 21-25, 2022.
Sustainability Reporting
The IPSASB approved its global consultation on developing a sustainability reporting framework for the public sector. The IPSASB plans to launch this pivotal consultation in early May, alongside its Natural Resources Consultation Paper and the IPSASB Mid-Period Work Program Consultation Feedback Statement.
Advancing public sector sustainability reporting is both important and urgent. The IPSASB is pleased to be able to lead the debate. Watch this space for launch details and how to get involved.
Mid-Period Work Program Consultation
The IPSASB agreed to add new projects to its 2022 work program:
Presentation of Financial Statements; Differential Reporting;
Reporting Sustainability Program Information; and
Advancing Public Sector Sustainability Reporting Consultation Paper.
As resources become available in 2022, work on the above projects will commence.
The landscape for IPSASB’s work has changed since the Mid-Period Consultation was published, resulting in fewer resources being available than originally anticipated. The IPSASB will continue to monitor work program progress and resource availability in 2023, to look for opportunities to commence work on the limited scope projects proposed in the Mid-Period Consultation, which were strongly supported by constituents.
Natural Resources
The IPSASB approved the Consultation Paper, Natural Resources, which will be published in May 2022, and will be open for comment until October2022. The Consultation Paper includes the IPSASB’s preliminary views on issues related to the recognition, measurement, presentation, and disclosure ofnatural resources, usingexamples of subsoil resources, water, and living resources.
The IPSASB approved the project roadmap, including issuing an Exposure Draft as the next output for this project. The IPSASB also decided to analyze the arrangements from the perspectives of both:
Parties to the arrangements; and
The consolidated financial statements and separate financial statements.
The IPSASB plans to discuss concessionary leases and leases for zero or nominal consideration at the June meeting.
Revenue and Transfer Expenses
The IPSASB agreed to use the term ‘compliance obligation’to describe an entity’s legally binding obligation arising from revenue transaction with a binding arrangement. The IPSASB furtherdiscussed the implications of internal and external factors on the subsequent measurement of assets arising from binding arrangements. The IPSASB also continued discussing principles related to transfer expenses accounting, focusing on the timing and recognitionof transfer expenses in transactions with binding arrangements, and the allocation of consideration to the transferor’s transfer rights.
Measurement
The IPSASB performed a detailedreview of the responses to ED 77, Measurement. Respondents strongly supported most of the ED proposals. The IPSASB agreed to move forward with the proposals related to Fair Value and Cost of Fulfillment, and thatdisclosure requirements should be included in the relevant IPSAS. The proposed principles related to historical cost and the measurement model policy choice are areas where further clarification is needed.
Conceptual Framework-Phase I
The IPSASB reviewed responses to ED 76, Conceptual Framework Update: Chapter 7, Measurement of Assets and Liabilities in Financial Statements. The IPSASB decided to retain the three-level classification proposed in ED 76. However, the term ‘Subsequent Measurement Framework’will be adopted rather than ‘Measurement Hierarchy’.
The IPSASB decided to include fair value as defined in ED 76 and to delete market value. The IPSASB instructed staff to further analyze the case for deletionof net selling price, cost of release and assumption price.
Non-Current Assets Held for Sale and Discontinued Operations
The IPSASB approved IPSAS 44, Non-current Assets Held for Sale and Discontinued Operations with an effective date of January 1, 2025. IPSAS 44 aligns with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations and provides the accounting requirements for assets held for sale and provides presentation and disclosure requirements for discontinued operations. IPSAS 44 is expected to be published in May 2022.
ISS Update
The IPSASB discussed the work done by the statistical community in updating the International Statistical Standards(ISS) and the IPSASB’s role in that process. The IPSASB also reviewed the new IPSAS-ISS Alignment Dashboard, which will be a standing agenda item for future meetings and captures the IPSASB’s long standing work to reduce unnecessary differences with statistical standards to make IPSAS information useful for statistical compilation purposes. The IPSASB discussed the importance of IPSAS-ISS alignment from both conceptual and practical perspectives.
Next Meeting
The next full meeting of the IPSASB will take place in June 2022. For more information, or to register as an observer, visit the IPSASB website (www.ipsasb.org).
The International Public Accounting Standards Setting Board (IPSASB) welcomed the release of the new Pathways to Accrual, a digital platform with resources designed to help governments and other public sector entities planning and undertaking the transition from cash to accrual accounting including adopting and implementing International Public Sector Accounting Standards (IPSAS). The platform was developed by the International Federation of Accountants (IFAC) with content provided by the Chartered Institute of Public Finance and Accountancy (CIPFA) and feedback from IPSASB and other international stakeholders.
With additional, easy to navigate digital content, Pathways to Accrual builds upon the IPSASB’s publication Study 14, Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities.
“There is significant accrual adoption and implementation activity underway across all regions of the world,” said Ian Carruthers, International Public Sector Accounting Standards Board (IPSASB) Chair. “By 2025, 50% of the jurisdictions in the 2021 International Public Sector Accountability Index are forecast to report on accrual basis, and Pathways to Accrual will be instrumental in supporting both these transitions and the many others planned for subsequent years.”
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board 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.
ED 81 is the second exposure draft resulting from the limited scope project to revise the Conceptual Framework in specified areas. ED 81 proposes updates to the chapters of the Conceptual Framework dealing with the attributes of financial information that make financial reporting useful-qualitative characteristics-and the building blocks of financial statements-elements.
In developing its proposals, the IPSASB has considered the Board’s experience in applying the Framework to the development and maintenance of International Public Sector Accounting Standards (IPSAS), as well as recent developments in international thinking about conceptual issues.
“Since its publication in 2014 the Conceptual Framework has been the cornerstone of IPSASB’s global standards delivery activity” said IPSASB Chair Ian Carruthers. “The ED 81 proposals are intended to address issues that have emerged in the Framework’s application in practice, so that it remains central to global public sector financial reporting.”
The ED 81 proposals include:
Clarifying the role of prudence in public sector financial reporting;
Revised definitions of an asset and a liability;
Clarifying what constitutes a transfer of resources when determining whether an entity has a liability; and
Restructuring guidance on liabilities to improve clarity for users of the Framework.
The IPSASB welcomes the views of respondents on the proposed amendments to the Conceptual Framework.
How to Comment To access the Exposure Draft, its summary At-a-Glance document, or to submit a comment, visit the IPSASB website. Comments are requested May 31, 2022. The IPSASB encourages IFAC members, associates, and Network Partners 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 developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board 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.
Stakeholder Comments on Exposure Draft 81 Sought by May 31, 2022
IPSAS 43 is based on International Financial Reporting Standard (IFRS®) 16, Leases, developed by the International Accounting Standards Board (IASB®). For lessees, IPSAS 43 introduces a right-of-use model that replaces the risks and rewards incidental to ownership model in IPSAS 13, Leases. For lessors, IPSAS 43 substantially carries forward the risks and rewards incidental to ownership model in IPSAS 13.
IPSAS 43 has an effective date of January 1, 2025. Earlier application is permitted in certain circumstances.
“IPSAS 43, Leases will improve the transparency of lease accounting in the public sector, while maintaining alignment with IFRS,” said IPSASB Chair Ian Carruthers. “Having a three-year period to apply IPSAS 43 provides public sector entities time to prepare for the new requirements and allows for learning to be drawn from the private sector experience in applying IFRS 16.”
The publication of IPSAS 43 completes the IPSASB’s first phase of work on Leases. The IPSASB will continue its work by considering additional public sector specific issues in its Other Lease-Type Arrangements project.
How to Access To access IPSAS 43, Leases, its summary At-a-Glance document, and webcast, visit the IPSASB website. The IPSASB encourages IFAC members, associates, and Network Partners to promote the availability of IPSAS 43, Leases to their members and employees.
About the IPSASB The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board 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.
Conceptual Framework Update: Chapter 3, Qualitative Characteristics and Chapter 5, Elements in Financial Statements
The objective of ED 81 is to update Chapter 3, Qualitative Characteristics, and Chapter 5, Elements of Financial Statements, of the Conceptual Framework, in light of:
The IPSASB held its fourth meeting of the year virtually on December 7-10 and 14-15, 2021.
Leases
The IPSASB approved IPSAS 43, Leases with an effective date of January 1, 2025. IPSAS 43 supersedes IPSAS 13, Leases and introduces the right-of-use model for lessees, aligning with IFRS 16, Leases. IPSAS 43 is expected to be published in January 2022. The IPSASB will continue consideration of public sector specific leasing issues, such as concessionary leases, in its Other Lease-Type Arrangements project.
Improvements
The IPSASB approved Improvements to IPSAS, 2021 with an effective date of January 1, 2023, except for the Interest Rate Benchmark Reform related amendments to IPSAS 29, Financial Instruments: Recognition and Measurement, which will have an effective date of January 1, 2022. Improvements to IPSAS, 2021 is expected to be published in January 2022.
Retirement Benefit Plans
The IPSASB voted to preliminary approve ED 82, Retirement Benefit Plans. ED 82 provides accounting and reporting requirements for public sector retirement benefit plans and is adapted from IAS 26, Accounting and Reporting by Retirement Benefit Plans. The IPSASB will finalize ED 82 at its February 2022 meeting.
The IPSASB approved ED 81, Conceptual Framework Update: Chapter 3, Qualitative Characteristics and Chapter 5, Elements. ED 81 will be published early in 2022 with a four-month consultation period. In December, the IPSASB finalized its proposals for the description of a resource and revisions to Chapter 5, which includes sections on unit of account and liabilities.
Natural Resources
The IPSASB reviewed updates to the draft Natural Resources Consultation Paper and performed a detailed page-by-page review of the introductory chapter, as well as the chapters on presentation, living resources, and water. Other than certain clarifications and editorial comments, no significant issues were noted by the IPSASB’s review. The Consultation Paper is expected to be approved at the March 2022 meeting.
Revenue and Transfer Expenses
The IPSASB discussed accounting models proposed for Transfer Expenses with, and without, binding arrangements and reviewed guidance related to specific aspects of the draft standard. The IPSASB confirmed an entity’s obligation in revenue transactions with binding arrangements is a narrower concept than ‘present obligation’ in the Conceptual Framework, and clarified how to distinguish individual obligations in a binding arrangement. The IPSASB agreed that specified activities and eligible expenditures are examples of ways in which an entity may fulfill obligations.
Mid-Period Work Program Consultation
The IPSASB performed its preliminary analysis of the responses to the Work Program Consultation. Based on the strong support from respondents, the IPSASB tentatively agreed to prioritize the two major and four minor projects proposed in the Consultation and decided a feedback statement should be developed to capture constituent feedback. The project prioritization and feedback statement are expected to be approved in March 2022. Finally, the IPSASB discussed the strong feedback received that indicated sustainability reporting should be prioritized.
Measurement Suite of EDs
A preliminary analysis of the responses to the Measurement Suite of Exposure Drafts (ED) 76-79 was discussed by the IPSASB. Respondents strongly supported most proposals, and it was clear the IPSASB’s efforts in developing an illustrative ED as part of the consultation process in 2019 paid dividends. The IPSASB focused its discussions on the diverse views related to the public sector specific measurement basis proposed and agreed the Board would have to dedicate resources in 2022 to address concerns identified.
Six volunteers are being sought to serve as members on the International Public Sector Accounting Standards Board (IPSASB). The Nominating Committee has issued a call for nominations looking for candidates to serve for an initial term of up to three years, commencing January 1, 2023.
“Volunteers with diverse backgrounds and skills are essential to the development of high-quality international standards, as well as the promotion of IPSAS adoption,” said Ian Carruthers, IPSASB Chair. “I strongly encourage our key stakeholders to consider applying and/or nominating candidates. Participation in the IPSASB’s work is a valuable experience for both the volunteer as well as being beneficial for the nominating and/or employing organization."
Nominations from a wide range of relevant backgrounds are sought, including, but not limited to:
Users of general-purpose financial reports, such as parliamentarians, budget offices, and credit-rating agencies;
Preparers of accrual-based financial statements, such those reporting directly or indirectly in accordance with IPSAS, or in the process of transitioning to IPSAS or another accrual-based accounting framework;
Ministries of Finance and Treasury departments; and,
Public sector external auditors.
Candidates will ideally have a public sector background and/or experience in standard setting to be able to contribute value to the work of the Board. English proficiency (both written and oral) is essential, as this is the language in which the IPSASB operates.
Regional balance is important to ensure diverse input from a wide range of jurisdictions to the Board’s discussions. Nominations of qualified candidates from all regions of the world are encouraged and, particularly from the Africa–Middle East and Latin America regions. Nominations from jurisdictions where English is not the native language are particularly encouraged. .
For more details and information on how to submit an application, please see the Call for Nominations.
Deadline for submitting applications is January 31, 2022.
