This At-a-Glance is a summary of Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities: Presentation in General Purpose Financial Reports.

Thank you for subscribing to the eNews from the International Public Sector Accounting Standards Board (IPSASB). This edition provides a summary of decisions made at the IPSASB’s meeting held March 11-14, 2013, in Abu Dhabi. Please go to the IPSASB Meeting Page for the meeting highlights and relevant agenda items.

1. Conceptual Framework  ED 4, Presentation in General Purpose Financial Reports
2. The Preface to the Conceptual Framework
3. Financial Statement Discussion and Analysis
4. Reporting on the Long-Term Sustainability of an Entity’s Finances
5. Public Sector Combinations
6. First-Time Adoption of Accrual Basis IPSASs
7. Next Meeting
8. World Congress of Accountants 2014 to be Held in Rome; Sponsorship Opportunities Available

1.     Conceptual Framework ED 4, Presentation in General Purpose Financial Reports

The IPSASB approved the Conceptual Framework–Exposure Draft 4 (CF–ED4), Presentation in General Purpose Financial Reports, which describes presentation, display, and disclosure. It proposes an approach to presentation of decisions involving a two-level application of the concepts developed in chapters 1–4 of the Conceptual Framework.

In finalizing CF–ED4, the IPSASB confirmed:

• The description of key terminology, including presentation, display, and disclosure; and
• The decision-focused approach to presentation, involving decisions on information selection, location, and organization.

The IPSASB also confirmed application of both the qualitative characteristics and constraints on information included in general purpose financial reports (GPFRs) when making presentation decisions. The IPSASB also confirmed its decision not to include specific presentation objectives, relying on the direct application of the objectives of financial reporting identified in chapter 2 of the Framework.

The ED will have a four-month exposure period. The ED and the At-a-Glance document, which provides a summary of the ED, will be published shortly.

2.     The Preface to the Conceptual Framework

The IPSASB also discussed the approach to incorporation of the Preface into the Conceptual Framework. While it confirmed that the Preface should be included in the Framework, it decided to defer approval and publication until the Framework is being finalized. This will allow the linkages between the characteristics identified in the Preface and the concepts in the Framework chapters to be made more explicit.

The IPSASB reviewed the draft Preface presented by staff and gave directions for amendments to some of the sections, particularly those dealing with involuntary transfers and non-exchange transactions, and the longevity of the public sector.

3.     Financial Statement Discussion and Analysis

Consistent with a decision earlier in the meeting to issue non-authoritative guidance for pronouncements relating to general purpose financial reports (GPFRs), the IPSASB confirmed that the draft International Public Sector Accounting Standard (IPSAS), Financial Statement Discussion and Analysis, which has been developed from Exposure Draft 47, should be revised to become a Recommended Practice Guideline (RPG).

The IPSASB reviewed the current draft, acknowledging that specific wording may change due to the decision to change its status, and gave directions for amendments. A draft RPG with a Basis for Conclusions will be considered for approval at the June 2013 meeting.

4.     Reporting on the Long-Term Sustainability of an Entity’s Finances

The IPSASB reviewed a draft Recommended Practice Guideline (RPG) 1, Reporting on the Long-Term Sustainability of an Entity’s Finances, which has been developed from Exposure Draft 46 and provided directions for amendments. In particular, it directed staff to revise the section relating to the dimensions of long-term fiscal sustainability to directly refer to the dimensions of service, revenue, and debt and to explain that there are two aspects to each dimension: capacity and vulnerability. Capacity is the ability of the entity to influence or change the service, revenue, or debt dimensions, and vulnerability is the extent of the entity’s dependence on factors outside its control or influence. The draft RPG will be revised and presented at the June 2013 meeting with a view to approval.

5.     Public Sector Combinations

The IPSASB considered the responses received to Consultation Paper (CP), Public Sector Combinations. The CP was issued in June 2012 and received 26 responses.

The IPSASB agreed that the project should continue with the scope proposed in the CP, which includes guidance on (a) the de-recognition and recognition of assets for the transferor, (b) the definition of an operation, (c) disclosure requirements for combining entities relating to the going concern basis, (d) subsequent measurement requirements similar to that included in International Financial Reporting Standard (IFRS) 3, Business Combinations, and (e) distinguishing between asset acquisitions, entity and operation acquisitions, and amalgamations using relevant text from IFRS 3.

The IPSASB had an initial discussion about whether the approach used in the CP of distinguishing acquisitions and amalgamations, with a further distinction for public sector combinations not under common control and under common control, is appropriate. Staff was directed to outline the possible consequences of such distinctions for review at its June 2013 meeting. The IPSASB will also conduct a detailed analysis of the responses to the CP and preliminary views during that meeting.

6.     First-Time Adoption of Accrual Basis IPSASs

The IPSASB discussed an analysis of the transitional provisions related to IPSAS 23, Revenue from Non-Exchange Transactions (Taxes and Transfers), IPSAS 25, Employee Benefits, and IPSAS 32, Service Concession Arrangements: Grantor, and provided directions to staff on various aspects including categorization. The IPSASB agreed to adopt a transition period of three years as a general guideline, acknowledging that this could be changed at the standards level if determined appropriate.

At the June 2013 meeting, an analysis of the transitional provisions for the financial instruments standards will be considered. The IPSASB thanks Ernst & Young for providing staff support up to this point in the project. The South African Accounting Standards Board is now providing staff resources for the project and will be developing an exposure draft for review, with a view to approval in September 2013.

7.     Next Meeting

The next IPSASB meeting will be held in Toronto, Canada, on June 17–20, 2013. Members of the public may register to observe the meetings. Registration will close one week before the first day of the meeting.

8.  World Congress of Accountants 2014 to be Held in Rome; Sponsorship Opportunities Available

The next World Congress of Accountants (WCOA) will be hosted by the Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili (CNDCEC) in Rome, Italy, in 2014. Themed 2020 Vision: Learning from the Past, Building the Future, the 2014 WCOA will be held November 10-13 at the Auditorium Parco della Musica. More than 4,000 professionals from all over the world will convene at this can’t-miss IFAC event, held every four years. WCOA 2014 will look back to explore the evolution of the accountancy profession and forward to showcase the innovations that will set the tone for the future.

The WCOA also affords an unparalleled opportunity for organizations and firms to share their projects and visions with the world by taking advantage of one of our carefully crafted sponsorship packages. There are numerous options so you’ll be able to select the one that best suits your organization’s unique strategy and goals. For more information, please contact info@wcoa2014rome.com or Dimarco@wcoa2014rome.com. 

This Handbook contains the complete set of the International Public Sector Accounting Standards Board’s (IPSASB’s) pronouncements on public sector financial reporting. It also includes Chapters 1–4 of the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities, which were approved in December 2012 and issued in January 2013.

In its report issued this week, the European Commission found that International Public Sector Accounting Standards (IPSASs) “represent an indisputable reference for potential EU harmonized public sector accounts.”

The report highlights that harmonized accruals-based government accounting improves transparency, accountability and the comparability of financial reporting in the public sector. Furthermore, a Commission staff working document that accompanied it discusses the advantages of IPSASs, including that “transparency provided by high-quality accruals standards such as IPSASs also provides for better-informed capital markets, in which government financial activity plays a much greater role than is often acknowledged.”

Noting that the present financial crisis has demonstrated that the need to assure financial stability is common to all European Union (EU) countries, the report also states that because “government assets and liabilities are substantial in all EU countries, it is therefore important that they are effectively managed and that governments are accountable for this management to their citizens, their representatives, investors and other stakeholders.”  

Andreas Bergmann, chair of the International Public Sector Accounting Standards Board (IPSASB), welcomed the report, which proposes that almost half of the existing IPSASs could be implemented as European Public Sector Accounting Standards (EPSASs) with little or no adaptation.

Currently, 15 European Union (EU) Member States incorporate IPSASs to some extent, with nine of these having national standards based on or in line with IPSASs.

“The adoption of accrual accounting by EU Member States would represent a historic step in the direction of achieving governmental transparency and serving the public interest,” Bergmann said. “Developing high-quality accounting standards like the IPSASs will require a rigorous process to ensure the EPSASs are of the same caliber. The IPSASB offers the EU’s public sector accounting authorities its full cooperation and resources in producing, adopting, and implementing EPSASs.”

The European Commission’s report will be followed by a conference, “Towards Implementing European Public Sector Accounting Standards,” to be held May 29-30 in Brussels.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the Canadian Institute of Chartered Accountants, and the governments of Canada, China, New Zealand, and Switzerland.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Public Sector Accounting Standards Board (IPSASB) welcomes the G-20 Finance Ministers’ and Central Bank Governors’ decision to address “transparency and comparability of public sector reporting” in the final communiqué issued for their February 15-16 meeting.

The G-20 Finance Ministers and Central Bank Governors called on the IMF and the World Bank to further explore the issue and provide appropriate updates, declaring that “strengthening the public sector balance sheet is needed to better assess risks to public debt sustainability.”

“We are very encouraged by these developments, as we had anticipated the G-20 under Russia’s leadership would view improved public sector financial management as a priority,” said IPSASB Chair Andreas Bergmann. “The IPSASB looks forward to continuing its constructive dialogue and cooperative efforts with the G20, the IMF, and the World Bank.”

The IPSASB has been setting standards for financial reporting of governments since 2001. Currently, it has published a complete suite of 32 standards for the accrual basis of accounting, as well as one cash basis standard for countries preparing for the move to accruals. Nearly 80 countries and many international governmental organizations, including the United Nations, NATO, OECD, the European Commission, and ASEAN, are currently using or have firm plans to use the standards.

More information can be found in the Feb. 16 news article, “The first G-20 Finance Ministers and Central Banks Governors' Meeting took place in Moscow,” which includes a link to the communiqué.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the United Nations, and the governments of Canada, China, New Zealand, and Switzerland.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Public Sector Accounting Standards Board (IPSASB) has issued the first four chapters of its Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities (the Conceptual Framework). The chapters are:

Chapter 1:    Role and Authority of the Conceptual Framework
Chapter 2:    Objectives and Users of General Purpose Financial Reporting 
Chapter 3:    Qualitative Characteristics  
Chapter 4:    Reporting Entity  

The Conceptual Framework underpins the development of International Public Sector Accounting Standards (IPSASs) and Recommended Practice Guidelines (RPGs).    

“The publication of the Conceptual Framework’s first four chapters is a major landmark for the IPSASB and the setting of global accounting standards for the public sector,” said IPSASB Chair Andreas Bergmann. “These concepts will provide the basis for the ongoing development of consistent and useful IPSASs and RPGs, and for the other three phases of the Conceptual Framework. They will also provide guidance to preparers faced with financial reporting issues not dealt with by IPSASs or RPGs.”

The chapters outline the role of the Conceptual Framework in the IPSAS and RPG development process, identify that the primary users of general purpose financial reports (GPFRs) of public sector entities are service recipients and resource providers, and clarify that the objectives of financial reporting by public sector entities are to provide information useful to users for accountability and decision making purposes. They also identify the qualitative characteristics of, and constraints on, information included in GPFRs and the key characteristics of a public sector reporting entity.

Information presented in financial statements is central to financial reporting and will remain the primary focus of IPSASs and RPGs developed by the IPSASB. However, because the primary objective of governments and other public sector entities is to deliver services to constituents the performance of public sector entities can only be partially evaluated by reference to their financial position, financial performance, and cash flows. These chapters explain that, to respond to users’ need for information for accountability and decision-making purposes, the scope of financial reporting by public sector entities is more comprehensive than information included in the financial statements. GPFRs may include, for example, information about an entity’s achievement of its service delivery objectives, compliance with its approved budget, and prospective information about its future service delivery activities, objectives, and resource needs.

Other chapters of the Conceptual Framework, which will address the definition, recognition, and measurement of the “elements” (or building blocks) of financial statements, and presentation in GPFRs, are being developed. They will be added to the Conceptual Framework when completed.

At its recent meeting, the IPSASB confirmed that it will review present IPSASs and non-authoritative guidance and, through application of the due process, address circumstances where there is substantial conflict between an IPSAS and the Conceptual Framework when issued. The mechanism and timing for withdrawal of the qualitative characteristics presently in IPSAS 1, Presentation of Financial Statements, and any other changes to IPSASs resulting from issue of these four chapters will be determined and communicated to constituents in 2013.

About the IPSASB
The IPSASB develops IPSASs, RPGs and other publications for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the United Nations, and the governments of Canada, China, New Zealand, and Switzerland.

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. It is comprised of 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities (the Conceptual Framework) underpins the development of International Public Sector Accounting Standards (IPSASs) and Recommended Practice Guidelines (RPGs).

The first four chapters of the Conceptual Framework are:

Takeo Fukiya became Technical Advisor to Mari Kobayashi in 2021, having previously served as a Technical Advisor for former board members; Kenji Izawa (2012-2017) and Do-jin Jung (2018-2020).

Mr. Fukiya is a researcher in The Japanese Institute of Certified Public Accountants (JICPA) since July 2021. Before that, He was an Audit Partner at KPMG Japan, where he had worked for more than 20 years, including more than 10 years in the public sector. He has led a number of audit engagements for Japanese public sector entities, including incorporated administrative agencies, such as state-owned R&D institutions and infrastructure entities. Since 2017, he has worked in the HQ Division, focusing on IPSASB-related activities and providing professional views regarding IFRS/J-GAAP issues, including public sector issues for audit/advisor teams.

He was the Chair of the IFAC-IPSASB Working Group of the Japanese Institute of CPAs  (2012-2016)  and prepared comments for IPSASB’s Consultation Papers/Exposure Drafts. He writes many articles relating to IPSAS. He has developed relationships with key Japanese constituents, such as the national governmental standard-setting division, allowing an ongoing exchange of views and information.

He has been a member of Accounting Standard Committee of Tokyo Metropolitan Government since 2024.

The International Public Sector Accounting Standards Board (IPSASB) welcomed the recent release of the International Monetary Fund (IMF) paper, Fiscal Transparency, Accountability, and Risk, and its support for International Public Sector Accounting Standards (IPSASs), the globally accepted, high-quality, accrual-based standards issued by the independent standard-setting body.

Many governments, jurisdictions, and international institutions have already adopted IPSASs, while others are working toward their implementation.

The IPSASB advocates for better financial reporting by governments worldwide and the need for improvements in the management of public sector resources. Since 1997, the IPSASB has developed and issued a suite of accrual standards and a cash-basis standard for countries moving toward full accrual accounting. IPSASs promote greater transparency and accountability in public sector finances and allow for enhanced monitoring of government debt and liabilities.

The IMF paper highlights the seriousness and extent of the current inadequacies in governments’ fiscal reporting and accountability and underscores the immense risks associated with these shortcomings.

Fiscal Transparency, Accountability, and Risk also calls for other measures supported by the IPSASB, including: 

• Updating fiscal transparency standards to address gaps in, and inconsistencies between, individual jurisdictions’ standards;
• Including all entities that have fiscal implications for governments (including central banks, public entities, and corporations outside of the general governments) in fiscal forecasting, budgeting, and financial reporting;
• Evaluating countries’ compliance with fiscal transparency standards using, for instance, auditing and assurance as a means for assessing compliance with standards;
• Strengthening incentives for improvements in fiscal transparency practices;
• Aligning the methodologies and standards for fiscal forecasting, budgeting, and financial reporting to reinforce the links between fiscal transparency and long-term sustainability; and
• Strengthening fiscal transparency and public sector financial management in all nations and, in particular, in developing and emerging nations.

IPSASB Chair Andreas Bergmann said the IPSASB agrees with the IMF that the requirements of accounting standards and the statistical framework should be harmonized, as far as the different purposes of the two frameworks permit, adding that it is critical for transparency and accountability that governments around the world have unambiguous guidance. He said the IPSASB also concurs that the efforts to monitor and enforce compliance with international standards, including IPSASs, need to be reinvigorated.

“The IMF paper underlines the need for strong and transparent financial reporting, which has the potential to improve public sector decision making and make governments more accountable to their constituents,” Bergmann said. “As we have witnessed with the sovereign debt crisis, when governments do not properly manage their finances, the consequences can include a loss of democratic control, social unrest, and the failure to meet their current and future commitments.”

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, and the governments of Canada, New Zealand, and Switzerland.

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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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The International Public Sector Accounting Standards Board (IPSASB) today released for comment two Exposure Drafts related to its project to develop a Conceptual Framework for the general purpose financial reporting of public sector entities. The Conceptual Framework continues to be the IPSASB’s key strategic objective and is of fundamental importance to the future of global public sector standard setting.

Conceptual Framework Exposure Draft (ED) 2, Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities: Elements and Recognition in Financial Statements, refines the issues highlighted in the Consultation Paper published in 2010 and reflects the IPSASB’s consideration of the responses to that Consultation Paper. Elements are the building blocks from which the financial statements are constructed.

The ED proposes definitions of eight elements: assets, liabilities, revenue, expenses, deferred inflows, deferred outflows, ownership contributions, and ownership distributions. It also proposes deferred inflows and deferred outflows as elements in order to distinguish the flows related to the reporting period from flows which relate to another reporting period. Deferred inflows and deferred outflows apply to flows that are provided for use in one or more specified reporting periods and are restricted to non-exchange transactions. The ED also considers how to deal with the uncertainty that can arise over the existence and measurement of elements.

Conceptual Framework Exposure Draft (ED) 3, Measurement of Assets and Liabilities in Financial Statements, identifies the measurement concepts that should guide the IPSASB in the selection of measurement bases for International Public Sector Accounting Standards. The ED stresses the importance of selecting measurement bases that meet the objectives of financial reporting-decision making and accountability. Many assets in the public sector are held for their operational capacity and, therefore, entry values that reflect the cost of purchase are likely to be adopted in many situations.

For liabilities that arise from obligations to provide goods and services to citizens and other eligible beneficiaries, the appropriate measurement basis will often be the cost of fulfillment—that is to say, the current cost of meeting the obligations represented by the liability.

“The Conceptual Framework continues to be IPSASB’s main priority and, when finalized, will underpin IPSASB’s standard-setting activities for many years to come,” said IPSASB Chair Andreas Bergmann. “These two Exposure Drafts propose concepts that deal with key aspects of the financial statements—the elements and the appropriate measurement bases. We strongly encourage all stakeholders to submit comments on the two Exposure Drafts.”

How to Comment
To access the Exposure Drafts and the At-a-Glance documents, which provide summaries of the two Exposure Drafts, or to submit a comment, visit the IPSASB website. Comments on the Exposure Drafts are requested by April 30, 2013. The IPSASB encourages IFAC members, associates, and regional accountancy bodies to promote the availability of these documents to their members and employees.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the United Nations, and the governments of Canada, China, New Zealand, and Switzerland.

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. It is comprised of 167 members and associates in 127 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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