IPSAS Explained: A Summary of International Public Sector Accounting Standards, 3rd Edition

I. Introduction: General information about IPSASs and the IPSASB 1

1 The International Public Sector Accounting Standards Board 1

1.1 General information 1

1.2 Structure and organization of IPSASB 2

1.3 Objectives of the IPSASB  4

1.4 Governance and oversight of the IPSASB  5

1.5 Members of the IPSASB  7

1.6 The strategy and work plan of the IPSASB 8

2 International accounting standards for the public sector  10

2.1 Overview of international accounting standards for the public sector 10

2.2 History of the International Public Sector Accounting Standards 14

2.3 Applicability of the International Public Sector Accounting Standards  15

2.4 General purpose financial statements  16

2.5 Authority of the International Public Sector Accounting Standards.. 17

2.6 IPSASs for accrual basis of accounting and cash basis of accounting 19

2.7 Background to the application of international accounting standards for the public sector . 19

2.8 Provisions for the transition from the cash basis to the accrual basis of accounting 21

2.9 Procedures for developing accounting standards  22

2.10 Process for reviewing and modifying IASB documents 24

2.11 Process for considering GFS reporting guidelines during development of IPSASs . 25

2.12 Current projects of the IPSASB........ 25

3 IPSASB’s Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities  28

3.1 Background  28

3.2 Key characteristics of the public sector  30

3.3 Role and authority of the Framework 30

3.4 Objectives and users of general purpose financial reporting 31

3.5 Qualitative characteristics 32

3.6 Reporting entity  33

3.7 Elements in the financial statements  34

3.8 Recognition in financial statements  36

3.9 Measurement of assets and liabilities in financial statements  37

3.10 Presentation in GPFRs 44

II. Costs versus benefits of implementing accrual accounting in the public sector  47

1 Cost-benefit assessments for implementation  47

2 Summary of expected benefits and positive impacts of implementing IPSASs 48

3 Expected costs of implementing IPSASs 51

4 Expected challenges of IPSAS implementation  53

III. International developments in public sector accounting  57

1 Africa    57

1.1 Current situation in Africa  57

1.2 Reform movements underway in Africa   59

1.3 Outlook  . 64

2 Europe   65

2.1 Current situation in Europe  65

2.2 Reform movements underway in Europe 68

2.3 Current status of the EPSAS project  70

2.4 EPSAS framework and governance 72

3 Latin America and the Caribbean 75

3.1 Current situation in Latin America and the Caribbean 75

3.2 Reform movements underway in LAC  76

3.3 Outlook 82

IV. Overview of accrual basis IPSASs 85

IPSAS 1: Presentation of Financial Statements  85

IPSAS 2: Cash Flow Statement 92

IPSAS 3: Accounting Policies, Changes in Accounting Estimates and Errors   97

IPSAS 4: The Effects of Changes in Foreign Exchange Rates  102

IPSAS 5: Borrowing Costs  105

IPSAS 6: Consolidated and Separate Financial Statements 108

IPSAS 7: Investments in Associates  114

IPSAS 8: Interests in Joint Ventures  118

IPSAS 9: Revenue from Exchange Transactions   122

IPSAS 10: Financial Reporting in Hyperinflationary Economies 127

IPSAS 11: Construction Contracts 129

IPSAS 12: Inventories . 133

IPSAS 13: Leases 138

IPSAS 14: Events after the Reporting Date  144

IPSAS 15: Financial Instruments: Disclosure and Presentation 148

IPSAS 16: Investment Property  149

IPSAS 17: Property, Plant and Equipment  155

IPSAS 18: Segment Reporting  163

IPSAS 19: Provisions, Contingent Liabilities and Contingent Assets  166

IPSAS 20: Related Party Disclosures  172

IPSAS 21: Impairment of Non-Cash-Generating Assets  175

IPSAS 22: Disclosure of Information About the General Government Sector 180

IPSAS 23: Revenue from Non-Exchange Transactions (Taxes and Transfers) 183

IPSAS 24: Presentation of Budget Information in Financial Statements 190

IPSAS 25: Employee Benefits 195

IPSAS 26: Impairment of Cash-Generating Assets 205

IPSAS 27: Agriculture  211

IPSAS 28: Financial Instruments: Presentation  216

IPSAS 29: Financial Instruments: Recognition and Measurement  219

IPSAS 30: Financial Instruments: Disclosures 225

IPSAS 31: Intangible Assets 229

IPSAS 32: Service Concession Arrangements: Grantor  236

IPSAS 33: First-time Adoption of Accrual Basis International Public Sector Accounting Standards (IPSASs) 246

IPSAS 34: Separate Financial Statements  253

IPSAS 35: Consolidated Financial Statements 257

IPSAS 36: Investments in Associates and Joint Ventures 263

IPSAS 37: Joint Arrangements  268

IPSAS 38: Disclosure of Interests in Other Entities  272

IPSAS 39: Employee Benefits 283

IPSAS 40: Public Sector Combinations 287

Cash Basis IPSAS: Financial Reporting Under the Cash Basis of Accounting  294

V. Recommended Practice Guidelines (RPGs) 301

RPG 1: Long-Term Sustainability of an Entity’s Finances  301

RPG 2: Financial Statement Discussion and Analysis  306

RPG 3: Reporting Service Performance Information  310

VI. Exposure Drafts and Consultation Papers  315

1 Exposure Drafts  315

1.1 ED 61, Amendments to Financial Reporting under the Cash Basis of Accounting (the Cash Basis IPSAS)  315

1.2 ED 62, Financial Instruments 317

2 Consultation Papers . 319

2.1 Recognition and Measurement of Social Benefits  319

2.2 Public Sector Specific Financial Instruments  324

2.3 Heritage  326

2.4 Accounting for Revenue and Non-Exchange Expenses 328 Further reading . 340

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Thomas Müller-Marqués Berger (Stuttgart, Germany) is a partner at Ernst & Young GmbH and serves as the firm's Global Leader of International Public Sector Accounting.

Thomas was a member of the International Public Sector Accounting Standards Board (IPSASB) from January 2009 to December 2014. In January 2016 he became the Inaugural Chair of the IPSASB's Consultative Advisory Group (CAG) and in that role actively participates in IPSASB meetings. In June 2017, he was elected as CAG Chair for a term of three years.

Since January 2011 he has served as Chair of the Public Sector Group of Accountancy Europe (former F??d??ration des Experts Comptables Europ??en (FEE)). In that capacity, he is a standing observer of the Eurostat EPSAS Working Group and contributes to the work of the EPSAS Cells.