IFAC Public Sector CommitteeIFAC Public Sector Committee

International Public Sector Accounting International Public Sector Accounting Standards (IPSASs)Standards (IPSASs)

Presented byPresented byRonald J. PointsRonald J. Points

March 2003March 2003

PSC Members and PSC Members and ObserversObservers

IFAC-156 member bodies, 114 countriesIFAC-156 member bodies, 114 countries

PSC MembersPSC Members Australia (Chair), Argentina, Canada, France, Australia (Chair), Argentina, Canada, France,

Germany, Hong Kong, Mexico, The Netherlands, Germany, Hong Kong, Mexico, The Netherlands, New Zealand, Norway, South Africa, UK, USANew Zealand, Norway, South Africa, UK, USA

PSC ObserversPSC Observers ADB, European Commission, IASB, IMF, ADB, European Commission, IASB, IMF,

INTOSAI, OECD, World Bank, UNDPINTOSAI, OECD, World Bank, UNDP

Standards Development Standards Development ProgramProgram

Stds Program Established late 1996Stds Program Established late 1996Funded ADB, IFAC, IMF, UNDP, World Funded ADB, IFAC, IMF, UNDP, World

BankBankCompleting first stageCompleting first stageCommencing second stageCommencing second stage

Need for Public Sector Need for Public Sector Accounting Standards Accounting Standards

(IPSAS) (IPSAS)

Concern about quality/variability of Concern about quality/variability of governmental financial reportinggovernmental financial reporting– Lack of transparency/completenessLack of transparency/completeness– Not timelyNot timely

Need for IPSASs Need for IPSASs

Necessary element in strengthening the Necessary element in strengthening the governance framework and enhancing governance framework and enhancing transparencytransparency

Set appropriate minimum benchmarks :Set appropriate minimum benchmarks :- for discharge of accountability, transparency - for discharge of accountability, transparency

Provide framework against which audit Provide framework against which audit is undertakenis undertaken

Standards Project - ApproachStandards Project - ApproachUnderlying philosophy:Underlying philosophy:

– Promote adoption of an accrual basisPromote adoption of an accrual basis– Acknowledge wide use of cash basis and Acknowledge wide use of cash basis and

develop a Cash Basis Standarddevelop a Cash Basis Standard– Guidance on transition to accrual basisGuidance on transition to accrual basis– Adopt a “Due Process” Adopt a “Due Process” – Involve the fin. Reporting, budget, GFS/ESA Involve the fin. Reporting, budget, GFS/ESA

communitycommunity

(at least 4 months exposure for comment)(at least 4 months exposure for comment)

First Stage –First Stage – Progress to Progress to datedate

Objectives of First StageObjectives of First Stage Cash basis standardCash basis standard Guidance on transition to accrual Guidance on transition to accrual

accounting accounting Core set of accrual standards based on Core set of accrual standards based on

IASs where appropriateIASs where appropriate Identify public sector specific issues for Identify public sector specific issues for

consideration in later stagesconsideration in later stages

Cash Basis –Cash Basis – Progress to Progress to datedate

ED 9 Financial Reporting under Cash Basis ED 9 Financial Reporting under Cash Basis (comments closed Nov 2000 – 41 responses)(comments closed Nov 2000 – 41 responses)

Additional consultation by developing economies Additional consultation by developing economies (30 countries circulated(30 countries circulated))

PSC revised structure/contentPSC revised structure/content– Reduced requirements plus encouragementsReduced requirements plus encouragements– St. Receipts/PaymentsSt. Receipts/Payments– Report third party cash settlementsReport third party cash settlements– More flexibility in reporting formatMore flexibility in reporting format

IPSAS approved for issue (by end January 2003)IPSAS approved for issue (by end January 2003)

CONSOLIDATED STATEMENT OF CASH RECEIPTS AND PAYMENTS FORYEAR ENDED 31 DECEMBER 200X

(In thousands of currency units)

Receipts/(Payments)Controlled by entity

Payments by third parties

200X

RECEIPTS

TaxationIncome tax

Value-added taxProperty tax

Other taxes

Grants and AidInternational agencies

Other Grants and Aid

BorrowingsProceeds from borrowings

Capital ReceiptsProceeds from disposal of plant & equipment

Training activitiesReceipts from trading activities

Total receipts

XX

XX

--

-

-

X -

X

X

X

X

X

X

X X

X -

X -

X X

CONSOLIDATED STATEMENT OF CASH RECEIPTS AND PAYMENTS FORYEAR ENDED 31 DECEMBER 200X

(In thousands of currency units)

Receipts/(Payments)Controlled by entity

Payments by third parties

200X

PAYMENTS

OperationsWages, salaries and employee benefits

Supplies and consumables

TransfersGrantsOther transfer payments

Total payments

(X)(X)

(X)

(X)(X)

(X)

(X)(X)

(X)

--

-

Capital ExpendituresPurchase/construction of plant & equipment

Purchase of financial instruments

(X)

(X)

(X) -(X)

(X)Loan and Interest Repayments

Repayment of borrowings

Interest payments

(X)

(X)(X) -

-

-

Other payments (X) (X)

Increase/(Decrease) in Cash

(X) (X)

X

Cash at beginning of year X

Increase/(Decrease) in Cash X

Cash at end of year X

X

N/A

N/A

N/A

Transitional GuidanceTransitional Guidance

Study 14 “Transition To Accrual Basis of Study 14 “Transition To Accrual Basis of Accounting. Guidance for Governments and Accounting. Guidance for Governments and Government Entities” Government Entities” – A Study (not-authoritative)A Study (not-authoritative)– Provides guidance on issues and approaches that might be Provides guidance on issues and approaches that might be

adopted in migration to accrualadopted in migration to accrual– Based on experiences in number of countriesBased on experiences in number of countries– Intend to update periodicallyIntend to update periodically

Released April 2002Released April 2002

Accrual - Progress to DateAccrual - Progress to Date

Study 11 Study 11 – – Governmental Financial Governmental Financial ReportingReporting

Accrual Basis IPSASs:Accrual Basis IPSASs:20 IPSASs issued20 IPSASs issued

– identified in attachment at end of slidesidentified in attachment at end of slides

IPSASs and Exposure IPSASs and Exposure DraftsDrafts

All IPSASsAll current Exposure Drafts PSC Update - on most recent PSC

meetingKey PSC meeting papers

AVAILABLE FREE OF CHARGE AT:

WWW.IFAC.ORG

Process Process – Developments 2002+– Developments 2002+

Consultative Groups (CG)Consultative Groups (CG)

Regional Workshops in conjunction with each Regional Workshops in conjunction with each PSC meetingPSC meeting

TranslationsTranslations – IASB Process for French, – IASB Process for French, Spanish, Spanish,

– National Bodies for others National Bodies for others

Steering Committees (SC) Steering Committees (SC) Project Advisory Panels (PAP)Project Advisory Panels (PAP)

PSC Work PSC Work ProgramProgram 2003+ 2003+

Public Sector Specific Issues identified in first Public Sector Specific Issues identified in first stagestage

Steering Committees Steering Committees – Non-exchange RevenueNon-exchange Revenue

– Social Policy ObligationsSocial Policy Obligations

– Budget Reporting (2003)Budget Reporting (2003)

Accounting for Development Assistance (cash Accounting for Development Assistance (cash basis)basis)

Impairment of government assetsImpairment of government assets

PSC Work PSC Work ProgramProgram 2003+ 2003+

GFS/ESA 95 and IPSAS HarmonizationGFS/ESA 95 and IPSAS Harmonization

Heritage AssetsHeritage Assets

Monitor IAASB - ongoingMonitor IAASB - ongoing

Care and Maintenance of IPSASsCare and Maintenance of IPSASs

Monitor national developments on Public Monitor national developments on Public Sector Conceptual Framework Sector Conceptual Framework

Non-Exchange Revenue SCNon-Exchange Revenue SC

Project developing an IPSAS to account for Project developing an IPSAS to account for revenues excluded from scope of IPSAS 9revenues excluded from scope of IPSAS 9– Taxes, Grants, Transfers …Taxes, Grants, Transfers …

SC met in June and Nov 2002SC met in June and Nov 2002 Members from: Canada, Australia, China, Members from: Canada, Australia, China,

Czech Republic, FEE, France, New Zealand, Czech Republic, FEE, France, New Zealand, Sweden, South Africa, UK, USASweden, South Africa, UK, USA

Social Policy Obligations Social Policy Obligations SCSC

Developing an IPSAS on accounting for Developing an IPSAS on accounting for provisions relating to obligations for provisions relating to obligations for social policy obligations: e.g. pensions, social policy obligations: e.g. pensions, health care, educationhealth care, education

SC met in in July and Nov 2002SC met in in July and Nov 2002Members from: New Zealand, Australia, Members from: New Zealand, Australia,

Canada, China, FEE, IMF, Pakistan, Canada, China, FEE, IMF, Pakistan, Sweden, UKSweden, UK

Budget Reporting ProjectBudget Reporting Project

Directed at enhancing budget reporting in the Directed at enhancing budget reporting in the public sectorpublic sector

Stage 1: Research paper identifyingStage 1: Research paper identifying– best practice in budget reportingbest practice in budget reporting– relationship with PSC mandaterelationship with PSC mandate

Steering Committee to be established in Steering Committee to be established in 2003, chaired by PSC Member from USA2003, chaired by PSC Member from USA

ATTACHMENTATTACHMENT

Cash Basis IPSAS Cash Basis IPSAS Cash Basis IPSASCash Basis IPSAS Financial Reporting under the Financial Reporting under the

Cash Basis of AccountingCash Basis of Accounting Approved for issue (end January 2003)Approved for issue (end January 2003) Comprehensive Cash Basis IPSASComprehensive Cash Basis IPSAS Includes requirements and encouragements Includes requirements and encouragements

Transition from Cash to AccrualTransition from Cash to AccrualStudy 14 Study 14 Transition to Accrual Basis of Accounting Transition to Accrual Basis of Accounting Issued in April 2002Issued in April 2002 to provide guidanceto provide guidance

ATTACHMENTATTACHMENTAccrual Basis IPSASs IssuedAccrual Basis IPSASs Issued

IPSAS 1 IPSAS 1 Presentation of Financial StatementsPresentation of Financial Statements

IPSAS 2 IPSAS 2 Cash Flow StatementsCash Flow Statements

IPSAS 3 IPSAS 3 Net Surplus or Deficit for the Period, Net Surplus or Deficit for the Period, Fundamental Errors and Changes in Fundamental Errors and Changes in

Accounting Accounting Policies Policies

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

IPSAS 5 IPSAS 5 Borrowing CostsBorrowing Costs

IPSAS 6 IPSAS 6 Consolidated Financial Statements and Consolidated Financial Statements and Accounting for Controlled Entities Accounting for Controlled Entities

ATTACHMENTATTACHMENTAccrual IPSAS (cont.)Accrual IPSAS (cont.)

IPSAS 7 IPSAS 7 Accounting for Investments in AssociatesAccounting for Investments in Associates

IPSAS 8 IPSAS 8 Financial reporting of Interests in Joint VenturesFinancial reporting of Interests in Joint Ventures

IPSAS 9 IPSAS 9 Revenue from Exchange TransactionsRevenue from Exchange Transactions

IPSAS 10 IPSAS 10 Financial Reporting in HyperinflationaryFinancial Reporting in Hyperinflationary Economies Economies

IPSAS 11 IPSAS 11 Construction Construction ContractsContracts

IPSAS 12 IPSAS 12 InventoriesInventories

IPSAS 13 IPSAS 13 LeasesLeases

IPSAS 14 IPSAS 14 Events After the Reporting DateEvents After the Reporting Date

IPSAS 15 IPSAS 15 Financial Instruments: Disclosure and Financial Instruments: Disclosure and PresentationPresentation

IPSAS 16 IPSAS 16 Investment PropertyInvestment Property

IPSAS 17 IPSAS 17 Property, Plant and EquipmentProperty, Plant and Equipment

IPSAS 18 IPSAS 18 Segment ReportingSegment Reporting

IPSAS 19 IPSAS 19 Provisions, Contingent Liabilities and Provisions, Contingent Liabilities and Contingent AssetsContingent Assets

IPSAS 20 IPSAS 20 Related Party DisclosuresRelated Party Disclosures

ATTACHMENTATTACHMENTAccrual IPSASs (cont.)Accrual IPSASs (cont.)