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IPSASB Biennial Review outlines developments and challenges in 2015-2016

The International Public Sector Accounting Standards Board (IPSASB) has published its Biennial Review for the year 2015 – 2016 to summarise in detail its activity in the public sector.

Highlights of the period include the completion of eight new or replacement IPSAS standards. These included IPSAS 33 (First Time Adoption of Accrual Basis IPSAS) a new suite of five IPSAS (34–38) on Accounting for Interests in Other Entities based on IASB’s IFRS 10–12.3 and a revised standard, IPSAS 39, Employee Benefits. All involved a thorough process with Exposure Drafts (ED) being issued.

The IPSASB also made changes to the process of approving and publishing amendments regarding how it communicated with the entities for which it develops IPSAS. This revised approach being high level and principles based replaced the government business enterprise that some found ambiguous and costly to apply.

In September 2014, the IPSASB approved The Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities which established the first global set of concepts that underpin general purpose financial reporting by public sector entities under the accrual basis of accounting. Since its approval the Framework has assumed a central role in the IPSASB’s standards development work, it was supported with a webinar, becoming one of IPSASB’s most popular resources.

Responding to the need for public interest oversight, which was recognised as a gap in the IPSASB’s institutional framework, a number of IPSASB’s constituents established the Governance Review Group (GRG) in 2013. Following a public consultation, the GRG published its recommendations in March 2015, which included the following:

  • The IPSASB should continue to operate under IFAC.
  • A single governance body should be established independently from IFAC to receive reports, and to review and advise IFAC and the IPSASB in the terms of reference, arrangements for nomination and appointments of members, and processes of the IPSASB’s strategy and development of IPSAS.
  • A Consultative Advisory Group (CAG) should be established for the IPSASB.

Following the report, the current Public Interest Committee (PIC) was formed as the single governance body and also oversees the CAG’s work.

In prioritising IPSASB projects, the Strategy and Work Plan identified important factors for consideration such as the significance of the public sector, urgency of issues, gaps in standards, International Financial Reporting Standard (IFRS) convergence and alignment with Government Finance Statistics.

Ian Carruthers IPSASB chair stated that in 2014 the IPSASB’s first-ever Strategy and Work Plan consultation and the completion of the Conceptual Framework were “landmark achievements” that have shaped the activities of 2015 – 2016. He also added that IPSAS adoption has significantly increased in recent years. The IPSASB’s current strategy objective is to strengthen public financial management through the increased adoption of accrual based IPSAS standards.

The following projects have been completed since the work plan consultation in late 2014.

  • IPSAS 33, First Time Adoption of Accrual Basis IPSAS
  • IPSAS 34–38, Interests in Other Entities
  • IPSAS 34–38 are drawn from IFRS 10-12:
  • IPSAS 34, Separate Financial Statements
  • IPSAS 35, Consolidated Financial Statements
  • IPSAS 36, Investments in Associates and Joint Ventures;
  • IPSAS 37, Joint Arrangements
  • IPSAS 38, Disclosure of Interests in Other Entities.

There was also progress made in the current and key continuing projects for social benefits, revenue and non-exchange expenses, heritage, financial instruments and leases.

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