The International Public Sector Accounting Standards Board (IPSASB), developer of IPSAS, international accrual-based accounting standards for use by governments and other public sector entities around the world has issued an integrated package of measurement-related pronouncements comprising:
- Updated Conceptual Framework: Chapter 7, Measurement of Assets and Liabilities in Financial Statements;
- International Public Sector Accounting Standard® (IPSAS®) 45, Property, Plant, and Equipment, and
- IPSAS 46, Measurement.
The three pronouncements provide simplified, more consistent guidance addressing key conceptual challenges and practical implementation issues identified by the public sector community by introducing:
- Straight-forward principles for initial and subsequent measurement, that apply throughout IPSAS and align with the Conceptual Framework; and
- Enhanced property, plant, and equipment guidance that also clarifies the recognition and measurement of infrastructure and heritage assets.
IPSASB chair, Ian Carruthers, said: “These important pronouncements provide clear and consistent foundational principles for the measurement of public sector assets.
“In addition, IPSAS 45 includes guidance on the recognition and measurement of heritage and infrastructure assets, which addresses their unique characteristics.”
The updates to Chapter 7 of the Conceptual Framework streamline the measurement principles by eliminating unused measurement bases and enhancing focus on those that are commonly used. The new subsequent measurement framework will help constituents apply the principles in practice and aligns measurement concepts with the guidance provided in IPSAS.
IPSAS 45 replaces IPSAS 17, Property, Plant, and Equipment by adding current operational value as a measurement basis in the updated current value model for assets within its scope, identifying the characteristics of heritage and infrastructure assets, and adding new guidance on how these important types of public sector assets should be recognized and measured.
IPSAS 46 provides new guidance in a single standard addressing how commonly used measurement bases should be applied in practice. It brings in generic guidance on fair value for the first time, and introduces current operational value, a public sector specific current value measurement basis addressing constituents’ views that an alternative current value measurement basis to fair value is needed for certain public sector assets.
The effective date for both IPSAS 45 and IPSAS 46 is 1 January 2025, with earlier application permitted. Updates to the Conceptual Framework are effective when published.