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.
IPSASB chair Andreas Bermann has described the publication of the first four chapters, which cover the role and authority of the conceptual framework, objectives and users of general purpose financial reporting, qualitative characteristics and reporting entity, as a "major landmark," that will provide a basis for the ongoing development of International Public Sector Accounting Standards (IPSASs) and Recommended Practice Guidelines (RPGs).
These four 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.
IPSASB said the 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.
In the Conceptual Framework chapters to follow the definition, recognition, and measurement of the "elements" (or building blocks) of financial statements, and presentation in GPFRs will be addressed.
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 board warned any affects on IPSAS’s from issue of these four chapters will be determined and communicated to constituents in 2013.