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August 29, 2014

Public sector entities: IPSASB goes beyond semantics

By Testabc

The International Public Sector Accounting Standards Board (IPSASB) released for comment a consultation paper (CP) to achieve a clearer, non-ambiguous definition of the subjects of its International Public Sector Accounting Standard (IPSAS) framework.

"The IPSASB considers that it has a responsibility to be transparent about the types of public sector entities for which it is developing IPSASs," IPSASB chair Andreas Bergmann said.

Through the CP, The Applicability of IPSASs to Government Business Enterprises and Other Public Sector Entities, IPSASB addresses the role of Government Business Enterprises (GBEs), generally commercially oriented entities that can have a significant impact on a government’s financial performance and financial position.

Under IPSAS, GBEs are not within the scope of the standard and should apply the International Accounting Standards Board’s International Financial Reporting Standards instead, but stakeholders’ feedback raised concerns about inconsistent definitions of GBEs across the industry.

The IPSASB’s CP moots two approaches to improve the transparency of its standard’s scope.

The first approach is to clarify the GBE definition and possibly narrow it to entities with a profit-seeking objective.

Under the second approach, the IPSASB would instead describe the characteristics of public sector entities for which IPSASs are intended and ultimately discard a definition of GBE.

"We look forward to hearing whether constituents support the approach of providing a high-level description of the characteristics of public sector entities for which IPSASs are intended or, instead, retention and improvement of the definition of a GBE," Bergmann said.

According to IPSASB, the board prefers the second approach "because it is principles-based and focuses on the high-level characteristics of entities for which IPSASs are intended."

The deadline for comments on the IPSASB CP is 31 December 2014.

 

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Few signs of a move to accrual accounting in Europe’s largest economy

Indian public sector enterprises ready to IFRS convergence

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