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Ipsas Vs Ifrs
Ipsas Vs Ifrs
IPSAS
Public Sector:
or
IFRS?
By: Caroline Aggestam-Pontoppidan
This movement is strongly pur- accounting and reporting on the adopted full accrual accounting.
sued by the international standards- allocation and use of total economic This has been done either for the
setter, the International Public resources at the disposal of manag- entire government accounts or at the
Sector Accounting Standards Board ers. Recently, Ian Ball of the IFAC ministry level.8
(IPSASB)1, issuer of International strongly re-emphasized the message Public sector entities that seek to
Public Sector Accounting Standards of the incoming chairman of the apply a set of internationally recog-
(IPSAS).2 The International Federa- International Accounting Standards nized accounting standards in their
tion of Accountants (IFAC) issued a Board (IASB), Hans Hoogervorst5 that move toward accrual accounting
series of recommendations3 for con- without transparency, there can be most often turn to IPSAS issued by
sideration by the G20 countries at no enduring stability at a 2011 inter- the IPSASB, an independent board of
their meeting in June 2010. IFAC spe- national conference on Trust and IFAC.9 A few countries have recently
cifically points out that: Accountability in Public Financial chosen International Financial
Management.6 Ball added to Hooger- Reporting Standards (IFRS). Austra-
many governments adhere to the vorsts statement: I believe that with- lia, for example, became one of the
cash basis of accounting, IFAC and out transparency, neither can there first countries to adopt IFRS within
the [IPSASB] encourage the adop- be trust or accountability. And as a local governments for the 20052006
tion of accrual-based accounting as it basis for what follows, I should be financial year. Another example is the
reinforces the principles of transpar- clear that a crucial element of trans- United Kingdom, where the accounts
ency and accountability. Under the parency in the public sector is accrual of central government departments
accrual basis of accounting, transac- accounting.7 and entities in the wider public sec-
tions and other events are recognized At the same time, though, aca- tor are to be produced using IFRS as
when they occur (and not only when demics are debating whether the of March 2010. This article provides
cash or its equivalent is received or accounting needs of the public sector an overarching introduction to the
paid). Therefore, transactions and are well served by accrual account- definition of a government business
events are recognized and reported in ing practices. Although the debate enterprise (GBE), as provided in
the financial statements of the peri- continues, the trend in practice IPSAS, as a determinant for apply-
ods to which they relate.4 seems clearthe number of public ing IPSAS or IFRS for a public sector
entities and governments that have entity. It also briefly discusses some
In addition, the Organisation for or are in the process of adopting key arguments for the application of
Economic Co-operation and Devel- accrual accounting is continuously IFRS versus IPSAS by public entities
opment (OECD) has stated that increasing. Today approximately moving toward accrual accounting.
accrual accounting is critical to enable one-third of OECD countries have