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FINANCIAL AUDIT AND ACCOUNTING SUBCOMMITTEE (FAAS)

Cash Basis IPSAS is principles-based fair presentation cash basis accounting framework
that is developed and maintained by the International Public Sector Accounting Standards
Board (IPSASB).

Cash basis IPSAS is separated into two parts.

Part 1

Part 1 is mandatory. It sets out the requirements which are applicable to all public sector
entities preparing general purpose financial statements under the cash basis of
accounting. It defines the cash basis of accounting, establishes requirements for the
disclosure of information in the financial statements and supporting notes, and deals with
a number of specific reporting issues. Compliance with the Part 1 requirements and
disclosure of additional information when necessary to achieve fair presentation is
mandatory to report that the financial statements have been prepared in accordance with
Cash Basis IPSAS.

Part 1 requires an entity to prepare and present financial statements which include the
following components:

A statement of cash receipts and payments which recognizes all cash receipts, cash
payments, and cash balances controlled by the entity;

Note disclosures including:

Information about the entity:

Information on the accounting policies being applied

Information on the domicile and legal form of the entity, and the jurisdiction(s)
within which it operates
A description of the nature of the entity’s operations and principal activities
A reference to the relevant legislation governing the entity’s operations, if any
The significant entities or sectors of government that are presented in the
financial statements, and changes in the significant entities or sectors that
comprise the reporting entity and were presented in the previous periods
financial statements
Restrictions on cash balances and access to borrowings:

Significant cash balances that are not available for use by the entity
Significant cash balances that are subject to external restrictions
Undrawn borrowing facilities that may be available for future operating
activities and to settle capital commitments, indicating any restrictions on the
use of these facilities

Budgetary basis, period and scope:

Explanation of the budgetary basis and classification basis adopted in the

approved budget
Explanation of the period of the approved budget
Explanation of the entities included in the approved budget

When the entity makes publicly available it’s approved budget, a comparison of budget
and actual amounts either as a separate additional financial statement or as a budget
column in the statement of cash receipts and payments​ . When the financial statements
and the budget are not prepared on a comparable basis, the budget must be reconciled to
total cash receipts and total cash payments, identifying separately any basis, timing and
entity differences. The reconciliation shall be disclosed on the face of the statement of
comparison of budget and actual amounts or in the notes to the financial statements.

Financial statements may be described as complying with Cash Basis IPSAS if they
comply with all the relevant requirements and if they include additional disclosures when
necessary to achieve a fair presentation.

Here is an illustrative financial statement that demonstrates the result of the application of
Part 1 of IPSAS Cash Basis.

Part 2

Part 2 is not mandatory. It identifies additional accounting policies and disclosures that a
public sector entity is encouraged to adopt to enhance the usefulness of its financial
statements for accountability and decision-making purposes and to support its transition
to the accrual basis of financial reporting and adoption of Accrual Basis IPSAS.

Cash Basis IPSAS may be obtained free of charge from IPSASB. You must sign up for an
account on the IPSASB website which grants you access to the IPSAS handbook that
contains this information. The IPSAS handbook is published in three volumes that include
all IPSASB pronouncements. Cash Basis IPSAS is presented in Volume 3.

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