Course : ACCT6313 – Public Sector Accounting

Effective Period : September 2019

International Public Sector

Accounting Standards - an
Introduction

Session 2
 Learning Objectives

After studying this Chapter you should understand

• The objectives of International Standard for NFP
entities
• Nature and Scope of IPSAS
• IPSAS Board and issued standards

© 2016 John Wiley & Sons, Inc. All rights

reserved. 2
 Overview on IPSAS

Mission
• Establish and promote adherence to high quality
professional standards
• Further the international convergence of such
standards
• With the intention of the public organizations of the
whole world
• In the optics of the financial statements of general use
• Speak out on public interest issues where the
profession’s voice is most relevant
 Overview on IPSAS

• Rationale of Accounting Reforms

• Accounting = Basis of decisions
• Development decisions in particular
» Infrastructure
» Networks
» Public services
• Judgment by decision makers requires identical
standards
• Credibility increase
• Education facilitated
 Overview on IPSAS

• Value added of Cash based IPSAS

• 1 Standard Cash Basis

Advantages:
• Full coverage of all cash transactions
• Consolidation

Disadvantages:
• Too basic for countries which are on modified
accrual
• Scope of consolidation is controversial
 Overview on IPSAS

• Value added of Accrual based IPSAS

• 26 Standards Accrual Basis

Advantages:
• Economic situation and flows
• Resource allocation
• Similar to GFS
• Risks

Disadvantage:
• Leap for many countries
 Overview on IPSAS

Country A Cash based Country B Accrual

IPSAS based IPSAS

Step 1 Step 2 Step 3

 Overview on IPSAS

• Structure of IPSAS
• Recognition

• Measurement

• Disclosure
 Overview on IPSAS

• Organization of the IPSAS-Board

• 18 members
• President M. Mike Hathorne
(Scottish/GB)
• 3 meetings of 4 days per year,
English language
• At least one phase of consultation
(“Exposure Draft“)
• Qualified majorities required (2/3,
3/4)
 Two Ways to Implement IPSAS
– Direct or indirect implementation
IPSAS

Legislation referring National accounting

to IPSAS standards

Legislation referring to
national accounting
standards

Accounting
Manual

Implementation
 Appendix
Overview on IPSAS - Current
Standards

• Accrual Accounting Standards (2007)

• IPSAS 1 – Presentation of Financial Statements
• IPSAS 2 – Cash Flow Statements
• IPSAS 3 – Accounting Policies, Changes in Accounting
Estimates and Errors
• IPSAS 4 – The Effects of Changes in Foreign
Exchange Rates
• IPSAS 5 – Borrowing Costs
• IPSAS 6 – Consolidated and Separate Financial
Statements
 Appendix
Overview on IPSAS - Current
Standards

• IPSAS 7 – Investments in Associates

• IPSAS 8 – Interests in Joint Ventures
• IPSAS 9 – Revenue from Exchange Transactions
• IPSAS 10 – Financial Reporting in Hyperinflationary
Economies
• IPSAS 11 – Construction Contracts
• IPSAS 12 – Inventories
• IPSAS 13 – Leases
• IPSAS 14 – Events After the Reporting Date
• IPSAS 15 – Financial Instruments: Disclosure and
Presentation
 Appendix
Overview on IPSAS - Current
Standards
• IPSAS 16 – Investment Property
• IPSAS 17 – Property, Plant and Equipment
• IPSAS 18 – Segment Reporting
• IPSAS 19 – Provisions, Contingent Liabilities and Contingent
Assets
• IPSAS 20 – Related Party Disclosures
• IPSAS 21 – Impairment of Non-Cash Generating Assets
• IPSAS 22 – Disclosure of Information About the General
Government Sector
• IPSAS 23 – Revenue from Non-Exchange Transactions (Taxes
and Transfers)
• IPSAS 24 – Presentation of Budget Information in Financial
Statements
• IPSAS 25 - Employee Benefits
• IPSAS 26 - Impairment of Cash-generating assets
 References
• Prof Andreas Bergmann, Robin Braun, The Value
Added of IPSAS, PEMPAL Workshop Istanbul;
February 25, 2008