ADAPTATION OF SPANISH PUBLIC SECTOR ACCOUNTING STANDARDS TO IPSAS

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ADAPTATION OF SPANISH PUBLIC SECTOR ACCOUNTING
STANDARDS TO IPSAS

• Belén Hernández
• BHernandez_at_igae.meh.es

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WHY A NEW PUBLIC ACCOUNTING REGULATION IN SPAIN?

• Adaptation to the International Public Sector
  Accounting Standards (IPSAS) developed by IPSASB
• Harmonizing with the new Spanish bussiness
  accounting regulation (2007) adapted to secondary
  Community legislation directives on accounting
  and regulations issued by the European Commission
  adopting International Accounting Standards.
• Suplying information about new transations which
  werent analyzed in the current public accounting
  regulation.
• Faithful image of Financial Statements.

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SPANISH NEW PUBLIC ACCOUNTING REGULATION SCOPE
OF APPLICATION

• SCOPE OF APLICATION ADMINISTRATIVE PUBLIC SECTOR
  
• STATE SECTOR
• State Sector WILL apply the new public accounting
  standards from 2011
• AUTONOMOUS REGIONS
• Autonomous Regions COULD apply the new public
  accounting standards from 2011
• LOCAL BODIES
• Local bodies WILL apply the new public accounting
  standards in the future

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SPANISH PUBLIC ACCOUNTING REGULATION

• Public Accounting regulation provides two
  recording systems completely integrated
• Financial accountancy
• Budgetary accountancy
• Financial accountancy applies a full accrual
  based system
• Budgetary accountancy almost applies a cash
  based system

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SPANISH NEW PUBLIC ACCOUNTING REGULATION
STRUCTURE

• Conceptual framework
• Recognition and measurement rules
• Financial statements
• Chart of accounts
• Accounting Definitions and relations

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I. CONCEPTUAL FRAMEWORK

• Faithful image of financial statements
• Qualitative characteristics of financial
  statements
• Public accounting standards
• Elements of financial statements
• Recognition of the elements of financial
  statements
• Measurement of the elements of financial
  statements

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• CONCEPTUAL FRAMEWORK
• 1. Faithful image of financial statements

• Financial statements provide information that is
  useful to a wide range of users in making
  economic decisions and to account for all the
  operations to the Court of Auditors.
• The objective of financial statements is to show
  a faithful image of the assets, financial
  situation, results and budgetary performance of
  the entity
• Transations must be accounted for and presented
  in accordance with their substance and economic
  reality and not merely their legal form.

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• CONCEPTUAL FRAMEWORK
• 2. Qualitative characteristics of the
  information provided in financial statements

• Understandability Information must be readily
  understable by users.
• Relevance Information must influence the
  economic decisions of users by helping them
  evaluate past, present or future events or
  confirming or correcting their past evaluations
• Reliabity It is free from material error and
  bias and can be depended upon by users to
  represent faithfully that which it purports to
  represent.
• Comparability Users must be able to compare the
  financial statements of an entity through time in
  order to identify trends in its financial
  position and performance and to compare the
  financial statements of different entities in
  order to evaluate their relative financial
  position, performance and changes in financial
  position.

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• CONCEPTUAL FRAMEWORK
• 3. Public accounting standards

• Economic standards
• Going concern
• Accrual basis
• Consistency over time
• Prudence
• No compensation
• Materiality
• Budgetary standars
• Budgetary allocation
• Use of resources for generic purposes

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• CONCEPTUAL FRAMEWORK
• 4. Elements of the financial statements

• Elements directly related to the measurement of
  financial position
• Assets
• Liabilities
• Equity
• Elements directly related to the measurement of
  performance
• Income
• Expenses
• Elements related to Budget execution
• Budgetary income
• Budgetary expenses
• Elements related to cash flow
• Cash uses
• Cash resources

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• CONCEPTUAL FRAMEWORK
• 5. Recognition of the elements of financial
  statements

• Recognition is the process of incorporating in
  the financial statements an item that meets the
  definition of an element and satisfies the
  criteria for recognition.
• An item that meets the definition of an element
  should be recognised if
• It is probable that any future economic benefit
  or service potencial associated with the item
  will flow to or from the entity, and
• the item has a cost or value that can be measured
  with reliabity.

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• CONCEPTUAL FRAMEWORK
• 6. Measurement of the elements of financial
  statements

• Measurement is the process of determining the
  monetary amounts at which the elements of the
  financial statements are to be recognised and
  carried in the financial statements.
• A number of different measurement bases are
  employed to different degrees and in varying
  combinations in financial statements. They
  include the following
• Historical cost
• Fair value
• Net realisable value
• Present value
• Carrying amount

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III. FINANCIAL STATEMENTS

• Balance sheet
• Economic and asset result statement
• Statement of Changes in Equity
• Cash flow statement
• Cash Balance of the budget
• Notes and supplementary schedules