IFAC Public Sector Committee

1
IFAC Public Sector Committee
International Public Sector Accounting Standards
(IPSASs) Presented by Ronald J. Points March
2003
2
PSC Members and Observers

• IFAC-156 member bodies, 114 countries
• PSC Members
• Australia (Chair), Argentina, Canada, France,
  Germany, Hong Kong, Mexico, The Netherlands, New
  Zealand, Norway, South Africa, UK, USA
• PSC Observers
• ADB, European Commission, IASB, IMF, INTOSAI,
  OECD, World Bank, UNDP

3
Standards Development Program

• Stds Program Established late 1996
• Funded ADB, IFAC, IMF, UNDP, World Bank
• Completing first stage
• Commencing second stage

4
Need for Public Sector Accounting Standards
(IPSAS)

• Concern about quality/variability of governmental
  financial reporting
• Lack of transparency/completeness
• Not timely

5
Need for IPSASs

• Necessary element in strengthening the governance
  framework and enhancing transparency
• Set appropriate minimum benchmarks
• - for discharge of accountability, transparency
  
• Provide framework against which audit is
  undertaken

6
Standards Project - Approach

• Underlying philosophy
• Promote adoption of an accrual basis
• Acknowledge wide use of cash basis and
  develop a Cash Basis Standard
• Guidance on transition to accrual basis
• Adopt a Due Process
• Involve the fin. Reporting, budget, GFS/ESA
  community
• (at least 4 months exposure for comment)

7
First Stage Progress to date

• Objectives of First Stage
• Cash basis standard
• Guidance on transition to accrual accounting
• Core set of accrual standards based on IASs where
  appropriate
• Identify public sector specific issues for
  consideration in later stages

8
Cash Basis Progress to date

• ED 9 Financial Reporting under Cash Basis
  (comments closed Nov 2000 41 responses)
• Additional consultation by developing economies
  (30 countries circulated)
• PSC revised structure/content
• Reduced requirements plus encouragements
• St. Receipts/Payments
• Report third party cash settlements
• More flexibility in reporting format
• IPSAS approved for issue (by end January 2003)

9
CONSOLIDATED STATEMENT OF CASH RECEIPTS AND
PAYMENTS FOR YEAR ENDED 31 DECEMBER 200X
200X
Receipts/ (Payments) Controlled by entity
Payments by third parties
(In thousands of currency units)
RECEIPTS
Taxation
Income tax
X
-
-
X
Value-added tax
-
Property tax
X
X
-
Other taxes
-
X
Grants and Aid
X
X
International agencies
X
X
Other Grants and Aid
X
X
Borrowings
X
X
Proceeds from borrowings
Capital Receipts
X
-
Proceeds from disposal of plant equipment
Training activities
X
-
Receipts from trading activities
Total receipts
X
X
10
CONSOLIDATED STATEMENT OF CASH RECEIPTS AND
PAYMENTS FOR YEAR ENDED 31 DECEMBER 200X
200X
Receipts/ (Payments) Controlled by entity
Payments by third parties
(In thousands of currency units)
PAYMENTS
Operations
Wages, salaries and employee benefits
(X)
(X)
(X)
(X)
Supplies and consumables
(X)
(X)
Transfers
(X)
-
Grants
(X)
-
Other transfer payments
(X)
-
Capital Expenditures
Purchase/construction of plant equipment
(X)
(X)
-
Purchase of financial instruments
(X)
(X)
(X)
Loan and Interest Repayments
(X)
-
Repayment of borrowings
-
(X)
Interest payments
(X)
-
Other payments
(X)
(X)
Total payments
(X)
(X)
X
Increase/(Decrease) in Cash
X
Cash at beginning of year
X
N/A
Increase/(Decrease) in Cash
X
N/A
Cash at end of year
N/A
X
11
Transitional Guidance

• Study 14 Transition To Accrual Basis of
  Accounting. Guidance for Governments and
  Government Entities
• A Study (not-authoritative)
• Provides guidance on issues and approaches that
  might be adopted in migration to accrual
• Based on experiences in number of countries
• Intend to update periodically
• Released April 2002

12
Accrual - Progress to Date

• Study 11 Governmental Financial Reporting
• Accrual Basis IPSASs
• 20 IPSASs issued
• identified in attachment at end of slides

13
IPSASs and Exposure Drafts

• All IPSASs
• All current Exposure Drafts
• PSC Update - on most recent PSC meeting
• Key PSC meeting papers
• AVAILABLE FREE OF CHARGE AT
• WWW.IFAC.ORG

14
Process Developments 2002

• Consultative Groups (CG)
• Regional Workshops in conjunction with each PSC
  meeting
• Translations IASB Process for French,
  Spanish,
• National Bodies for others
• Steering Committees (SC)
• Project Advisory Panels (PAP)

15
PSC Work Program 2003

• Public Sector Specific Issues identified in first
  stage
• Steering Committees
• Non-exchange Revenue
• Social Policy Obligations
• Budget Reporting (2003)
• Accounting for Development Assistance (cash
  basis)
• Impairment of government assets

16
PSC Work Program 2003

• GFS/ESA 95 and IPSAS Harmonization
• Heritage Assets
• Monitor IAASB - ongoing
• Care and Maintenance of IPSASs
• Monitor national developments on Public Sector
  Conceptual Framework

17
Non-Exchange Revenue SC

• Project developing an IPSAS to account for
  revenues excluded from scope of IPSAS 9
• Taxes, Grants, Transfers
• SC met in June and Nov 2002
• Members from Canada, Australia, China, Czech
  Republic, FEE, France, New Zealand, Sweden, South
  Africa, UK, USA

18
Social Policy Obligations SC

• Developing an IPSAS on accounting for provisions
  relating to obligations for social policy
  obligations e.g. pensions, health care,
  education
• SC met in in July and Nov 2002
• Members from New Zealand, Australia, Canada,
  China, FEE, IMF, Pakistan, Sweden, UK

19
Budget Reporting Project

• Directed at enhancing budget reporting in the
  public sector
• Stage 1 Research paper identifying
• best practice in budget reporting
• relationship with PSC mandate
• Steering Committee to be established in 2003,
  chaired by PSC Member from USA

20
ATTACHMENT

• Cash Basis IPSAS
• Cash Basis IPSAS Financial Reporting under the
  Cash Basis of Accounting
• Approved for issue (end January 2003)
• Comprehensive Cash Basis IPSAS
• Includes requirements and encouragements
• Transition from Cash to Accrual
• Study 14 Transition to Accrual Basis of
  Accounting
• Issued in April 2002
• to provide guidance

21
ATTACHMENT

• Accrual Basis IPSASs Issued
• IPSAS 1 Presentation of Financial Statements
• IPSAS 2 Cash Flow Statements
• IPSAS 3 Net Surplus or Deficit for the Period,
  Fundamental Errors and Changes in
  Accounting Policies
• IPSAS 4 The Effects of Changes in Foreign
  Exchange Rates
• IPSAS 5 Borrowing Costs
• IPSAS 6 Consolidated Financial Statements and
  Accounting for Controlled Entities

22
ATTACHMENTAccrual IPSAS (cont.)

• IPSAS 7 Accounting for Investments in Associates
• IPSAS 8 Financial reporting of 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

23
ATTACHMENTAccrual IPSASs (cont.)

• IPSAS 14 Events After the Reporting Date
• IPSAS 15 Financial Instruments Disclosure and
  Presentation
• 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