Report by International Public Sector Accounting Standards Board (IPSASB) Mike Hathorn Chair IPSASB

IFAC IPSASB

Overview • • • • •

Background Recent exposure drafts & pronouncements Revised strategic themes Current projects Proposed new projects IPSASB UPDATE

2

IFAC IPSASB IFAC IPSASB

IPSASB • Develops International Public Sector Accounting Standards (IPSASs) - cash and accrual • 24 Accrual Basis IPSASs and a Comprehensive Cash Basis IPSAS

• Facilitates convergence of national and international public sector standards • Financial support from World Bank, ADB, UN, EC, Canadian, Chinese, NZ and Swiss governments, CICA • Relocation to Toronto IPSASB UPDATE

3

IFAC IPSASB

IPSASB Process • Meetings 3 times per year

• Open to the public • Materials available to those registered • Transparent consultative due process with minimum 4 month exposure periods IPSASB UPDATE

4

IFAC IPSASB

Available on the IPSASB Web Site: • All IPSASs (24 accrual plus 1 cash basis) – (including Spanish and French translations) • All current Exposure Drafts and other publications • IPSASB Meeting Highlights • IPSASB E-Mail • IPSASB Agenda Papers (before each meeting) FREE OF CHARGE AT: WWW.IPSASB.ORG IPSASB UPDATE

5

IFAC IPSASB

IPSASB Members 2007 Accounting Profession -15 members UK (Chair), Argentina, Australia, Canada, China, France, India, Israel, Japan, Mexico, Netherlands, New Zealand, Norway, South Africa, USA

Public Members -3 Italy, Switzerland, USA Observers ADB, EU, IASB, IMF, INTOSAI, OECD, UN, UNDP, World Bank IPSASB UPDATE

6

IFAC IPSASB

Adoption • UN System (28 bodies) • OECD, NATO (21 bodies), EC, IFAC, INTERPOL • 58 countries have agreed processes or have a project in place to adopt IPSASs or align with IPSASs IPSASB UPDATE

7

IFAC IPSASB

Recent exposure drafts and pronouncements • ED 32, “ Financial Reporting under the Cash Basis of Accounting-Disclosure Requirements for Recipients of External Assistance”. • IPSAS 22, “Disclosures 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” • Revision to 11 accrual basis IPSASs and revised Preface IPSASB UPDATE

8

IFAC IPSASB

IPSAS 23: Non-exchange Revenue (1) • IPSAS 23 issued in January 2007 • Key principles of ED 29 retained • Some modifications of emphasis, presentation and format in areas such as: – Social security contributions – In-kind services – Transitional provisions IPSASB UPDATE

9

IFAC IPSASB

IPSAS 23: Non-exchange Revenue (2) • Asset/liability approach • Assets recognized from non-exchange transactions initially measured at fair value at date of acquisition

• Stipulations -conditions and restrictions • Conditions - both performance and return obligations – Unfulfilled conditions give rise to liabilities • Five year transitional provision for taxes/Three years for other non-exchange transactions IPSASB UPDATE

10

IFAC IPSASB

Revised Strategic Themes • Conceptual framework for public sector • Public sector specific issues including convergence with statistical bases where appropriate • IFRS convergence • Promotion & communication

IPSASB UPDATE

11

IFAC IPSASB

Conceptual Framework (1) • Objective to develop a public sector conceptual framework • Collaborative project with National StandardSetters • Divergence from IASB framework only where necessary to reflect public sector differences • Stand-alone framework will be more than an interpretation IPSASB UPDATE

12

IFAC IPSASB

Conceptual Framework (2) • IPSASB Co-ordination and Leadership • Process: Consultation Papers followed by omnibus ED • Four groups of Consultation Papers • First Consultation Papers late 2007/early 2008 • ED: 2011 • Full framework: 2012

IPSASB UPDATE

13

IFAC IPSASB

Conceptual Framework (3) Group 1 Consultation Papers • Objectives of financial reporting (United Kingdom ASB) • Scope of financial reporting (South African ASB) • Qualitative Characteristics (Norway NIPA) • Reporting Entity (Australian AASB)

IPSASB UPDATE

14

IFAC IPSASB

Service Concessions • Collaborative project involving NSS and Other Bodies, including the OECD • Primary resources to be provided by US GASB • IFRIC Interpretation (IFRIC 12) deals only with operators • Survey • Close collaboration with IASB/IFRIC (IFRIC representative on subcommittee) IPSASB UPDATE

15

IFAC IPSASB

Likely New Projects for Initiation in 2007 • Firm decision to be made at March 2007 IPSASB Meeting – Heritage Assets – Financial Instruments – Business Combinations – Fair value – Non-current Assets Held for Sale and Discontinued Operations – Updating of existing IPSASs

IPSASB UPDATE

16

International Federation of Accountants www.ifac.org

IFAC IPSASB

ATTACHMENTS

IPSASB UPDATE

18

IFAC IPSASB

Budget Reporting • IPSAS 24 “Presentation of Budget Information in Financial Statements” accrual basis • Amendments to Cash Basis IPSAS – additional section 1.10 “Presentation of Budget Information in Financial Statements”

IPSASB UPDATE

19

IFAC IPSASB

Budget Reporting • Prior – budget information comparison encouraged only if on same basis • Entities making budgets publicly available (does not require public availability) • Basis of preparation does not need to be the same • Comparison is on the basis of the budget • Effective date January 1 2009 – earlier adoption encouraged

IPSASB UPDATE

20

IFAC IPSASB

Budget Reporting • Comparison of actual amounts to both original and final budget (separate financial statement if not same basis) • Explanation of material differences - financial statements or x-ref public documents • Reconciliation of budget based actual with financial statement actual when bases differ • Explanation of differences between original and final budget - financial statements or x-ref public documents IPSASB UPDATE

21

IFAC IPSASB

Disclosure of External Assistance (Cash Basis) • OECD and Multilateral Development Banks harmonize/reduce compliance costs • Differing views • Approved revised ED: – required and encouraged disclosures – field testing ED

IPSASB UPDATE

22

IFAC IPSASB

Social Policy Obligations • Reservations over extent of liability recognized & mirroring of existing approaches • Reservations reinforced by majority view in FASAB Preliminary Issues Paper • Change of approach to presentation and disclosure (would exclude recognition) • Present obligation for cash transfers when all eligibility criteria have been met

IPSASB UPDATE

23

IFAC IPSASB

Social Policy Obligations • Disclosed liability: present value of future cash flows to all eligible participants at reporting date • No present obligation in respect of individual goods and services (e.g. education and health) • Not a fiscal sustainability statement • Acknowledgement of importance of fiscal sustainability statements and will be addressed initially in conceptual framework project • Approach early step - not last word IPSASB UPDATE

24

IFAC IPSASB

Heritage Assets • • • •

Currently no requirement to recognize If recognize, disclose based on IPSAS 17 Permitted to use IPSAS 17 measurement approach Range of Responses to February 2006 Consultation Paper • Project brief to March meeting • Separate ED/Standard or amendment to IPSAS 17?

IPSASB UPDATE

25

IFAC IPSASB

General Improvements Project • December 2003 - IASB’s Improvements Project – reduce or eliminate alternative, redundancies and conflicts • Deal with some convergence issues • Black and grey letters equal authority • Clarify hierarchy • Make other improvements

IPSASB UPDATE

26