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IFAC Public Sector Committee

IFAC Public Sector Committee. International Public Sector Accounting Standards (IPSASs) Presented by Ronald J. Points March 2003. PSC Members and Observers. IFAC-156 member bodies, 114 countries PSC Members

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IFAC Public Sector Committee

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  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 IPSASFinancial 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

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