Financial Management Institute Public Sector Management Workshop

1. Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting Standards Board (IPSASB) Stuart Barr (Technical Advisor to Sheila Fraser – INTOSAI) INTOSAI - PSC June 2009

2. Overview of Session • Introduce IFAC and IPSASB • Discuss IPSASB’s mission and strategic themes • Provide an overview of various projects under way and planned • Q & A INTOSAI - PSC June 2009

3. IFAC What is IFAC? • Expanding organization – currently, 157 member bodies and associates in 123 countries • Represents over 2.5 million accountants in public practice, education, government service, industry and commerce • Sets standards for auditing & assurance, ethics, education and public sector accounting • Also issues guidance to support professional accountants in business, small and medium practices, and developing nations INTOSAI - PSC June 2009

4. What is IPSASB? • Standing IFAC Board • Consists of 18 volunteer Members from around the world, including two from Canada: • 15 Members nominated through IFAC member bodies and 3 members serve as public members • Experience and expertise in public sector financial reporting • Ministries of finance, government audit institutions, public practice and public members – but, they serve as individuals not as representatives of their organization • Issues and promotes benchmark guidance and facilitates the exchange of information among its constituents INTOSAI - PSC June 2009

5. Who is IPSASB? 2009 Membership • ChairW: • Mike Hathorn, Partner Moore Stephens, UK • Deputy Chair: • Erna Swart, CEO, Accounting Standards Board, South Africa • Members: • Peter Batten, Assistant Director, Treasury & Finance, Victoria, Australia • David Bean, Director of Research and Technical Accounting, GASB, USA • Marie-Pierre Cordier, Cours des Comptes, France • YossiIzkovich, Chief Accountant, Ministry of Finance, Israel • Dr. Hong Lou, Deputy Director-General, Treasury Dept., Ministry of Finance, Peoples Republic of China • Thomas Müller-Marqués Berger, Ernst & Young, Germany • . • Anne Owuor, Kenya Power & Lighting Co. Ltd • Bharti Prasad, Deputy Comptroller and Auditor General, Delhi, India • Ron Salole, Vice-President, Standards, Canadian Institute of Chartered Accountants • Tadashi Sekikawa, Deloitte Touche Tohmatsu, Japan • Frans van Schaik, Deloitte Touche Tohmatsu, The Netherlands • Ken Warren, The Treasury, New Zealand • Public Members: • Prof. Andreas Bergmann, Zurich University of Applied Sciences, Switzerland • Sheila Fraser, Auditor General, Government of Canada • Prof. Stefano Pozzoli, Italy INTOSAI - PSC June 2009

6. How the IPSASB Works • Generally holds 3 meetings per year • Meetings are open to the public • Transparent due process – available on IPSASB web site at www.ifac.org/PublicSector : • All meeting materials are publicly available • Approved minutes are posted • Project summaries are updated after each meeting • Rules of the road for convergence projects http://web.ifac.org/download/IPSASB_Process_Final_version_Oct_08.pdf INTOSAI - PSC June 2009

7. IFRS (Private Sector) IPSASs (Public sector) Rules of the Road for Convergence Projects • Terminology • Public sector guidance • Public sector issues • Public sector examples 1 2 INTOSAI - PSC June 2009

8. Strategic Partnerships • The IPSASB receives assistance from various of its constituents in developing its standards: • Supported by Canadian, US and Swiss governments • United Nations – major adopter • IFAC – Developing Nations Committee • IASB • IMF • INTOSAI • National Standard Setters, including the CICA – provide staff support • World Bank and Development Banks (IADB, ADB) INTOSAI - PSC June 2009

9. Keep up to date on IPSASB projects • IPSASB Project Pages – all IPSASB projects http://www.ifac.org/PublicSector/ • IFAC eNews – Free electronic newsletter • Enroll at www.ifac.org INTOSAI - PSC June 2009

10. To serve the public interest by developing high quality accounting standards for use by public sector entities around the world, including international organisations, in the preparation of general purpose financial statements. The IFAC IPSASB Mission INTOSAI - PSC June 2009

11. What the IFAC IPSASB Does • The IPSASB achieves its objectives by: • Issuing International Public Sector Accounting Standards (IPSASs) • Publishing other documents which provide guidance on issues and experiences in financial reporting in the public sector • Promoting their acceptance and the international convergence to these standards INTOSAI - PSC June 2009

12. IPSASB Publications • 26 IPSASs for accrual-basis financial statements • Including French and Spanish translations • Cash Basis IPSAS • 6 Exposure Drafts (EDs) for comment • 1 ED approved at May 2009 meeting (Annual Improvements to IPSASs) • 14 Studies • Downloadable free of charge at: http://www.ifac.org/Store/Category.tmpl?Category=Public%20Sector%20Accounting INTOSAI - PSC June 2009

13. What are the IPSASs? • The IPSASs represent international best practice in financial reporting by public sector entities • In many jurisdictions, the application of the requirements of IPSASs will enhance the accountability and transparency of the financial reports prepared by governments and their agencies • High-quality financial reporting and financial management by international organizations and governments worldwide is vital to economic growth and stability for both developed and developing countries - this is particularly important now because of the global economic crisis INTOSAI - PSC June 2009

14. Public Sector Studies • 14 studies issued to date • Most recent – Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities • This Study is intended to assist governments and government entities wishing to migrate to the accrual basis of accounting in accordance with IPSASs INTOSAI - PSC June 2009

15. Adoption of IPSASs to date: UN System (28 bodies), including UN World Food Program OECD, NATO (21 bodies), EC, IFAC, INTERPOL Swiss Government Government of Israel Government of South Africa Over 70 countries have agreed processes or have a project in place to adopt IPSASs or align with IPSASs BRIC countries committed to adopt Strong Evidence of Progress INTOSAI - PSC June 2009

16. IPSASB Strategic Themes • Public sector conceptual framework • IFRS Convergence • Public sector specific projects • Promotion, communications and outreach INTOSAI - PSC June 2009

17. Public Sector Conceptual Framework • Series of interrelated papers • Phase 1 Consultation Paper (CP) issued Sept 2008 that addressed: • scope of the financial statements • objectives & users of general purpose financial statements • reporting entity • qualitative characteristics of financial information • Phase 2 CP to address: • definition & recognition of elements of financial assets (e.g., assets, liabilities, revenues and expenses) • Phase 3 CP to address the measurement bases consistent with the objectives of financial reporting, the qualitative characteristics of financial information and the recognition criteria • In May 2009, the IPSASB discussed the responses to CP1 as well as preliminary drafts of CP2 and CP3 INTOSAI - PSC June 2009

18. Conceptual Framework (cont’d) • This is not a convergence project • The IPSASB is not bound by the timetable and principles in the IASB project • The conceptual framework will help answer questions such as: • Is the recent North American intervention to save GM an investment of the governments? • Is it a public sector entity because of public ownership? • Is it something else? • If it belongs on the relevant governments’ books on what basis and at what amount should it be measured? INTOSAI - PSC June 2009

19. IFRS Convergence • Target date December 31, 2009 for IFRS as at December 31, 2008 • Major projects to be completed: • Financial instruments • Intangible assets • Entity combinations • Agriculture • Renewed focus on regular liaison with IASB (Chair, Vice-Chair, Public Member) INTOSAI - PSC June 2009

20. IFRS Convergence EDs Approved • Four Exposure Drafts (EDs) were approved at IPSASB’s February 2009 meeting: • ED 36 – Agriculture (IAS 41) • ED 37 – Financial Instruments: Presentation (IAS 32) • ED 38 – Financial Instruments: Recognition and Measurement (IAS 39) • ED 39 – Financial Instruments: Disclosures (IFRS 7) INTOSAI - PSC June 2009

21. IFRS Convergence EDs Approved (cont’d) • Two EDs were approved out-of-session and issued in May: • ED 40 – Intangible Assets (IAS 38) • ED 41 – Entity Combinations from Exchange Transactions (IFRS 3) • All the EDs are available at: http://www.ifac.org/PublicSector/ExposureDrafts.php INTOSAI - PSC June 2009

22. Financial Instruments • The IPSASB’s quick response in converging these standards recognizes the important public sector role in addressing the global economic crisis • Convergence with IFRS 7, IAS 32 and IAS 39 • Changes made only to address specific public sector issues (e.g., in ED 39, additional disclosures proposed for concessionary loans) • The IPSASB has just issued a press release indicating it will proceed with developing these standards – any changes made by the IASB will be addressed in due course • ED response date: July 31, 2009 • Staff contact: johnstanford@ifac.org INTOSAI - PSC June 2009

23. Agriculture • IAS 41 convergence • Minor changes in terminology • Inclusion of non-exchange transactions • Scope excludes biological assets held for the supply of services • ED response date: June 30, 2009 • Staff contact: johnstanford@ifac.org INTOSAI - PSC June 2009

24. Intangible Assets • IAS 38 convergence • Incorporates SIC-32 guidance for web site costs • Does not address powers to grant rights and to tax • ED response date: August 15, 2009 • Staff contact: joykeenan@ifac.org INTOSAI - PSC June 2009

25. Entity Combinations • Two projects • Entity Combinations from Exchange Transactions • IFRS 3 Convergence • ED response date: August 15, 2009 • Entity Combinations from Non-Exchange Transactions • Public sector specific project (e.g., recent government interventions) • Work is under way • Staff contact: annettedavis@ifac.org INTOSAI - PSC June 2009

26. Public Sector Specific Projects • Long-term fiscal sustainability • Review of cash basis standard • Service concession arrangements (SCAs) • Social benefits • Heritage assets • See IPSASB project pages for additional details and contact information • http://www.ifac.org/PublicSector/Projects.php#InProgress INTOSAI - PSC June 2009

27. Long-term Fiscal Sustainability • Increased importance in light of public sector interventions to respond to the global economic crisis • The IPSASB discussed a draft Consultation Paper (CP) at its May 18-21, 2009 meeting • Project will consider issues including: • Defining what is meant by “fiscal sustainability” • Explaining why it is important • Exploring how it can be reported in GPRS, including what indicators should be reported • Staff contact: johnstanford@ifac.org INTOSAI - PSC June 2009

28. Review of Cash Basis IPSAS • Primary objective is to identify the major technical issues that public sector entities in developing economies have encountered, or are anticipated to encounter, in implementing the standard • The IPSASB will then consider whether to modify the Standard in light of these difficulties and/or whether to provide further guidance on its application • The review will also identify whether additional reporting requirements should be added to the standard • Staff contact: paulsutcliffe@ifac.org INTOSAI - PSC June 2009

29. Service Concession Arrangements • CP issued in March 2008 • Respondents expressed broad support for the proposed views in the CP • Although it uses a control-based approach as IFRIC 12 to determine if the grantor should recognize an asset, it is not a convergence project • Work is under way to develop an ED that will: • Define an SCA • Determine when to report the property as an asset using a control-based approach • Provide accounting and reporting guidance and examples in a variety of scenarios, including when the control criteria are not met • Give guidance on accounting for and reporting guarantees, contingent liabilities and contingent assets related to SCAs • Staff contact: joykeenan@ifac.org INTOSAI - PSC June 2009

30. Promoting Acceptance of the IPSASs • Members and staff are involved in ongoing and extensive promotion, communications and outreach activities both within their own jurisdictions and internationally to promote the IPSASs • Widespread adoption is our ultimate goal INTOSAI - PSC June 2009

31. Looking Ahead • Completion of convergence initiative and completion of the conceptual framework will allow increased focus on public sector issues • Improve consistency, transparency and accountability in financial reporting among public sector entities • Improve harmonization between statistical and accrual bases of accounting INTOSAI - PSC June 2009

32. Key Challenges for IPSASB • Meeting target for IFRS Convergence • Growing demand for standards in light of the global financial crisis • Credibility of IPSASB – Board/staff • Completion of Conceptual Framework • Continuing relevance to public sector INTOSAI - PSC June 2009

33. International Federation of Accountants www.ifac.org INTOSAI - PSC June 2009