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IPSASB Publishes Exposure Draft 56, The Applicability of IPSASs

Jul 30, 2015 | New York, New York | English

The International Public Sector Accounting Standards Board® (IPSASB®) today released for comment Exposure Draft (ED) 56, The Applicability of IPSASs.

ED 56 proposes to:

  • Revise the Preface to International Public Sector Accounting Standards to provide the characteristics of public sector entities for which IPSASs are intended;
  • Delete the definition of Government Business Enterprises (GBEs) in IPSAS 1, Presentation of Financial Statements; and
  • Amend the scope section of each International Public Sector Accounting Standard (IPSAS) and Recommended Practice Guideline (RPG) by removing the paragraph that states that these pronouncements do not apply to GBEs.

ED 56’s proposed changes address constituents’ concerns about the application of IPSASs to public sector entities. Currently, each IPSAS includes a statement that it does not apply to GBEs, which are expected to be commercially-oriented public sector entities. The term “Government Business Enterprise” is defined in IPSAS 1, Presentation of Financial Statements.

The IPSASB received feedback that a wide range of entities are described as GBEs, but some of these entities clearly do not meet the IPSASB definition of a GBE. In other cases, there are different interpretations of the GBE definition.

“The proposals in this Exposure Draft provide a more transparent way to communicate the types of public sector entities that the IPSASB considers when developing IPSASs and RPGs,” said IPSASB Chair Andreas Bergmann. “They use a high-level, principles-based approach that draws on The Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities.”

“These proposals acknowledge the role of regulators in determining the accounting standards to be applied by different entities in their jurisdictions, and address constituents’ concerns about differing interpretations of the GBE definition,” Prof. Bergmann added. “We look forward to hearing whether constituents support the changes to IPSASs and RPGs proposed in this Exposure Draft or present alternative views.”

Publication of ED 56 follows the IPSASB’s consideration of responses to a Consultation Paper (CP), The Applicability of IPSASs to Government Business Enterprises and Other Public Sector Entities. The CP proposed two main approaches to communicate the IPSASB’s view of the entities for which it develops IPSASs. The first approach involved describing the characteristics of public sector entities for which IPSASs are intended. The second approach would have retained the definition of a GBE in modified form, potentially narrowing it to profit-seeking public sector entities.

A large majority of respondents to the CP supported the first approach of providing the characteristics of public sector entities for which IPSASs are intended using IPSASB’s current literature, rather than retaining and improving the definition of a GBE. The proposals in ED 56 give effect to that approach.

How to Comment
To access the ED and the At-a-Glance summary of the ED, or to submit a comment, please visit the IPSASB website at Comments on the Exposure Draft are requested by November 30, 2015. The IPSASB encourages IFAC® members, associates, and regional accountancy bodies to promote the availability of this Exposure Draft to their members and employees.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. It receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the Chartered Professional Accountants of Canada, the South African Accounting Standards Board, and the governments of Canada, New Zealand, and Switzerland. The structures and processes that support the operations of the IPSASB are facilitated by IFAC.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of over 175 members and associates in 130 countries and jurisdictions, representing approximately 2.8 million accountants in public practice, education, government service, industry, and commerce.