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IPSASB Issues Guidance on the Capitalization of Borrowing Costs

Nov 3, 2021 | New York | English

The International Public Sector Accounting Standards Board® (IPSASB®) has issued Amendments to IPSAS 5, Borrowing Costs – Non-Authoritative Guidance.

The new pronouncement adds implementation guidance and illustrative examples to IPSAS 5. The new material illustrates how the existing principles for when borrowing costs can be capitalized should be applied in various regularly encountered public sector contexts. No amendments are proposed to the authoritative material in IPSAS 5, and the existing option to expense or capitalize borrowing costs is retained.

“We undertook this project to illustrate how to apply existing principles in IPSAS 5 to scenarios that are unique to the public sector,” said IPSASB Chair Ian Carruthers. “This new guidance should support our constituents in applying the existing standard to the practical challenges they have identified in determining which borrowing costs can be capitalized and when.”

This illustrative guidance addresses public sector specific issues by focusing on transactions associated with capitalizing borrowing costs when funds are borrowed by a related entity or centralized lending program. The additional guidance facilitates the preparation of financial reporting information that is relevant, faithfully representative, and comparable for these important public sector transactions. 

About the IPSASB

The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact

About the Public Interest Committee

The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.