Submit an Issue to the IPSASB Application Group

Any individual or organization may submit technical or application issues for consideration by the IPSASB Application Group (IAG). Users are encouraged to submit issues they’ve encountered when applying our standards to specific transactions or events. Submitting issues will help ensure IPSAS continue to reflect evolving practice and remain practical and understandable for everyone. For more information on the purpose of the IAG, issue identification, issue selection, and the IPSASB Staff’s analysis process, please refer to the IAG’s Operating Procedures and the video below about the group.

The submission should include the following:

1. Description of the Issue

Provide a detailed explanation of the situation you're encountering. This should include:

  • The nature of the transaction or event in question;
  • All relevant facts and circumstances;
  • Relationships between the parties involved;
  • Any unusual aspects of the transaction; and
  • If applicable, explain the economic or policy rationale behind the transaction.

2. Specific Question(s) for the IAG

Clearly state the technical accounting question(s) you believe need clarification or interpretation from the IAG.

3. Current or Emerging Practice

Describe how the issue is currently being handled in practice. This includes:

  • The different accounting treatments that are being used (if any);
  • Reference to the relevant IPSAS requirements;
  • Any observed inconsistencies or areas where practice varies; and
  • If available, your preliminary analysis of the issue and proposed accounting treatment.

4. Why the IAG Should Address This Issue

Explain why the issue merits review by the IAG. Specifically, address the following:

  • Is this a public sector-specific matter?
  • Is the issue expected to be common?
  • Is the issue expected to have a significant or material impact?
  • Does the issue point to gaps or ambiguity in existing IPSAS guidance that are leading to inconsistent application?
  • Is the issue sufficiently narrow in scope and limited to a single or limited number of IPSAS Standards?

Please submit all materials in English. 

Submissions to the IPSASB Application Group are for consideration and analysis only; the IPSASB may not provide direct responses or authoritative interpretations. However, staff may contact submitters to inform them if their issue will be discussed further or to request additional information or clarifications.

  • Responses from the IPSASB
    • Measurement of Equity Investments

      IPSASB Meeting when Issue was Discussed: Q4 2025

      Relevant IPSAS Standards: IPSAS 28, Financial Instruments: Presentation, IPSAS 31, Intangible Assets, IPSAS 41, Financial Instruments, IPSAS 46, Measurement

      Key Words: equity instrument, current operational value, control, significant influence, lack of contractual cash flows, lack of dividends, restrictions on sale, substance over form,

      Summary of the IPSASB’s Discussion:

      The submission noted that as control, joint control, or significant influence does not exist, the equity instrument is within the scope of IPSAS 41, Financial Instruments. The submission also noted that the equity instrument cannot be measured at amortized cost as there are no contractual cash flows. Furthermore, despite the presence of an active market for road salt, the submitter indicated that fair value is not an appropriate measurement basis as the sale of the shares is prohibited.

      The submission considered if paragraph AG3 of IPSAS 41, which allows the use of the equity method via IPSAS 36 for strategic investments, is applicable. The submitter noted that the equity method is not appropriate because:

      1. Significant influence does not exist in their view based on the nature of the shares and various restrictions from the shareholder agreement; and
      2. The equity method does not capture the service potential or operational purpose in the same way as COV.

      In the submission’s view, holding the equity instruments for strategic reasons, together with the absence of cash flows and the restriction on sale, indicate that the instruments are held for their operational capacity and not for their financial capacity. As a result, the submission concluded that a COV, which reflects the amount an entity would pay to acquire the remaining service potential of an asset at the measurement date (i.e., a COV based on the cost approach), would be the appropriate measurement basis. Based on their conclusion, the submission indicated that there is currently a gap in the measurement guidance for financial instruments, as IPSAS 41 requires the current value of financial instruments to be measured at fair value.

      Analysis by the IAG

      The IAG discussed the above fact pattern at its November 2025. While the IAG does not advise on the accounting for specific transactions, depending on the specific facts and circumstances, the IAG considered the following:

      1. Paragraph 9 of IPSAS 28, Financial Instruments: Presentation, defines a financial asset as:
        1. Cash;
        2. An equity instrument of another entity; or
        3. A contractual right that will or may be settled in the entity’s own equity instruments and is either a non-derivative for which the entity is or may be obliged to receive a variable number of the entity’s own equity instruments, or a derivative that will or may be settled other than by the exchange of a fixed amount of cash, another financial asset, or a fixed number of the entity’s own equity instruments.
      2. Paragraph 9 of IPSAS 28 also defines an equity instrument as any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
      3. Where the case facts support the investment meets the definition of an equity instrument, and Entity A determines that the restrictions in the shareholders’ agreement are not substantive, the investment could fall within the definitions of financial assets and equity instruments. Under this view, the investment would be within the scope of IPSAS 41 and measured at fair value. However, because the instrument is not actively traded, paragraphs AG140-AG143 could be applicable. These paragraphs clarify that in limited circumstances, where insufficient information is available, cost may be an appropriate estimate of fair value.
      4. Where case facts support the investment does not, in substance, have the key characteristics of a financial asset or an equity instrument (for example, there appears to be restrictions on dividends, and the sale/liquidation of the investment is restricted), the investment is likely an intangible asset within the scope of IPSAS 31, Intangible Assets.
      5. Paragraph 16 of IPSAS 31 defines an intangible asset as an identifiable non-monetary asset without physical substances. In this fact pattern, Entity B was set up, in substance, using the legal structure of a corporation to facilitate the supply of salt to the shareholders and the entity was not designed to generate a return to its shareholders. Under this view, the measurement guidance for the intangible assets in IPSAS 31 would be applicable.

      Conclusion

      Based on the above, the IAG concluded that there is sufficient guidance in existing IPSAS Standards. Therefore, the IAG concluded that no amendments to existing guidance, or the development of additional guidance, is required.