The International Public Sector Accounting Standards Board^® (IPSASB^®) has released a Consultation Paper (CP), Accounting for Revenue and Non-exchange Expenses.

The IPSASB seeks constituent views on potential recognition and measurement approaches for revenue and non-exchange expenses. Conceptually robust and understandable accounting treatments of taxes, transfers and other major sources of public sector income as well as expenses on universally accessible and collective services are fundamental to high-quality financial reporting. The publication of IFRS 15, Revenue from Contracts with Customers, by the International Accounting Standards Board, has provided the IPSASB with an impetus to consider its approaches both to commercial transactions and public sector specific transactions. The CP also considers recognition approaches for significant non-exchange expense transactions, such as the provision of education, healthcare and defense.

“This Consultation Paper is an important first step in addressing some key IPSAS implementation issues while seeking to maintain IFRS convergence,” said Ian Carruthers, IPSASB Chair. “It also provides an opportunity to address gaps in literature that have been identified in accounting for non-exchange expenses and the measurement of non-contractual receivables and non-contractual payables—such as taxes, fines and licenses.”

The CP proposes updating existing IPSAS 23, Revenue from Non-Exchange Transactions (Taxes and Transfers), to address issues identified by users, as well as to replace current IPSAS dealing with revenue arising from exchange transactions and construction contracts with an IPSAS based on IFRS 15.

For non-exchange transactions with performance obligations the CP discusses two potential revenue recognition approaches.

(a)   Exchange/non-exchange approach – Under this approach the CP identifies five options for updating IPSAS 23, Revenue from Non-Exchange Transactions (Taxes and Transfers); and

(b)   The Public Sector Performance Obligation Approach for Revenue – Under this approach revenue would be recognized when identified performance obligations have been fulfilled, drawing upon the approach in IFRS 15 adapted for the public sector.

The CP discusses two potential approaches to the recognition of non-exchange expenses.

(a)   The Extended Obligating Event Approach – this approach would rely on the IPSASB’s Conceptual Framework to determine when a resource provider has a liability and expense; and

(b)   The Public Sector Performance Obligation Approach for Expenses – this approach would mirror the equivalent approach for revenue, and adapt it for non-exchange expense transactions.

The CP also discusses:

• Implementation issues regarding the recognition of revenue from capital grants and services in-kind;
• Initial and subsequent measurement of non-contractual receivables; and
• Subsequent measurement of non-contractual payables.

How to Comment
To access the Consultation Paper and its summary At-a-Glance document, or to submit a comment, visit the IPSASB website, www.ipsasb.org. Comments on the Consultation Paper are requested by January 15, 2018. The IPSASB encourages IFAC^® members, associates, and regional accountancy organizations to promote the availability of this Consultation Paper to their members and employees.

About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through the development of accrual-based International Public Sector Accounting Standards® (IPSAS®) and other guidance for use by governments and other public sector entities. It 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 permissions@ifac.org.

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.

The Consultative Advisory Group (CAG) of the International Public Sector Accounting Standards Board^® (IPSASB^®) has unanimously elected Thomas Müller-Marqués Berger as CAG Chair until June 2020.

Created in June 2016, the IPSASB CAG is a forum composed of 22 representatives of public and private sector organizations and individuals that are interested in, or affected by, the IPSASB’s work, including those engaged in the preparation, audit, or evaluation of public sector financial reports. The CAG provides advice to the IPSASB on the IPSASB’s strategy and work plan; IPSASB’s projects, including views on technical issues or matters that may impede the adoption and implementation of International Public Sector Accounting Standards^™; and other matters relevant to the IPSASB’s standard-setting activities. Mr. Müller-Marqués Berger was appointed inaugural Chair at the CAG’s inception in 2016 until the membership was in a position to hold a formal vote.

“I am delighted Mr. Müller-Marqués Berger will continue as CAG Chair. His election confirms that CAG members have valued his commitment and strong leadership since its first meeting in June 2016. He has helped develop the CAG as an effective forum for discussing key public interest issues related to the IPSASB’s work,” said IPSASB Chair Ian Carruthers. “I look forward to continuing to work closely with Thomas and the CAG members.”

Thomas Müller-Marqués Berger is a distinguished public sector accounting expert. Currently Global Head of International Public Sector Accounting for Ernst & Young, Mr. Müller-Marqués Berger’s deep experience in accounting standard setting includes chairmanship of the Public Sector Group of Accountancy Europe since 2011, membership of the German Public Sector Committee since 2002, and service to global standard setting as an IPSASB member from 2009–2014.

“I am very appreciative of the support expressed by the unanimous vote of the CAG members in electing me. The CAG has made great progress and we look forward to continuing to foster meaningful input to the IPSASB’s project work and to the development of the IPSASB’s next strategy and work plan,” said Mr. Müller-Marqués Berger.

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 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 permissions@ifac.org.

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.

Highlights from the IPSASB CAG's June 26, 2017, meeting in Luxembourg, Luxembourg.

0:10 – Introduction (John Stanford, Technical Director, IPSASB)

0:27 – Summary of IPSASB CAG meeting (Thomas Müller-Marqués Berger, IPSASB CAG Chair)

8:50 – Closing remarks (John Stanford, Technical Director, IPSASB)

Highlights from the IPSASB's June 27 - 30, 2017, meeting in Luxembourg, Luxembourg.

0:10 – Introduction (John Stanford, Technical Director, IPSASB)

1:13 – Overview of IPSASB meeting (Ian Carruthers, IPSASB Chair)

2:54 – Revenue and Non-Exchange Expenses (Jo Spencer, Standards Development & Technical Projects, IPSASB)

5:47 – Financial Instruments (Dave Warren, Principal, Public Sector Accounting Board, Canada)

6:54 – Social Benefits (Paul Mason, Principal, IPSASB)

7:58 – Strategy and Work Plan (Ian Carruthers, IPSASB Chair)

11:05 – Closing remarks (John Stanford, Technical Director, IPSASB)

In this podcast, IPSASB Deputy Director Ross Smith and Principal Paul Mason discuss how materiality can be applied when preparing financial statements. The podcast summarizes the accounting requirements for materiality in International Public Sector Accounting Standards.

An accompanying Staff Questions and Answers document is also available.

The International Public Sector Accounting Standards Board (IPSASB) staff have issued this Staff Questions and Answers document on the application of materiality to preparing financial statements. It summarizes existing provisions in International Public Sector Accounting Standards for materiality.

This publication is not an IPSASB pronouncement and does not represent IPSASB members' views.

An accompanying podcast with IPSASB staff is also available.

The 2015-2016 Biennial Review: Sustaining the Momentum summarizes the International Public Sector Accounting Standards Board (IPSASB)’s achievements, challenges, and key developments in 2015 and 2016.

One of the major milestones during this period was the establishment of a new single-layer governance and advisory framework—the Public Interest Committee (PIC)* and Consultative Advisory Group (CAG)**—a landmark achievement for the IPSASB and its global stakeholders.

2015 and 2016 also saw IPSASB members sustain an ambitious stakeholder outreach program in support of one of the strands of the Board’s strategic objective—raising awareness of IPSAS and their benefits. The Public Sector Standard Setters Forum in particular elevated IPSASB’s outreach.

The Forum, jointly held in March 2016 by the IPSASB and the US Governmental Accounting Standards Board (GASB), was the first-ever global event for public sector standard setters and involved more than 70 participants from more than 30 countries and 22 organizations with standard-setting responsibilities, including ministries of finance with standard-setting responsibilities. The event created an environment to build a dialogue, exchange ideas, and discuss critical issues in standard setting.

This period also included substantial progress on the IPSASB’s work plan, including completion of eight new or replacement IPSAS and a number of limited scope projects.

Key continuing projects on which substantial progress was made include:

• Social benefits;
• Revenue and Non-Exchange Expenses;
• Heritage;
• Financial Instruments (both core standards and public sector specific); and
• Leases.

The Biennial Review provides detail on completed and ongoing projects.

In the Review’s introduction, IPSASB Chair Ian Carruthers highlights the importance of the IPSASB’s Strategy and Work Plan and the Conceptual Framework in shaping the IPSASB’s activities. The IPSASB’s Strategy for 2015 Forward: Leading through Change was the first full IPSASB strategy on which there was public consultation. The Conceptual Framework, published in October 2014, guides the IPSASB’s standard-setting approach.

The International Federation of Accountants (IFAC) facilitates the work of the IPSASB and includes IPSASB’s financial results within IFAC’s 2016 Financial Statements.

* The Public Interest Committee provides assurance that the IPSASB’s standard-setting activities are in the public interest.

** The Consultative Advisory Group is an integral part of the IPSASB's formal consultation process and provides advice on all aspects of IPSASB’s standard-setting activities, including IPSASB’s strategy, work plan, and projects, with a particular focus on implementation.

The 2015-2016 Biennial Review summarizes the International Public Sector Accounting Standards Board’s achievements, challenges, and key developments in 2015 and 2016. This period also included substantial progress on the IPSASB’s work plan, including completion of eight new or replacement IPSAS and a number of limited scope projects. Key continuing projects on which substantial progress was made include: