In the wake of the sovereign debt crisis, the International Public Sector Accounting Standards Board (IPSASB) is facing increasing demands for its standards and for guidance on their adoption and implementation.

During this audio podcast, Acting Technical Director John Stanford interviews Chair Andreas Bergmann and Senior Technical Manager Gwenda Jensen on the IPSASB's recent standard-setting work and other key projects discussed its September 22-25, 2015, meeting. 

This Strategy of the International Public Sector Accounting Standards Board (IPSASB) covers the period from 2015 forward and was developed after consultation with stakeholders.

It will guide the IPSASB’s activities from 2015 forward so that the IPSASB can fulfill its public interest mandate.

An appendix to the strategy provides brief descriptions of projects recently approved by the IPSASB

Ian Carruthers has been appointed chair of the International Public Sector Accounting Standards Board^® (IPSASB^®) for a three-year term commencing January 1, 2016.

As chair Mr. Carruthers will lead the board in its efforts to establish high-quality accounting standards for use by public sector entities, promote the adoption of and international convergence to the IPSAS™ pronouncements, and issue guidance on topics in public sector financial reporting.

“I am honored to have been chosen to lead the IPSASB through the next exciting and crucial phase of its work,” Mr. Carruthers said. “The recently completed Conceptual Framework will enable us to address some of the most fundamental reporting issues facing the public sector today. We will also build on the heightened credibility from our enhanced governance arrangements and the existing IPSAS adoption groundswell to play a critical role in strengthening global public financial management—which, in turn, will improve public sector decision-making and make governments more accountable to their constituents.”

Mr. Carruthers has served on the IPSASB since January 2010. Currently, he serves as chair of the IPSASB Task Force on Alignment of IPSAS and Public Sector Statistical Reporting. He also chaired the IPSASB Task Force on Long-term Fiscal Sustainability and participated in the Task Force for Harmonization of Public Sector Accounts and the Non-exchange Revenue Steering Committee. Prior to becoming an IPSASB member, Mr. Carruthers served from 2006 to 2009 as technical advisor to former IPSASB Chair Michael Hathorn.

Having spent the first part of his career in the public sector practice of PwC, Mr. Carruthers joined HM Treasury in 1999, where he played a key role in the UK Government’s transition from cash to accrual budgeting and reporting, in particular leading its Whole of Government Accounts program. He joined the Chartered Institute of Public Finance and Accountancy (CIPFA) in 2006 where his work has included leading its work on the role of the public services CFO, as well as working with IFAC on the development of the International Framework for Good Governance in the Public Sector.

Commenting on Mr. Carruthers’ appointment, current IPSASB Chair Andreas Bergmann said, “Ian is an experienced leader whose skills, knowledge, and global contacts will help the IPSASB successfully reach its next stage of development. With this appointment, I am confident that the IPSASB—and the public interest—will continue to be well-served.”

Mr. Carruthers was nominated for the IPSASB Chair position by CIPFA, with the Public Interest Committee welcoming the recruitment process from a public interest perspective. He will undertake the chair role for three-quarters of his time, with the balance spent with CIPFA.

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. “International Public Sector Accounting Standards Board”, “IPSASB”, and “IPSAS” are trademarks or registered trademarks of IFAC in the US and other countries.

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. “International Federation of Accountants” and “IFAC” are trademarks or registered trademarks of IFAC in the US and other countries.

About PIC
The Public Interest Committee (PIC) was established in March 2015 to promote the public interest in the standard-setting activities of the IPSASB. The PIC issues non-binding advice to IFAC and the IPSASB on the procedures and processes for nomination and appointment of IPSASB members, formulating the IPSASB strategy and work plan, and developing individual accounting standards. The PIC also advises on the terms of reference of the IPSASB. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in the International Monetary Fund (IMF), International Organization of Supreme Audit Institutions (INTOSAI), Organization for Economic Cooperation and Development (OECD), and World Bank Group (WBG).

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 www.ipsasb.org. 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.

The International Public Sector Accounting Standards Board^® (IPSASB^®) today released for comment a Consultation Paper (CP), Recognition and Measurement of Social Benefits.

The delivery of social benefits to the public is the primary objective of most governments and social benefits often account for a large proportion of a government’s budget. There is an opportunity for the IPSASB to improve its suite of standards by developing an International Public Sector Accounting Standard™ (IPSAS™) on social benefits. This CP asks constituents for their views on the different approaches identified.

“Users need information that allows them to evaluate the financial impact of the social benefits that governments provide,” said IPSASB Chair Andreas Bergmann. “The IPSASB considers there is a major need for guidance in this area. This Consultation Paper is the first step in achieving appropriate reporting of social benefits. We look forward to receiving constituents’ views on the options we have identified.”

This CP builds on the IPSASB’s previous work on accounting for social benefits while also developing new ideas. It defines social benefits as “benefits provided to individuals and households, in cash or in kind, to mitigate the effect of social risks.” The definitions of social benefits and social risks are consistent with those used in statistical reporting. The scope of the social benefits project includes social assistance and social security, but excludes programs that form part of an employer-employee relationship, other transfers in kind, and collective goods and services such as the provision of universal health care and education services. Consequently, this project has a significantly narrower scope than the IPSASB’s earlier work in this area.

The CP identifies three broad options to account for social benefits:

• Option 1: The obligating event approach. This approach considers social benefits by reference to the definition of a liability in The Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities. Obligations to pay social benefits are seen as no different from other obligations. The key issue is when a present obligation arises.
• Option 2: The social contract approach. This option is based on the view that there is an imputed social contract between the state and the citizens. Under this social contract, citizens agree to pay taxes to enable the state to provide social benefits. This is analogous to an executory contract for commercial transactions. Obligations are recognized when they become enforceable (or when claims for social benefits are approved).
• Option 3: The insurance approach. This approach considers that some social benefits are similar in practice to insurance contracts. It uses an insurance accounting model to measure schemes at the net present value of their cash inflows and outflows.

How to Comment
To access the Consultation Paper and the At-a-Glance summary of the Consultation Paper, or to submit a comment, please visit the IPSASB website at www.ipsasb.org/. Comments on the Consultation Paper are requested by January 31, 2016. The IPSASB encourages IFAC^® members, associates and regional accountancy bodies to promote the availability of this Consultation Paper 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. It is comprised of more than 175 members and associates in 130 countries and jurisdictions, representing approximately 2.8 million accountants in public practice, education, government service, industry, and commerce.

Only: IPSAS 2, 4, 5, 11, 13, 16, 19, 20, and 23