This presentation was made by Ian Carruthers & John Stanford, IPSASB, at the 19th OECD Senior Financial Management and Reporting Officials Symposium held at the OECD Conference Centre, Paris, on 4-5 March 2019

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IPSASB Update
Ian Carruthers
IPSASB Chair
John Stanford
IPSASB Technical Director
OECD
Paris
4th March 2019

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2 IPSAS approved
• Financial Instruments – IPSAS 41
• Social Benefits - IPSAS 42
• plus ‘Improvements to IPSAS’
3 Exposure Drafts
• Social Benefits (ED 63)
• Leases (ED 64)
• Collective & Individual Services &
Emergency Relief (ED 67)
• plus ‘Improvements to IPSAS’
(EDs 65 & 66)
Consultation Paper
• 2019-23 Strategy and Work Plan
….and considerable work on:
• Revenue
• Grants and Transfers (Expense)
• Public Sector Measurement
Delivering a challenging Work Plan:
Strong progress during 2018

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IPSAS–IFRS Alignment Dashboard:
Status at December 2018
Table 1 – IPSAS and Equivalent IFRS—Summary2
IPSAS IFRS Status IPSAS IFRS Status IPSAS IFRS Status
1, Presentation of Financial
Statements
IAS 1 18, Segment Reporting IAS 14
32, Service Concession
Arrangements: Grantor
IFRIC 12,
SIC 29
2, Cash Flow Statements IAS 7
19, Provisions, Contingent Liabilities
and Contingent Assets
IAS 37
33, First-time Adoption of Accrual
Basis IPSASs
IFRS 1
3, Accounting Policies, Changes in
Accounting Estimates and Errors
IAS 8 20, Related Party Disclosures IAS 24 34, Separate Financial Statements IAS 27
4, The Effects of Changes in
Foreign Exchange Rates
IAS 21
21, Impairment of Non-Cash-
Generating Assets
IAS 36 35, Consolidated Financial Statements IFRS 10
5, Borrowing Costs IAS 23
22, Disclosure of Financial Information
about the General Government Sector
−
36, Investments in Associates and
Joint Ventures
IAS 28
9, Revenue from Exchange
Transactions
IAS 18
23, Revenue from Non-Exchange
Transactions (Taxes and Transfers)
− 37, Joint Arrangements IFRS 11
10, Financial Reporting in
Hyperinflationary Economies
IAS 29
24, Presentation of Budget Information
in Financial Statements
−
38, Disclosure of Interests in Other
Entities
IFRS 12
11, Construction Contracts IAS 11
26, Impairment of Cash-Generating
Assets
IAS 36 39, Employee Benefits IAS 19
12, Inventories IAS 2 27, Agriculture IAS 41 40, Public Sector Combinations IFRS 3
13, Leases IAS 17
28, Financial Instruments:
Presentation
IAS 32,
IFRIC 2
41, Financial Instruments
IFRS 9,
IFRIC 16
14, Events after the Reporting
Date
IAS 10
29, Financial Instruments: Recognition
and Measurement
IAS 39,
IFRIC 16
42, Social Benefits −
16, Investment Property IAS 40 30, Financial Instruments: Disclosures IFRS 7
17, Property, Plant, and
Equipment
IAS 16 31, Intangible Assets
IAS 38,
SIC 32

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Current IPSASB work programme
Project Public sector
specific
IFRS
alignment
Non-Exchange Expenses
- Collective and Individual Services (IPSAS 19 amends)
- Grants, contributions and transfers
ED 67
 
Revenue
- IFRS 15 alignment (replacing IPSAS 9 & 11)
- IPSAS 23 update
- Grants, contributions and transfers (guidance location TBD)





Financial Instruments (Public Sector)  IPSAS 41
Leases  
Public Sector Measurement  
Heritage 
Infrastructure Assets 

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IPSASB work programme:
December 2019 projected position
Project Public sector
specific
IFRS
alignment
Non-Exchange Expenses
- Collective and Individual Services (IPSAS 19 amends)
- Grants, contributions and transfers
IPSAS
ED 
Revenue
- IFRS 15 alignment (replacing IPSAS 9 & 11)
- IPSAS 23 update
- Grants, contributions and transfers (guidance location TBD)
ED
ED
? ?


Financial Instruments (Public Sector) ED IPSAS 41
Leases ? ? ? ?
Public Sector Measurement CP/ED 
Heritage 
Infrastructure Assets 

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Scope of IPSAS 42 and ED 67
• Grants to other public sector entities
• Grants to charities
Grants, Contributions
and Other Transfers
• Disaster relief; ongoing planning and
preparation activitiesEmergency Relief
• Defense; street lightingCollective Services
• Universal education
• Universal healthcare
Individual Services
• CASH TRANSFERS: State pensions;
unemployment benefits; income supportSocial Benefits
• Employee pensions; employee healthcare;
salariesEmployee Benefits
• Vehicle insurance; private medical insurance
Contracts for
Insurance
• Purchase of goods; payment for services
Contracts for Goods
and Services
Non-Exchange
ExpensesProject
IPSAS
42
OtherIPSASor
IFRS
ScopeofSocialBenefitsinGFS
ED67*

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Social Benefits: Finalizing IPSAS 42
• Recognition (and measurement implications)
– General (formerly Obligating Event) approach – single recognition point
– Insurance approach – remains optional
• Definitions
– Clarified that social benefits limited to cash transfers
– Impact on Non-Exchange Expenses
• Disclosures limited to current and prior year (no forward projections)
• Long-Term Financial Sustainability – important but no further work now
• Likely to be subject of first ever IPSASB Post-Implementation Review
• Comparison summary with Government Finance Statistics
• Approved December/Publication: January 2019

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Non-exchange expense definitions
Relationship between collective services, individual services and social benefits
Social Benefits Individual
Services
Collective
Services
Involves a cash transfer to eligible
beneficiaries?
  
Provided to individuals and/or
households?
  
Intended to address the needs of society
as a whole?
  
Goods and services delivered through Emergency Relief address the
needs of specific individuals and households rather than the needs of
society as a whole.

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ED 67: Proposed accounting
• No provision is recognized for collective services or individual services:
– Government enters into exchange contracts for goods and services required
to deliver collective and individual services
– Delivery of service itself to public is a non-exchange transaction
• Information about collective services and individual services is
presented and disclosed in accordance with other IPSAS
• Two approaches to emergency relief:
– Delivered in response to specific emergencies – apply IPSAS 19
– Delivered as ongoing activity (e.g. FEMA in USA) – depends on
circumstances – IPSAS 19 or same as for Collective and Individual services

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No performance
obligations or
stipulations
Taxes, transfers
Enforceable agreements,
with performance
obligations or stipulations
to use or consume
resources in a particular
way; and/or other
agreements requiring
resources to be used over
a specified period of time
Funding to deliver a
specified number of
vaccinations to the public
Enforceable agreements,
with performance
obligations to transfer
goods or services to
customers on commercial
terms
Sale of goods or services
on commercial terms
Current classification
CP Revenue
Characteristics
Examples
ExchangeNon-Exchange
Revenue projects context:
Categorization of transactions
Category A Category B* Category C
* Whether Category B transactions are considered to be exchange or non-exchange can
differ depending on how the characteristics of the transaction are interpreted.

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Revenue projects: Way forward
• Board decisions:
– Replace IPSASs 9 & 11 with IFRS 15-based standard
– Retain IPSAS 23 – update to address specific application issues
– Services in kind – maintain current approach
– Develop Public Sector Performance Obligation Approach (PSPOA) for Category B
– PSPOA guidance in IFRS 15-based standard
• PSPOA ‘filter mechanism:
– Step 1: Binding arrangement?
– Step 2: Performance obligation? Sufficiently specific?
– Enforceability key: Revenue of recipient when no enforcement mechanism
• Areas for further discussion:
– Capital grants
– ‘Grants, contributions and other transfers’ – guidance / examples location(s)

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• IFRS 15-aligned core text
• Definitions ‘stretched’ for PSPOA,
but clear link to IFRS 15
definitions
• PSPOA Application Guidance
(mainly on Steps 1 and 2)
• IFRS 15 examples reviewed for
public sector
• Additional PSPOA examples
IFRS 15
-aligned
PSPOA
‘stretch'
IFRS 15-based IPSAS:
‘Revenue from Binding Arrangements with Purchasers’?

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Updated IPSAS 23:
Revised flowchart? - March IPSASB discussion
NoDoes the inflow give
rise to an item that
meets the definition
of an asset?
Do not recognize
an increase in an
asset, consider
disclosure.
Yes
No Do not recognize
an increase in an
asset, consider
disclosure.
Does the inflow
satisfy the criteria for
recognition as an
asset?2
NoNo
Yes
Refer to
other
IPSASs
Does the
transaction
arise from a
binding
arrangement?
Does the inflow
result from a
contribution from
owners?
Refer to other
IPSASs
Yes
No
Yes
Use IPSAS XX, Revenue
from Binding Arrangements
with Purchasers
Are there specific
performance obligations?
Yes
Use this IPSAS and
recognize an asset
and recognize
revenue

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• PSPOA (including recognition of asset) to be applied to transactions
meeting Steps 1 & 2 criteria:
• ‘Reverse’ IPSAS 23 approach where outside PSPOA
• Key areas under debate in relation to Steps 1 & 2:
– When should a liability be recognized?
– Asset recognition? - enforceability?
Grants, Contributions and Transfers - Expense
Identify the
binding
arrangement
Determine
the
consideration
Allocate the
consideration
Recognize
expense
Identify
performance
obligations
Step 1 Step 2 Step 3 Step 4 Step 5

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Public Sector Measurement: Project drivers
• Combined impact of Conceptual Framework (CF) and IFRS 13, Fair Value:
– Fair value references inconsistent with IFRS 13 (exit-based)
– Existing measurement requirements not consistent with CF
– Service potential - need for entry-based values
• Other key issues:
– Limited guidance on Depreciated Replacement Cost
– No guidance on when to use current value measurement options
– Transaction costs not addressed
– Borrowing costs – IPSAS 5 still allows both capitalisation and write-off
– Consistency with GFS and IVSC guidance?

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Public Sector Measurement: Planned IPSAS
Objective &
Scope
Definitions
Measurement
Bases
(What)
Basis for
Conclusions
(Why)
Application
Guidance
Appendices (How)
Cost of fulfillment
Fair value
Historical cost
Replacement cost
Other IPSAS
Which basis?
IPSAS 17
IPSAS 31
IPSAS 41
Net Selling price

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IPSAS Public Sector Measurement:
Guidance sources
IPSAS
Measurement
Application
Guidance
IPSAS 17 / 31
•- Historical cost
IFRS 13
- Fair Value
New Guidance
- DRC
- Cost of Fulfilment

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Consultation Paper
Illustrative ED,
Measurement
Consultation Paper
• What measurement bases?
• Conceptual Framework context
• Sources of proposed Application Guidance
• How to implement bases
• Comparison with valuation standards and GFS
• Transaction costs
• Borrowing costs
• Which bases to apply
• Approach to consequential amendments
Illustrative ED, Measurement
• What – Definitions of measurement bases
• How – Application Guidance
• Disclosures
• Why – Basis for conclusions
ED, Consequential
Amendments
Draft IPSAS,
Measurement
ED, Consequential Amendments
Amendments to other IPSAS, as follows:
• Application Guidance removed. (Transferred to IPSAS, Measurement)
• Revisions to measurement base terms. (To align with Conceptual Framework and reflect public
sector needs.
IPSAS, Measurement [Draft]
Incorporating changes to ED, Measurement to address stakeholders’ responses. Subject to
final approval.
IPSAS, Measurement
Amendments to other
IPSASs
IPSAS, Measurement
• Issued as final Standard.
Amendments to other IPSASs
• Consequential amendments to other IPSASs approved. Other IPSASs amended accordingly.
Process: IPSAS, Measurement
Consultation
Paper including
illustrative ED,
Measurement
ED,
Consequential
Amendments and
Draft IPSAS,
Measurement
IPSAS,
Measurement and
amendments to
other IPSASs

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Lessor Accounting
ED 64, Leases:
Overview of single ‘right of use’ proposals
Lease
Contract
Accounting for the underlying asset
Separate accounting for the lease (right-of-use)
• Lessor recognizes and measures according to
the applicable IPSAS - different to IFRS 16
• Lessee liability – as per IFRS 16
• Lessor receivable – different to IFRS 16
• Lessor liability (unearned revenue) – different to IFRS 16
• At market terms – unless a concessionary lease
• At below market terms – concessionary leases

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• Lessee accounting:
- Strong support for ‘right of use’ approach
• Lessor accounting:
- Majority support for IFRS 16 departure
BUT:
– Lack of clear support for ED 64 proposals
– Alternative proposals
– Opposing views on the same issues
• Concessionary leases:
- Majority support for lessee proposals
- Diverse views on lessor proposals
ED 64: Overview of responses

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Leases: Way forward
Lessee accounting: Decision to proceed with Right of Use (IFRS 16)
Lessor accounting: Three broad options:
• Proceed with ED64 proposals?
• Revert to IFRS 16 approach?
• Develop another approach?
Concessionary leases: Approach to be decided in light of above deliberations
Planned approach:
• Detailed review of responses
• Review of earlier deliberations on IASB CP and EDs
• Assess available experience on IFRS 16 implementation
• Task Force formation – work through detail
• Potential need for further ED(s)

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Currently 25% of governments report on accrual……
Source: IFAC / CIPFA
International Public Sector
Financial Accountability Index
Data from 150 countries

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…...within 5 years 65% will report on accrual
Source: IFAC / CIPFA
International Public Sector
Financial Accountability Index
Data from 150 countries

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Changes will increase IPSAS usage and influence:
Raising IPSASB’s profile and stakeholder expectations
2018 – 37 governments 2023 – 98 governments

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2019-23 Strategy and Work Plan:
Building partnerships and stakeholder profile
Latin-America
Location: Brasília, Brazil
Partners: Federal Accounting Council
National Treasury
Brazilian Accounting Foundation
Europe
Location: Brussels, Belgium
Partner: Accountancy Europe
Africa
Location: Addis Ababa
Partner: African Union
Asia
Location: Manila, Philippines
Partner: Asian Development Bank
In total…
Attendees 384
Organizations 300+
Countries 108
4 Regional Roundtables

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This Strategic Objective will be delivered through two main areas of activity
both of which have a public interest focus:
Delivering Global Standards:
Developing and maintaining IPSAS and
other high-quality financial reporting
guidance for the public sector
Inspiring Implementation:
Raising awareness of IPSAS and the
benefits of their adoption
Strengthening Public Financial Management (PFM)
globally through increasing adoption of accrual-based
IPSAS.
2019-2023 Strategy and Work Plan:
Delivering Global Standards. Inspiring Implementation.

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Delivering
Global
Standards
Theme A: Setting
standards on public
sector specific
issues
Theme B:
Maintaining IFRS
alignment
Theme C:
Developing guidance
to meet users’
broader financial
reporting needs
Theme A
• Natural Resources
• Conceptual Framework –
limited-scope review
Theme B
• Annual improvements
• Limited scope projects
Theme C
• Actively monitor developments
• No specific projects currently
Mid-period review 2021
2019-23 Strategy and Work Plan:
Themes A to C: Work plan 2019-2023

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Projects selected for research / scoping in advance of mid-period Work Plan
consultation (2021):
– Discount rates
– Differential reporting
– Presentation of financial statements
– Tax expenditures
• IPSASB to facilitate rather than undertake research itself
• Research ‘facilitation’ approach to be developed in advance of June 2019
Public Sector Standard Setters Forum for discussion there
• Initial discussion of research topics at Forum
• Research / scoping to be completed by mid 2020 for Board discussions on
Work Plan consultation document – H2 2020
• Volunteers needed to lead or participate in research groups!
Research programme: Topics and approach

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Questions, discussion & further information
• Visit our webpage http://www.ipsasb.org/
• Or contact us by e-mail :
IPSASB Chair: iancarruthers@ipsasb.org
Technical Director: johnstanford@ipsasb.org