Presentation made by Ian Carruthers, IPSASB, at the 16th Annual OECD Accruals Symposium held at the OECD Conference Centre, Paris, on 21-22 March 2016. sbo-accruals-march-2016

1. Page 1
IPSASB Update
Ian Carruthers
IPSASB Chair
16th OECD Accruals Symposium
21 March 2016

2. Page 2
IPSASB update – Session outline
• IPSASB Strategic Objective
• 2015 – new standards and consultations
• Work plan 2016 onwards
• Conceptual Framework influence
• Key project overviews
• New Governance arrangements - CAG

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IPSASB Strategic Objective - 2015 onwards
Strengthening public financial management
and knowledge globally through increasing
adoption of accrual-based IPSASs by:
• Developing high-quality financial reporting
standards
• Developing other publications for the public
sector
• Raising awareness of the IPSASs and the
benefits of their adoption

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New / revised standards and guidance issued 2015
IPSAS 33, First-time Adoption of
Accrual Basis IPSASs
(January 2015)
IPSAS 34-38, Interests in Other Entities
(replacing IPSASs 6-8)
(January 2015)
RPG 3, Reporting Service Performance
Information
(March 2015)

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Consultations and Exposure Drafts 2015
Final pronouncements approved at March 2016 meeting:
• Minor Improvements
• Applicability of IPSASs
Responses currently being analysed:
• Social Benefits CP
Exposure Drafts still open for comment:
• Update of IPSAS 25 Employee Benefits ED 59 (April 30th)
• Public Sector Combinations ED 60 (June 30th)
• Update of Cash Basis IPSAS ED 61 (July 31st)

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Work programme 2016 onwards – Key projects
Project Public sector
specific
IFRS
convergence
Social Benefits x
Revenue & Non-Exchange Expenditure x x
Financial Instruments x x
Heritage Assets x
Public Sector Measurement (not yet started) x
Infrastructure Assets (not yet started) x
Leases (just started) x

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Public Sector Conceptual Framework (1)
• Establishes the concepts to be applied in developing IPSASs
• Provides guidance for preparers of general purpose financial reports
(GPFRs) of public sector entities where no IPSAS exists
Purpose:
Project initiated in 2006; accelerated in 2010
Published October 2014
• e.g. Social Benefits CP, PS Financial Instruments, Heritage
Impact already clear

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Public Sector Conceptual Framework (2)
Preface - Characteristics of the Public Sector that
influence Public Sector Accounting
Non-exchange
Transactions
Role of the
approved
Budget
Longevity
Characteristics
of Assets/Liabs
Role as
Regulator
Government
Finance
Statistics

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Public Sector Conceptual Framework (3)
Public Sector Conceptual Framework
Preface – Key Characteristics of Public Sector
Phase 2
• Elements
and
Recognition
Phase 3
• Measure-
ment
Phase 4
• Presenta-
tion
Phase 1
• Role
• Objectives
and Users
• QCs
• Reporting
Entity

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Narrower scope of current project
Social Benefits
Projects
Social Benefits
Social
Assistance
Social
Security
Non-Exchange
Expenses
Other
Transfers In
Kind
Collective
Goods and
Services
IPSAS
25
Update
Employment
Related
Social
Insurance

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CP responses on scope and definitions
Social Benefits
Agree, 14
Partially
Agree, 10
Disagree, 9
Did not
Comment,
3
Do you agree with the definitions?
Agree, 18
Partially
Agree, 6
Disagree, 9
Did not Comment, 3
Do you agree with the proposed
scope?

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Option 1
• Obligating
Event
Approach
Option 2
• Social
Contract
Approach
Option 3
• Insurance
Approach
Recognition and measurement options
Social Benefits

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Option 1 – potential recognition points
Social Benefits
Eligibility Criteria Met
to Receive Next
Benefit
Claim Approved
Payment Date Arrived
Eligibility Criteria
Met to Receive
Next Benefit
Claim Approved
Eligibility Criteria
Met to Receive
Next Benefit
Eligibility Criteria
Initially Met
Key Participatory
Events Occur
Some but not all
eligibility criteria
may be met
Key Participatory
Events
Eligibility
Criteria Met to
Receive Benefit
Threshold
Eligibility
Criteria
Approved
Claim
Enforceable
Claim
Earliest
Recognition
Point
Latest
Recognition
Point
Requirements to satisfy ongoing eligibility
criteria (including revalidation) affect
measurement but not recognition
Requirements to satisfy ongoing eligibility
criteria (including revalidation) affect both
recognition and measurement

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Financial Instruments: Coverage and approach
• Public Sector Specific Financial Instruments
– 2016 CP will cover monetary authority items (monetary
gold, currency and notes in circulation, IMF items)
– Statutory receivables and payables
- Revenue and Non-Exchange Expenditure project
– Securitization - IPSAS 29 update
• Recognition and Measurement (update IPSAS 29,
considering IFRS 9)  ED (Starting June)

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Heritage assets (1)
• Provide requirements and guidance to replace provisional
guidance in IPSAS 17 – no asset recognition requirement
• CP as initial step despite original 2006 CP
• Proposed Heritage Items definition:
Heritage items are items that, because of their rarity, importance
and/or significance, are expected to be held for the benefit of
present and future generations and preserved indefinitely. They
are preserved for many different reasons including, and not
limited to, their architectural, agricultural, artistic, cultural,
environmental, historical, natural, scientific or technological
importance.

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Heritage Assets (2)
• Categories considered based on UNESCO Conventions
– Cultural property
– Underwater cultural heritage
– Intangible cultural heritage
– Cultural and natural heritage
• Discussion in terms of CF asset and liability definitions
• CF used to develop proposals on recognition, measurement
and disclosure
• December 2016 CP approval

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Public Sector Measurement (1):
CF Measurement Bases
Assets Liabilities
Historical Cost Historical Cost
Current Value measures
• Market Value
• Replacement Cost
• Net Selling Price
• Value in Use
Current Value measures
• Market Value
• Cost of Fulfilment
• Cost of Release
• Assumption Price

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Public Sector Measurement (2)
• Combined impact on IPSASs of CF and IFRS 13:
– Measurement requirements not consistent with CF
– Fair value references inconsistent with IFRS 13
• Other key issues:
– Further Implementation Guidance needed?
– Transaction costs treatment (including borrowing costs)
– Consistency with GFS and IVSC guidance
• Preliminary analysis stage before deciding further steps
• Task Force to include GFS and IVSC representatives

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New Governance arrangements - now almost in place
• First two meetings in 2015
• Update on activities in separate Session
Public Interest Committee
• Terms of Reference: Focus on stakeholder involvement
• Composition: Focus on areas underrepresented on
IPSASB
• Inaugural Chair appointed
• Initial meeting planned for June 2016
Consultative Advisory Group

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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
Acting Technical Director: johnstanford@ipsasb.org