Acc for public sector ch 1-6 (2).pptx

12/1/2023 By: Abatneh M. (MSc) 1

Introduction
 There are organizations whose object is not to make profit. these N-F-P
organizations account their resources & financial activities under
different accounting system. Every organization wants to be successful.
 “Success” must be defined in terms of goals. Then it needs some means
to measure its results against its goals.
 Measuring success is often thought of in terms of effectiveness (achieving
the goal at the highest level) and efficiency (achieving the goal
through using the least amount of resources).

Cont….
 For profit seeking organizations(F.P.) whose objective is to make profit, both
efficiency and effectiveness can easily be measured with f/s.
 There are certainly non financial criteria to judge success like qualitative or
quantitative measures. But regardless of what other measures are
employed, ultimately effectiveness will be measured by the income
statement.
 Efficiency is evaluated by the expense section of the income statement.
If expenses are less than revenue and the organization has earned an
“acceptable” profit, then we can say it is successful in efficiency.

Cont….
 We can therefore say that the objective of the income statement is to
demonstrate both the effectiveness and efficiency of the organization.
For not-for-profit organizations (N-F-P) however, these objectives are not
as useful. Without a good measure of effectiveness, measurement of
efficiency become almost meaningless.
 The public can then hold the person accountable for the proper use of the
resources. This means that the income statement is only limited to use
in judging effectiveness.

Cont….
 Both the nature of N-F-P Orgn. & the objectives of their financial
reporting have given rise to a particular accounting method, i.e. the use of
“fund accounting”. It is very important to understand the meaning of fund
in this context. in normal conversation “fund” means simply, a resource
of money.
 That is not the meaning “fund” has in Fund Accounting. In fund
accounting, “fund” means a distinct entity within a larger entity. A separate
journal entry ledger will be kept and separate F/s will be kept for each fund

Classification of not-for-profit organizations
 Generally, organizations could be classified either based on their
1. Objectives 2. Ownership
 Objectives: a. Commercial / for profit organizations- emphasize on the
making of profit b. Non commercial/ not –for – profit organizations-
which do not give emphasis on the making of profit.
2. Ownership : a) Non-governmental (Private organizations) –operating
for the benefit of an individual proprietor or a group of partners
a. Governmental organizati. –operated for the benefit of society as a Whole.

Cont….
 A non profit (not- for profit) organization is a legal accounting entity that is
operated for the benefit of society as a whole rather than for the benefit
of an individual proprietor or a group of partners or shareholders.
 Thus, the concept of net income is not meaningful for non-profit
organization. A non-profit organization strives only to obtain revenue
& support sufficient to coves its expenses. Non-profit organizations
comprise a significant segment of the country’s economy.

Distinguish Characteristics Of Governmental Units & Non-
profit Entities
 For all the similarities and differences in the mechanics of accounting and
management of resources, there are very significant resources in what the
two types of organizations do and how they operate.
 From the standpoint of the management of resources, for profit and not
for profit organizations are similar different ways. For example both
use the same type of resources as cash, fixed asset personnel, etc..., both
need good information for decision making, and both need to exercise
careful control of the resources that they have.

Cont….
 Both should imply accounting forms and other types of controls to restrict
on use of assets & capture information, double entry accounting to record
and classify that information, employing journals and ledgers, and then
use those journals and ledgers as a basis to produce financial reports.
 Despite the wide range in size and scope of governance, similarity &
differences as the accounting treatment as compared to business
organizations, Governmental units and other non-profit organizations
would have the following common characteristics.
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Cont….
 Organization to serve the society (citizens): The basic principle of
governmental philosophy is that governmental units exist to serve the
citizens subject to their jurisdictions.
 General absence of profit motive: With few exceptions, governmental
units render services to the citizenry with out the objective of profiting
from those services. Business enterprises are motivated to earn profit.
 Society as a principal source of revenue: As with governmental units,
most non- profit organization depend on the general population for a
substantial portion of their support.
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Cont….
 Citizenry contributions are mostly involuntary Taxes. Citizen’s
contribution to non-profit organizations is voluntary donations.
There is no comparable source for business enterprise. Tax is an
involuntary contribution from the society to the government. based
upon their assessment, taxes could be classified into:
I) Self assessed taxes: - taxes, which are assessed and declared by the tax
payer e.g. Income tax, value added tax
II) Government assessed taxes:-
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Cont….
 It is axes determined and levied by the governmental authorities. e.g.
property tax , customs duty, Excise Tax.
 Importance of budget: Governmental accounting systems as we have
seen are employed by government resources. The government can
then hold the person accountable for the resources. This means that
budget become highly important in governmental entities.
 Non- profit organizations may employ object budget, programming
budget or performance budget.
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Cont….
 Stewardship for resources: A primary responsibility of governmental
units in financial reporting is to demonstrate adequate stewardship
for resources provided by its citizenry. Non-profit organizations have a
comparable responsibility to their donors but not to the same extent as
governmental units
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Sources of financial reporting standards for Governmental and NFP
 Accounting and financial reporting standards for state and local
governmental units are established by the governmental accounting
standards board (GASB). Accounting and financial reporting standards
for profit seeking business are established by the financial accounting
standards board (FASB).
 The GASB and the FASB are parallel bodies under the oversight of the
Financial Accounting Foundation. they are referred to as “ independent
standard setting boards” in the private sector.
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Cont….
 Before the creation of the GASB & FASB, financial reporting standards
were set by groups sponsored by professional organizations. Before 1934
in US, there was no governmental accounting standard.
 But by 1934, to overcome this confusion & scandal specially in
municipality accounting, the Municipal Finance Officers Association
(MFOA) formed, the National Committee on Municipality Accounting
(NCMA) to assure accounting standard for municipalities.
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Cont….
 By expanding its scope, the NCMA in 1949 was reorganized as National
Committee on Governmental Accounting (NCGA) to establish
accounting standards for states and local governmental units. In
1974, the committee was again reorganized as a council and formed the
National Council of Governmental Accounting (NCGA).
 In 1984 the council was again reorganized as a board parallel to FASB and
was renamed as Governmental Accounting Standards Board
(GASB).
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Cont….
 Accordingly the GASB has the responsibility for establishing accounting &
financial reporting standards for not for profit organizations whose
financial statements may be combined with the financial statements of
state and local governmental reporting entities, or which are
considered governmentally owned. The FASB has the responsibility for
establishing accounting and financial reporting standards for non-
governmental non-for profit organizations.
 But now, IPSAS is adopted for N-F.-P and governmental organization.
12/1/2023 By: Abatneh M. (MSc) 18

What are IPSAS & IFRS?
 IPSAS: stands for International Public Sector Accounting Standards
are a set of accounting standards issued by the IPSASB for use by
public sector entities around the world in the preparation of F/S.
 IPSAS are financial reporting standards for use by public sector
entities & they are for public sector equivalent of International
Financial Reporting Rtandards (IFRS), which apply to private sector
companies and developed by the International Accounting Standards
Board (IASB). As of January 2016 the IPSASB had issued 39 IPSAS.
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Cont….
 IFRS: Stands for International Financial Reporting Standards are a
set of accounting rules for the financial statements of public
companies that are intended to make them consistent, transparent,
and easily comparable around the world. It was also created to bring
consistency and integrity to accounting standards and practices,
regardless of the company or the country.
 IFRS are issued by the International Accounting Standards Board
(IASB).
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IPSAS versus IFRS
1. Scope : IPSAS applies to :International organization, public sectors
(National & local government, other government and commission).
IFRS applies to government business entities and private sectors.
2. Basis of accounting : IPSAS follow accruals or cash basis of
accounting while IFRS follow accrual basis of accounting.
3. Revenue: IPSAS 19 recode it on the title of revenue from exchange
transaction and it includes revenue from ordinary activity and gain.
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Cont….
 While IFRS on IAS 18 record on the title of revenue and it only
include revenue from ordinary activity.
 Separate consolidated Financial statement
 IPSAS Allows entity to use equity method to account for controlled
entities in the separate financial statement of controlling entities
while IFRS use the cost method.
 Lease: Both IPSAS & IFRS classified lease as operating lease or
finance lease
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Cont….
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The Conceptual Framework for Public Sector Accounting [IPSASB]
 DEFINITON OF FRAMEWORK – The basic structure of something : a set of
ideas or facts that provide support for something.
• CONCEPTUAL FRAMEWORK - It describes the objective & the concepts
for general purpose for something. It is a theoretical structure of assumptions,
principles, and rules that holds together the ideas comprising a broad concept.
The Framework of IPSASB is structured into with the following topic:
1: Role and Authority of the Conceptual Framework; 2: Objectives and Users of
General Purpose Financial Reporting; 3: Qualitative Characteristics; 4: Reporting
Entity; 5: Elements in Financial Statements; 6: Recognition in Financial
Statements; 7: Measurement of Assets & Liabilities in Financial Statements; 8:
Presentation of Information in General Purpose F/S.
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Objectives and Users of General Purpose Financial Reporting;
 Objectives: 1. The objectives of financial reporting by public sector entities are
to provide information about the entity that is useful to users of GPFRs for
accountability purposes and for decision-making purposes .
2. Financial reporting is not an end in itself. Its purpose is to provide
information useful to users of GPFRs. The objectives of financial reporting are
therefore determined by reference to the users of GPFRs & their information needs.
 Users : i) Governments , ii) Other public sector entities, iii) Taxpayers, iv)
Donors , v) Lenders .
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Qualitative Characteristics
The qualitative characteristics of information are the followings:
 Relevance: Financial and non-financial information is relevant if it is capable of
making a difference in achieving the objectives of financial reporting.
 Faithful Representation: To be useful, information must be a faithful
representation of the economic & other phenomena that it purports to represent.
 Comparability: Comparability is the quality of information that enables users to
identify similarities in, and differences between, two sets of phenomena.
 Verifiability: Verifiability is the quality of information that helps assure users that
information in GPFRs faithfully represents the economic and other phenomena
that it purports to represent. others are: Materiality and cost-benefit.
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Elements in Financial Statements
(a) Property, plant, and equipment;
(b) Investment property; (c) Intangible assets;
(d) Financial assets (excluding amounts shown under (e), (g), (h) & (i));
(e) Investments accounted for using the equity method;
(f) Inventories;
(g) Recoverables from non-exchange transactions (taxes and transfers);
(h) Receivables from exchange transactions;
(i) Cash and cash equivalents;
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Cont….
(j) Taxes and transfers payable;
(k) Payables under exchange transactions;
(l) Provisions;
(m) Financial liabilities (excluding amounts shown under (j), (k), and (l));
(n) Minority interest, presented within net assets/equity; and
(o) Net assets/equity attributable to owners of the controlling entity.
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Cont….
 Presentation of Information in General Purpose Financial Statements
 Presentation is defined in the Framework as “the selection, location and
organization of information that is reported in the GPFRs”. It focuses on the
comprehensive scope of financial reporting, and describes the concepts
applicable to financial statements in greater detail.
 Reporting Entity: A public sector entity is an entity that raises economic
resources from, or on behalf of, constituents and/or uses economic resources
to undertake activities for the benefit of, or on behalf of, those constituents,
and whose service recipients or resource providers are dependent on the GPFRs
of the entity for information for accountability or decision-making purposes
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Fundamental concepts Recognition, measurement, and disclosure concepts
 Recognition: is described as the process of incorporating and including
amounts shown on the face of the appropriate financial statement.
 An item that is recognized is one that meets the definition of an
element and can be measured in a way that achieves the qualitative
characteristics provided for in the Framework.
 Measurement: is the process is of assigning a monetary value to the
item for the financial statements. Assigning a monetary value to a
transaction requires the selection of an appropriate measurement basis.
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Cont….
 And it ensuring that the measurement is sufficiently relevant and
faithfully representative of the item. The objective is to select those
measurement bases that most fairly reflect the cost of services,
operational capacity & financial capacity of the entity in a manner that is
useful in holding the entity to account, & for decision-making purposes”.
 Disclosure concept is an accounting principle that requires
management to report all relevant information about the company’s
operations to creditors and investors in the financial statements and
footnotes.
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Principles of accounting
&
Financial reporting
of
Governmental Entities
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Objectives
After going through this unit: you should be able to:
 Explain all governmental accounting principles
 Understand the concept of fund accounting system
applied
 Identify the funds, their common accounting
character and the financial activities and resources
they account
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Statement of the principles
Accounting & Reporting Capabilities (Principle #1)
 A government accounting system must make it possible
both:
(a) To present fairly & with full disclosure the financial
operation of the funds & account groups of the
governmental unit in conformity with International
public sectors Accounting standards
(b) To determine & demonstrate compliance with
finance-related legal and contractual provisions.
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Cont….
a. Adherence to IPSAS is essential to answering a reasonable
degree of comparability among the general-purpose
financial reports of state and local governmental units.
b. Sometimes the legal requirements might be contrary to
IPSAS, GAAP or IFRS;
 For instance, governmental entities may require to keep books
with a single entry ledger, or it may require to keep all
account on a strictly cash basis. In these cases since the legal
requirements are contrary to GAAP/IFRS financial
statements & reports prepared in compliance with state laws
are complied.
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Cont….
 In some governmental units however Under such
circumstances where the laws require to follow practices
not consistent with accounting principles,
Governmental units may prepare two sets of financial
statements.
1. One set in compliance with legal requirements,
2. One set in conformity with Accounting principles
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Fund Accounting System (Fund defined) (principle # 2)
 Governmental accounting systems should be organized &
operated on a fund basis.
 “A fund is defined as a fiscal & accounting entity with a
self balancing set of accounts recording cash & other
financial resources, together with all related liabilities &
residual equities and balances, & changes there in, which
are segregated for the purpose of carrying on
specifies activites or attaining certain objectives in
accordance with special regulations, restrictions or
limitations.”
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Cont….
 The word FUND is given special definition as it relates to Fund
Accounting. The narrow definition of Fund as used in ordinary
conversation is a “resource of money”. However in this
course it is given the special definition above. It has key phrases
indicating the following points;
 It is by itself is an entity
 Having its own accounting existence and
 A self balancing set of books(double entry system).
 The establishment of the fund will attain a specific objective
and will have regulations, restrictions or limitations.
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Cont….
 Example: To illustrate the concept of fund, we can
consider the ministry of education that operates on
several colleges. Although all are part of the Ministry as a
whole each one is treated as a fund.
 Each college will be given money that is specifically for
its operations, is not to be mixed up with other
institutions. Therefore each college will keep its own set
of books, and issue its own Financial Reports,
irrespective of the performance of other individual
institutions or the ministry as a whole.
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Types of Funds (Principle # 3)
 There are seven types of funds, which are subdivided into three
categories:
I. GOVERNMENTAL FUNDS
1. The General Fund- to account for all financial resources
except those required to be accounted for in another funds.
2. Special Revenue Funds- to accounts for the proceeds of
specific revenue sources (other than expendable trusts or
for major capital projects) that are legally restricted to
expenditure for specific purposes.
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Cont….
 An example of a special revenue fund might be “The Unity and
safety of the motherland tax” that was collected during the Derg
regime. It was raised specifically for the armed forces.
3. Capital Project Fund- to account for financial resources to be
used for the acquisition or construction of major capital
facilities (other them those financed by proprietary & trusts funds) .
An example of Capital Projects Funds could be the construction of
new building for the city government Administration.
4. Debt Service Funds- It is for the accumulation of resources for
& the payment of general long term debt principal & interest
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Cont….
II. PROPRIETARY FUNDS
5. Enterprise Funds- to accounts for operations where the governing
body has decided that periodic determinations of reveries earned,
expenses incurred and/or net income is appropriate for capital
maintenance, public policy, management control, accountability, or
other purposes
Example: water fund, Airport fund, Natural gas fund……
6. Internal Service Funds- to account for the financing of goods or
services provided by one department or agency to the another
department or agency of the governmental unit, or to the other
governmental units on a cost reimbursement basis.
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Cont….
 A shared garage is a common example of an Internal Service
Fund in government ministry offices. the garage would repair
all the ministries` vehicles regardless of which project, offices
or funds uses them
III. FIDUCIARY FUNDS
7. Trust And Agency Funds- To account for assets held by
governmental unit in a trustee capacity or as an agent for
individual private organizations, other governmental units & or
funds. These include: Expandable trust funds, Non-expendable trust
funds, Pension trust funds and Agency funds.
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Number of Funds (Principle # 4)
 Governmental units should establishes and maintain those
funds require by law & sound financial administration.
only the minimum number of funds in consistent with legal
and operating requirements should be established, however
since unnecessary funds result in inflexibility, undue
complexity & inefficient financial administration.
 The seven fund types are to be used if needed by Governmental
unit to demonstrate compliance with legal requirements or if
needed to facilitate sound financial administration.
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Accounting for fixed assets & long-term liabilities (Principle #5)
 A clear distinction should be made between Fund fixed assets
& general fixed assets & Fund long-term liabilities &
General long-term debt.
A. Fixed assets that related to specific property funds &
trust funds should be accounted for through those funds. All
other fixed assets of governmental units should be accounted for
through the general fixed asset account group.
 General fixed assets include land, buildings, improvements
other than buildings, car & equipment's used by activities
accounted by the four fund types classified as “governmental
funds”.
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Cont….
B. Long term liabilities of proprietary funds & trusts fund
should be accounted for through those funds. All other
unmatured general long-term liabilities of governmental unit
including special assessments debt for which the government is
obligated in some manner should be accounted for through the
general long-term debt account group.
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Valuation of Fixed Assets (PRINCIPLE # 6)
 Fixed assets should be accounted for at cost, or if the cost
is not practically determinable, at estimated cost,
donated fixed assets should be recorded at their
estimated fair value at the time received.
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Deprecation of Fixed Assets (PRINCIPLE # 7)
a. Deprecation of general fixed assets should not be recorded
in the accounts of governmental funds. Deprecation of
general fixed assets may be recorded in cost accounting
systems or calculated for cost finding analysis; &
accumulated deprecation may be recorded in the
General Fixed Asset Account group.
b. Deprecation of fixed assets accounted for in a proprietary
funds should be recorded in accounts of governmental
funds. deprecation also recognized in those trust funds
where expenses, net income &/or capital maintenance are
measured.
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Basis of Accounting (PRINCIPLE # 8)
 The Modified Accrual or accrual basis of accounting as
appropriate should be utilized in measuring financial position
& operating results.
a. Governmental fund revenues & expenditures should be
recognized on the modified accrual basis. Revenues should
be recognized in the accounting in which they become
available & measurable. expenditures should be recognized
in the accounting period in which the fund liability is
incurred, if measurable.
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Cont….
b. Proprietary fund revenues & expenses should be
recognized on the accrual basis.
c. Fiduciary funds revenue and expenses or expenditures (as
appropriate) should be recognized on the basis consistent
with the fund’s accounting measurement objective.
d. Transfers of financial resources among funds should be
recognized in all funds affected in the period in which the
inter-fund receivables & payable(s) arise
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Budget and Budgetary Accounting (Principle # 9)
 Budgeting is the process of allocating of resource to meet
unlimited demands and it is key elements of legislative
control over governmental units.
1. An annual budget (s) should be adapted by every
governmental units.
2. The accounting system should provide the basis for
appropriate budgetary control.
3. Budgetary comparisons should be included in the
appropriate financial statement & schedules for
governmental units funds,
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Importance of budget
 Budget is importance for the government because of:
1. Reallocation of Resources: Through the budgetary policy,
Government aims to reallocate resources in accordance with the
economic (profit maximization) and social (public welfare)
priorities of the country.
2. Reducing inequalities in income and wealth:. It will reduce
income of the rich and raise standard of living of the poor, thus
reducing inequalities in the distribution of income.
3. Economic Stability: Government budget is used to prevent
business fluctuations of inflation or deflation to achieve the
objective of economic stability
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Cont….
4. Management of Public Enterprises: Budget is prepared with
the objective of making various provisions for managing such
enterprises and providing those financial help.
5. Economic Growth: It helps to mobilise sufficient resources
for investment in the public sector.
6. Reducing regional disparities: The government budget aims
to reduce regional disparities through its taxation and
expenditure policy for encouraging setting up of production
units in economically backward regions.
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Classification of budget
 A government budget is an annual financial statement
which outlines the estimated government expenditure
and expected government receipts or revenues for the
forthcoming fiscal year. Depending on the feasibility of
these estimates, budgets are of three types
 Balanced budget
 Surplus budget and
 Deficit budget.
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Cont….
1. Balanced Budget: A government budget is said to be a
balanced budget if the estimated government expenditure is
equal to expected government receipts in a particular
financial year. Advocated by many classical economists, this
type of budget is based on the principle of “living within means.”
They believed the government’s expenditure should not exceed
their revenue.
 Though an ideal approach to achieve a balanced economy and
maintain fiscal discipline, a balanced budget does not ensure
financial stability at times of economic depression or
deflation.
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Cont….
 Theoretically, it’s easy to balance the estimated expenditure &
anticipated revenues but when it comes to practical
implementation, such balance is hard to achieve.
2. Surplus Budget: A government budget is said to be a surplus
budget if the expected government revenues exceed the estimated
government expenditure in a particular financial year. This means
that the government’s earnings from taxes levied are greater than
the amount the government spends on public welfare.
 A surplus budget denotes the financial affluence of a country. It
implemented at times of inflation to reduce aggregate demand.
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Cont….
3. DEFICIT BUDGET: A government budget is said to be a deficit
budget if the estimated government expenditure exceeds the
expected government revenue in a particular financial year.
 This type of budget is best suited for developing economies,
such as India. Especially helpful at times of recession, a deficit
budget helps generate additional demand and boost the rate of
economic growth.
 Here, the government incurs the excessive expenditure to
improve the employment rate.
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Cont….
 This results in an increase in demand for goods and services
which helps in reviving the economy.
 The government covers this amount through public borrowings
(by issuing government bonds) or by withdrawing from its
accumulated reserve surplus.
 Helps in addressing public concerns such as unemployment
at times of economic recession. And it enables the
government to spend on public welfare.
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Cont….
 This results in an increase in demand for goods and services
which helps in reviving the economy.
 The government covers this amount through public borrowings
(by issuing government bonds) or by withdrawing from its
accumulated reserve surplus.
 Helps in addressing public concerns such as unemployment
at times of economic recession. And it enables the
government to spend on public welfare.
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Approaches to budgeting
 Various budgeting models continue to be commonly used
and fall predominantly into the following categories:
(1) line-item, or "traditional," budgeting;
(2) performance budgeting;
(3) program and planning ("program") budgeting;
(4) zero-based budgeting (ZBB);
(5) site-based budgeting; and
(6) outcome-focused budgeting.
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Cont….
 Line-Item Budgeting: It is still the most widely used approach
in many organizations, including schools, because of its
simplicity and its control orientation. It is referred to as the
"historical" approach because administrators and chief
executives often base their expenditure requests on historical
expenditure and revenue data.
 One important aspect of line-item budgeting is that it offers
flexibility in the amount of control established over the use
of resources, depending on the level of expenditure detail (e.g.,
fund, function, object) incorporated into the document.
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Cont….
 It offers simplicity and ease of preparation.
 Although this approach offers substantial advantages, critics
have identified several shortcomings that may make it
inappropriate for certain organizational environments.
The most severe criticism is that line item budgeting presents
little useful information to decision makers on the
functions and activities of organizational units. Because
this budget presents proposed expenditure amounts only by
category, the justifications for such expenditures are not
explicit and are often not intuitive.
12/1/2023 By: Abatneh M. (MSc) 64

Cont….
 Performance Budgeting: A different focus is seen in
performance budgeting models. In a strict performance
budgeting environment, budgeted expenditures are based
on a standard cost of inputs multiplied by the number
of units of an activity expected to be provided in a
time period.
 Although this strict approach may be useful for certain
types of operations, many organizations require a
more flexible approach.
12/1/2023 By: Abatneh M. (MSc) 65

Cont….
 Program and Planning (Program) Budgeting: Program
budgeting refers to a variety of different budgeting systems
that base expenditures primarily on programs of work and
secondarily on objects. It is considered a transitional form
between traditional line-item and performance approaches,
sometimes referred to as modified program budgeting.
 In contrast to other approaches, a full program budget bases
expenditures solely on programs of work regardless of objects
or organizational units. Program budgeting is flexible enough
to be applied in a variety of ways, depending on
organizational needs and administrative capabilities.
12/1/2023 By: Abatneh M. (MSc) 66

Cont….
 Zero-Based Budgeting (ZBB): The basic tenet of ZBB is that
program activities and services must be justified annually
during the budget development process. The budget is
prepared by dividing all of a government's operations into
decision units at relatively low levels of the organization.
Individual decision units are then aggregated into decision
packages on the basis of program activities, program goals,
organizational units, and so forth.
 Costs of goods or services are attached to each decision package
on the basis of the level of production or service to be provided
to produce defined outputs or outcomes. Decision units are
then ranked by their importance in reaching
organizational goals and objectives.
12/1/2023 By: Abatneh M. (MSc) 67

12/1/2023 By: Abatneh M. (MSc) 68

12/1/2023 By: Abatneh M. (MSc) 69

Cont….
 Site-Based Budgeting: Site-based budgeting is widely
considered the most practical for budgeting within the
school district environment because it provides greater
control and reporting of school-level data. This approach
(which may be used in combination with any of the four
discussed above) emphasizes the decentralization of
budgetary decision making.
 Site-based budgeting places local managers and other staff at
the center of the budget preparation process, making them
responsible for both the preparation and the maintenance
of the budget.
12/1/2023 By: Abatneh M. (MSc) 70

Cont….
 Outcome-Focused Budgeting: Consistent with the
evaluation objective, government budgeting is becoming
increasingly outcome focused. Fiscal austerity, coupled with
intense competition for resources, has precipitated an effort to
ensure a more effective use of resources at all levels of
government.
 Outcome-focused budgeting is the practice of linking the
allocation of resources to the production of outcomes. The
objective is to allocate government's resources to those service
providers or programs that use them most effectively.
12/1/2023 By: Abatneh M. (MSc) 71

Financial Reporting (Principal # 10)
1. Appropriate interim financial statements & reports of
financial position, operating results & other pertinent
information should be prepared to facilitate management
control of financial operations, legislative oversight &
where necessary or desired for external reporting purpose.
2. A comprehensive annual financial report covering all
funds & account gropes of the governmental unit including
appropriate combined, combining & individual fund
statements, notes to the F.S, schedules, narrative explanations
& statistical tables should be prepared & published.
12/1/2023 By: Abatneh M. (MSc) 72

Cont….
12/1/2023 By: Abatneh M. (MSc) 73

International Public Sector
Accounting Standards [IPSAS]
12/1/2023 By: Abatneh M. (MSc) 74

Activities of Government
 The following matters are some of the activity of the government.
1. Enacting and Enforcing Laws: it is the prime responsibility of
the Government of each country. This is because laws and
regulations only enable the businesses to function smoothly.
2. Maintaining Law and Order :protecting persons and property
is another responsibility of the Government of the country. It
would be impossible to carry on business in the absence of a
peaceful atmosphere.
3. 3. Providing Monetary System: The Government has to
provide monetary system so that business transactions can be
effected.
12/1/2023 By: Abatneh M. (MSc) 75

Cont….
Further, it is also the responsibility of the Government to regulate
money and credit, and protect the money value of the currency in
terms of other currencies.
4. Balanced Regional Development and Growth: It is the
responsibility of the Government to make sure that there are balanced
regional developments and growth.
5. Provision of Basic Infrastructure: Government should provide
basic infrastructural facilities such as transportation, power, finance,
trained personnel and civic amenities, which are indispensable for
the effective functioning of business concerns.
12/1/2023 By: Abatneh M. (MSc) 76

Cont….
6. Supply of Information: Governments is responsible to
provide information, which is useful to businessmen which
relates to economic and business activity, specific lines of
business, scientific and technological developments.
7. Assistance to Small-scale Industries: Government provide
the required facilities and encourage the development of small-
scale industries to overcome the problem faced by them.
8. Transfer of Technology: Government is responsible to
transfer to private industries whatever discoveries are made by
the Government – owned Research Institutions so that they
can be used for commercial production.
12/1/2023 By: Abatneh M. (MSc) 77

Cont….
9. Conducting Inspections: Government responsible to inspect
the private business concerns in order to make sure that they
produce quality products, and also to prevent the production and
sale of sub-standard goods.
10. Incentives to Home Industries: It is the responsibility of the
Government to encourage the development of home industries
by providing them various incentives and subsidies.
12/1/2023 By: Abatneh M. (MSc) 78

Cont….
Summary statement of principles
12/1/2023 By: Abatneh M. (MSc) 79

IPSAS 1—PRESENTATION OF FINANCIAL STATEMENTS
 Objectives: The objective of this Standard is to prescribe
the manner in which general purpose financial statements
should be presented to ensure comparability both with the
entity’s financial statements of previous periods and with
the financial statements of other entities.
 Scope: This Standard shall be applied to all general purpose
financial statements prepared and presented under the
accrual basis of accounting in accordance with IPSASs.
12/1/2023 By: Abatneh M. (MSc) 80

Definitions
 Accrual basis: means a basis of accounting under which
transactions and other events are recognized when they occur
(and not only when cash or its equivalent is received or paid).
 Assets: are resources controlled by an entity as a result of
past events and from which future economic benefits or
service potential are expected to flow to the entity.
 Contributions from owners: means future economic
benefits or service potential that has been contributed to the
entity by parties external to the entity, other than those
that result in liabilities of the entity
12/1/2023 By: Abatneh M. (MSc) 81

Cont….
 Distributions to owners means future economic benefits or service
potential distributed by the entity to all or some of its owners,
 An economic entity is a controlling entity & its controlled entities.
 Expenses: are decreases in economic benefits or service potential
during the reporting period in the form of outflows or
consumption of assets or incurrences of liabilities that result in
decreases in net assets/equity, other than those relating to
distributions to owners.
 Revenue: is the gross inflow of economic benefits or service
potential during the reporting period when those inflows
result in an increase in net assets/equity, other than
increases relating to contributions from owners.
12/1/2023 By: Abatneh M. (MSc) 82

Cont….
 Liabilities: are present obligations of the entity arising from past
events, the settlement of which is expected to result in an
outflow from the entity of resources embodying economic benefits
or service potential.
 Material: Omissions or misstatements of items are material if they could,
individually or collectively, influence the decisions or assessments of
users made on the basis of the financial statements.
 Net assets/equity: is the residual interest in the assets of the
entity after deducting all its liabilities.
 Impracticable: It is when the entity cannot apply it after making
every reasonable effort to do so.
12/1/2023 By: Abatneh M. (MSc) 83

Purpose of Financial Statements
 The objectives of general purpose financial reporting in the
public sector should be to provide information useful for
decision making, and to demonstrate the accountability of
the entity for the resources entrusted to it, by:
 Providing information about the sources, allocation, & uses of
resources;
 Providing information about how the entity financed its
activities
 Providing information that is useful in evaluating the entity’s
ability to finance its activities and to meet its liabilities
12/1/2023 By: Abatneh M. (MSc) 84

Cont….
 Providing information about the financial condition of the
entity and changes in it;
 Providing aggregate information useful in evaluating the
entity’ performance in terms of service costs, efficiency, and
accomplishments
12/1/2023 By: Abatneh M. (MSc) 85

Components of Financial Statements
A complete set of financial statements comprises:
(a) A statement of financial position;
(b) A statement of financial performance;
(c) A statement of changes in net assets/equity;
(d) A cash flow statement;
(e) When the entity makes publicly available its approved budget,
a comparison of budget and actual amounts
(f) Notes, comprising a summary of significant accounting policies
(g) Comparative information in respect of the preceeding period
12/1/2023 By: Abatneh M. (MSc) 86

IPSAS 2—CASH FLOW STATEMENTS
 Objective: The cash flow statement identifies (a) the sources of
cash inflows, (b) the items on which cash was expended during the
reporting period, and (c) the cash balance as at the reporting date.
 Scope: An entity that prepares and presents financial statements
under the accrual basis of accounting shall prepare a cash flow
statement in accordance with the requirements of this Standard
 Information about cash flows may be useful to (a) assessing the
entity’s cash flows, (b) assessing the entity’s compliance with
legislation and regulations (including authorized budgets where
appropriate), and (c) making decisions about whether to provide
resources to, or enter into transactions with, an entity.
12/1/2023 By: Abatneh M. (MSc) 87

Definitions
 Cash comprises cash on hand and demand deposits.
 Cash equivalents: are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
 Cash flows are inflows and outflows of cash and cash equivalents.
 Control: An entity controls another entity when the entity is
exposed, or has rights, to variable benefits from its involvement
with the other entity and has the ability to affect the nature or
amount of those benefits through its power over the other entity.
 Financing activities are activities that result in changes in the size
and composition of the contributed capital and borrowings of the
entity.
12/1/2023 By: Abatneh M. (MSc) 88

Cont….
 Investing activities are the acquisition and disposal of long-
term assets and other investments not included in cash
equivalents.
 Operating activities are the activities of the entity that are not
investing or financing activities.
 Reporting date means the date of the last day of the reporting
period to which the financial statements relate.
 Terms defined in other IPSASs are used in this Standard with
the same meaning as in those Standards,
12/1/2023 By: Abatneh M. (MSc) 89

Operating Activities
 Cash flows from operating activities are primarily derived from the
principal cash-generating activities of the entity. Examples are:
(a) Cash receipts from taxes, levies, and fines; (b) Cash receipts from charges
for goods and services provided by the entity; (c) Cash receipts from grants or
transfers, (d) Cash receipts from royalties, fees, commissions, and other
revenue; (da) Cash payments to beneficiaries of social benefit schemes; (e)
Cash payments to other public sector entities to finance their operations , (f)
Cash payments to suppliers for goods and services; (g) Cash payments to
and on behalf of employees; (i) Cash payments of local property taxes or
income taxes in normal activity, (j) Cash receipts and payments from
contracts held for dealing or trading purposes; (k) Cash receipts or payments
from discontinuing operations; and (l) Cash receipts or payments in relation to
litigation settlements.
12/1/2023 By: Abatneh M. (MSc) 90

Investing Activities
 . Examples of cash flows arising from investing activities are:
(a) Cash payments to acquire property, plant, and equipment, intangibles, and other
long-term assets. These payments include those relating to capitalized development
costs and self-constructed property, plant, and equipment; (b) Cash receipts from
sales of property, plant, and equipment, intangibles, and other long-term assets; (c)
cash payments to acquire equity or debt instruments of other entities and
interests in joint ventures (other than payments or trading purposes); (d) Cash
receipts from sales of equity or debt instruments of other entities and interests in joint
ventures (other than receipts those held for dealing or trading purposes); (e) Cash
advances and loans made to other parties, (f) Cash receipts from the repayment of
advances and loans made to other parties; (g) Cash payments for futures
contracts, forward contracts, option contracts, and swap contracts, except held for
dealing or trading purposes, or the payments are classified as financing activities; and
(h) Cash receipts from futures contracts, forward contracts, option contracts, and
swap contracts,
12/1/2023 By: Abatneh M. (MSc) 91

Financing Activities
 The separate disclosure of cash flows arising from financing
activities is important, because it is useful in predicting claims
on future cash flows by providers of capital to the entity.
Examples of cash flows arising from financing activities are:
(a) Cash proceeds from issuing debentures, loans, notes,
bonds, mortgages, and other short or long-term borrowings;
(b) Cash repayments of amounts borrowed; and
(c) Cash payments by a lessee for the reduction of the
outstanding liability relating to a finance lease.
12/1/2023 By: Abatneh M. (MSc) 92

IPSAS 3—ACCOUNTING POLICIES, CHANGES IN
ACCOUNTING ESTIMATES AND ERRORS
 Objective: The objective of this Standard is to prescribe the
criteria for selecting and changing accounting policies,
together with the (a) accounting treatment and disclosure
of changes in accounting policies, (b) changes in accounting
estimates, and (c) the corrections of errors.
 Scope: This Standard shall be applied in selecting and applying
accounting policies, and accounting for changes in accounting
policies, changes in accounting estimates, and corrections
of prior period errors.
12/1/2023 By: Abatneh M. (MSc) 93

Definitions
 Accounting policies are the specific principles, bases,
conventions, rules, and practices applied by an entity in preparing
and presenting financial statements.
 A change in accounting estimate is an adjustment of the carrying
amount of an asset or a liability, that results from the assessment of
the present status of, and expected future benefits and
obligations associated with, assets and liabilities.
 Prior period errors are omissions from, and misstatements in, the
entity’s financial statements for one or more prior periods arising
from a failure to use, or misuse of, faithfully representative
information
12/1/2023 By: Abatneh M. (MSc) 94

Cont….
 Retrospective restatement is correcting the recognition,
measurement, & disclosure of amounts of elements of financial
statements as if a prior period error had never occurred.
 Consistency of Accounting Policies: An entity shall select
and apply its accounting policies consistently for similar
transactions, other events, and conditions, unless an IPSAS
specifically requires or permits categorization of items for
which different policies may be appropriate.
12/1/2023 By: Abatneh M. (MSc) 95

IPSAS 4―THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES
 Objective. An entity may carry on foreign activities in two ways. It
may have transactions in foreign currencies or it may have
foreign operations. In addition, an entity may present its financial
statements in a foreign currency.
 The objective of this Standard is to prescribe how to include foreign
currency transactions and foreign operations in the financial
statements of an entity, and how to translate financial statements
into a presentation currency.
 The principal issues are (a) which exchange rate(s) to use, and (b)
how to report the effects of changes in exchange rates in the financial
statements.
12/1/2023 By: Abatneh M. (MSc) 96

Cont….
under the accrual basis of accounting shall apply this Standard:
(a) In accounting for transactions and balances in foreign currencies,
except for those derivative transactions and balances that are
within the scope of IPSAS 41, Financial Instruments;
(b)In translating the financial performance and financial position of
foreign operations that are included in the financial statements of the
entity by consolidation, or by the equity method; and
(c) In translating an entity’s financial performance and financial
position into a presentation currency.
12/1/2023 By: Abatneh M. (MSc) 97

Definitions
 Closing rate is the spot exchange rate at the reporting date.
 Exchange difference is the difference resulting from translating
a given number of units of one currency into another
currency at different exchange rates.
 Exchange rate is the ratio of exchange for two currencies.
 Foreign currency is a currency other than the functional
currency of the entity.
 Foreign operation is an entity that is a controlled entity,
associate, joint arrangement, or branch of a reporting entity,
the activities of which are based or conducted in a country
or currency other than those of the reporting entity.
12/1/2023 By: Abatneh M. (MSc) 98

Cont….
 Functional currency is the currency of the primary economic
environment in which the entity operates.
 Monetary items are units of currency held and assets and liabilities
to be received or paid in a fixed or determinable number of units of
currency.
 Net investment in a foreign operation is the amount of the
reporting entity’s interest in the net assets/equity of that operation.
 Presentation currency is the currency in which the financial
statements are presented.
 Spot exchange rate is the exchange rate for immediate delivery.
12/1/2023 By: Abatneh M. (MSc) 99

Cont….
Functional Currency: The primary economic environment in which an
entity operates is normally the one in which it primarily generates
and expends cash. An entity considers the following factors in
determining its functional currency: (a)The currency:
(i)That revenue is raised from, such as taxes, grants, and fines;
(ii) That mainly influences sales prices for goods and services and
(iii) Of the country whose competitive forces and regulations
mainly determine the sale prices of its goods and services.
(b) The currency that mainly influences labor, material, and other costs
of providing goods and services
12/1/2023 By: Abatneh M. (MSc) 100

IPSAS 5—BORROWING COSTS
 Objective: This Standard prescribes the accounting treatment
for borrowing costs. This Standard generally requires the
immediate expensing of borrowing costs. However, the
Standard permits, as an allowed alternative treatment, the
capitalization of borrowing costs that are directly
attributable to the acquisition, construction, or production of a
qualifying asset.
 Scope: This Standard shall be applied in accounting for
borrowing costs.
12/1/2023 By: Abatneh M. (MSc) 101

Definitions
 Borrowing costs are interest and other expenses incurred by
an entity in connection with the borrowing of funds.
 Qualifying asset is an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale. Borrowing
costs may include:
(a) Interest expense calculated using the effective interest
method as described in IPSAS 41, Financial Instruments;
(b) Finance charges in respect of finance leases and service
concession arrangements; and
(e) Exchange differences arising from foreign currency
borrowings, to the extent that they are regarded as an adjustment to
interest costs.
12/1/2023 By: Abatneh M. (MSc) 102

Cont….
 Qualifying Assets: Examples of qualifying assets are office
buildings, hospitals, infrastructure assets such as roads,
bridges and power generation facilities, and inventories that
require a substantial period of time to bring them to a condition
ready for use or sale.
 Other investments, and those assets that are routinely produced
over a short period of time, are not qualifying assets. Assets
that are ready for their intended use or sale when acquired also
are not qualifying assets.
 Borrowing costs shall be recognized as an expense in the period
in which they are incurred. The financial statements shall
disclose the accounting policy adopted for borrowing costs.
12/1/2023 By: Abatneh M. (MSc) 103

(IPSAS) 6, Consolidated and Separate Financial Statements
 International Public Sector Accounting Standard (IPSAS) 6,
Consolidated and Separate Financial Statements has been
superseded by IPSAS 34, Separate Financial Statements and
IPSAS 35, Consolidated Financial Statements.
 These Standards apply for annual financial statements covering
periods beginning on or after January 1, 2017. As a result IPSAS
6 is no longer applicable and has been removed.
 IPSAS 6 : requires all controlling entities to prepare
consolidated financial statements, which consolidate all
controlled entities on a line-by-line basis.
12/1/2023 By: Abatneh M. (MSc) 104

IPSAS 7 Investments in Associates
 IPSAS 7 Investments in Associates requires all such
investments to be accounted for in the consolidated financial
statements using the equity method of accounting.
12/1/2023 By: Abatneh M. (MSc) 105

IPSAS 8 Interests in Joint Ventures
 International Public Sector Accounting Standard (IPSAS) 8,
Interests in Joint Ventures has been superseded by IPSAS 37,
Joint Arrangements. This Standards apply for annual financial
statements covering periods beginning on or after January 1,
2017. As a result IPSAS 8 is no longer applicable and has
been removed.
 IPSAS 8 Interests in Joint Ventures requires proportionate
consolidation to be adopted as the benchmark treatment, and
the equity method of accounting as an allowed alternative to
account for joint ventures
12/1/2023 By: Abatneh M. (MSc) 106

IPSAS 9—REVENUE FROM EXCHANGE TRANSACTIONS
accounting treatment of revenue arising from exchange
transactions and events. The primary issue in accounting for
revenue is determining when to recognize revenue. Revenue is
recognized when it is probable that (a) future economic
benefits or service potential will flow to the entity, and (b)
these benefits can be measured reliably.
 This Standard identifies the circumstances in which these
criteria will be met and, therefore, revenue will be recognized.
It also provides practical guidance on the application of these
criteria.
12/1/2023 By: Abatneh M. (MSc) 107

Cont….
 Scope: An entity that prepares and presents financial
statements under the accrual basis of accounting shall apply
this Standard in accounting for revenue arising from the
following exchange transactions and events:
 (a) The rendering of services;
 (b) The sale of goods; and
 (c) The use by others of entity assets yielding interest, royalties,
and dividends or similar distributions.
12/1/2023 By: Abatneh M. (MSc) 108

Cont….
 This Standard does not deal with revenue arising from non-exchange
transactions.
 An exchange transaction is one in which the entity receives assets or
services, or has liabilities extinguished, and directly gives approximately
equal value (primarily in the form of goods, services, or use of assets) to
the other party in exchange. Examples of exchange transactions include:
 Information that is reliable is free from material error and bias, and
can be depended on by users to faithfully represent that which it
purports to represent or could reasonably be expected to represent.
Paragraph BC16 of IPSAS 1 discusses the transitional approach to the
explanation of reliability.
12/1/2023 By: Abatneh M. (MSc) 109

Cont….
(a) The purchase or sale of goods or services; or
(b) The lease of property, plant, and equipment at market rates.
 Examples of non-exchange transactions include revenue from
the use of sovereign powers (for example, direct and indirect
taxes, duties, and fines), grants, and donations.
 The rendering of services typically involves the performance
by the entity of an agreed task over an agreed period of time.
 This Standard does not deal with revenues arising from:
 (a) Lease agreements (see IPSAS 13, Leases);
 (b) Dividends or similar distributions arising from investments
12/1/2023 By: Abatneh M. (MSc) 110

IPSAS 10—FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES
 Objective፡ Is to prescribe the accounting treatment in the
consolidated and individual financial statements of an entity
whose functional currency is the currency of a hyperinflationary
economy. The Standard also specifies the accounting treatment
where the economy ceases to be hyperinflationary.
 Scope፡ An entity that prepares and presents financial statements
under the accrual basis of accounting shall apply this Standard to
the financial statements, including the consolidated financial
statements, of any entity whose functional currency is the
currency of a hyperinflationary economy. In a hyperinflationary
economy, reporting of operating results and financial position in
the local currency without restatement is not useful.
12/1/2023 By: Abatneh M. (MSc) 111

Definitions
 Hyper Inflation: Interest rates, wages, and prices are linked to a
price index and The cumulative inflation rate over three years is
approaching, or exceeds, 100%.
 Carrying amount of an asset is the amount at which an asset is
recognized in the statement of financial position, after
deducting any accumulated depreciation and accumulated
impairment losses thereon.
 Carrying amount of a liability is the amount at which a liability is
recognized in the statement of financial position.
 Non-monetary items are items that are not monetary items.
 Terms defined in other IPSASs are used in this Standard with the
same meaning as in those Standards, and are reproduced in the
Glossary of Defined Terms published separately.
12/1/2023 By: Abatneh M. (MSc) 112

IPSAS 11—CONSTRUCTION CONTRACTS
accounting treatment of costs and revenue associated with
construction contracts. The Standard:
I. Identifies the arrangements that are to be classified as
construction contracts;
II. Provides guidance on the types of construction contracts that can
arise in the public sector; and
III. Specifies the basis for recognition and disclosure of contract
expenses and, if relevant, contract revenues.
 Because of the nature of the activity undertaken in construction
contracts, the date at which the contract activity is entered into
and the date when the activity is completed usually fall into different
reporting periods.
12/1/2023 By: Abatneh M. (MSc) 113

Cont….
 In many jurisdictions, construction contracts entered into by
public sector entities will not specify an amount of contract
revenue. Rather, funding to support the construction activity
will be provided by an appropriation or similar allocation of
general government revenue, or by aid or grant funds.
 Scope: A contractor that prepares and presents financial
statements under the accrual basis of accounting shall
apply this Standard in accounting for construction Contracts.
12/1/2023 By: Abatneh M. (MSc) 114

Definitions
 Construction contract is a contract, or a similar binding arrangement,
specifically negotiated for the construction of an asset or a
combination of assets that are closely interrelated or interdependent in
terms of their design, technology, and function or their ultimate purpose
or use.
 Contractor is an entity that performs construction work pursuant to a
construction contract.
 Cost plus or cost-based contract is a construction contract in which the
contractor is reimbursed for allowable or otherwise defined costs
and, in the case of a commercially based contract, an additional
percentage of these costs or a fixed fee, if any.
12/1/2023 By: Abatneh M. (MSc) 115

Cont….
 Fixed price contract: is a construction contract in which the
contractor agrees to a fixed contract price, or a fixed rate per
unit of output, which in some cases is subject to cost
escalation clauses. For the purposes of this Standard,
construction contracts include:
(a) Contracts for the rendering of services that are directly
related to the construction of the asset, for example, those for the
services of project managers and architects; and
(b) Contracts for the destruction or restoration of assets, and the
restoration of the environment following the demolition of
assets.
12/1/2023 By: Abatneh M. (MSc) 116

Cont….
 A contractor: is an entity that enters into a contract to build
structures, construct facilities, produce goods, or render
services to the specifications of another entity. The term
“contractor” includes a general or prime contractor, a subcontractor
to a general contractor, or a construction manager
 Contract Revenue: Contract revenue shall comprise:
(a) The initial amount of revenue agreed in the contract; and
(b) Variations in contract work, claims, and incentive payments to the
extent that:
(i) It is probable that they will result in revenue; and
(ii) They are capable of being reliably1 measured.
12/1/2023 By: Abatneh M. (MSc) 117

IPSAS 12—INVENTORIES
 Objective: The objective of this Standard is to prescribe
the accounting treatment for inventories. A primary issue
in accounting for inventories is the amount of cost to be
recognized as an asset and carried forward until the
related revenues are recognized.
 This Standard provides guidance on the determination of
cost and its subsequent recognition as an expense,
including any write-down to net realizable value. It also
provides guidance on the cost formulas that are used to
assign costs to inventories.
12/1/2023 By: Abatneh M. (MSc) 118

Scope:
 An entity that prepares and presents financial statements under the
accrual basis of accounting shall apply this Standard in accounting
for all Inventories except:
(a) Work-in-progress arising under construction contracts, including
directly related service contracts (see IPSAS 11, Construction Contracts);
(b) Financial instruments (see IPSAS 28,Financial Instruments:
Presentation and IPSAS 41, Financial Instruments);
(c) Biological assets related to agricultural activity and agricultural
produce at the point of harvest (see IPSAS 27, Agriculture); and
(d) Work-in-progress of services to be provided for no or nominal
consideration directly in return from the recipients.
12/1/2023 By: Abatneh M. (MSc) 119

Definitions
 Current replacement cost is the cost the entity would incur to
acquire the asset on the reporting date. Inventories are assets:
 (a) In the form of materials or supplies to be consumed in the
 production process; (b) In the form of materials or supplies to be
consumed or distributed in the rendering of services;
 (c) Held for sale or distribution in the ordinary course of
operations; or (d) In the process of production for sale or
distribution.
 Net realizable value: is the estimated selling price in the
ordinary course of operations, less the estimated costs of
completion and the estimated costs necessary to make the sale,
exchange, or distribution.
12/1/2023 By: Abatneh M. (MSc) 120

IPSAS 13—LEASES
 Objective: The objective of this Standard is to prescribe, for
lessees and lessors, the appropriate accounting policies
and disclosures to apply in relation to finance and operating
leases.
this Standard in accounting for all leases other than:
 (a) Leases to explore for or use minerals, oil, natural gas,
and similar non-regenerative resources; and
 (b) Licensing agreements for such items as motion picture
films, video recordings, plays, manuscripts, patents, and
copyrights.
12/1/2023 By: Abatneh M. (MSc) 121

Definitions
 The commencement of the lease term is the date from which
the lessee is entitled to exercise its right to use the leased
asset. It is the date of initial recognition of the lease (i.e., the
recognition of the assets, liabilities, revenue, or expenses
resulting from the lease, as appropriate).
 Contingent rent is that portion of the lease payments that is
not fixed in amount, but is based on the future amount of a
factor that changes other than with the passage of time (e.g.,
percentage of future sales, amount of future use, future price
indices, future market rates of interest).
12/1/2023 By: Abatneh M. (MSc) 122

Cont….
 Economic life is either: (a) The period over which an
asset is expected to yield economic benefits or service potential
to one or more users; or (b) The number of production or
similar units expected to be obtained from the asset by one
or more users.
 A finance lease is a lease that transfers substantially all the risks
and rewards incidental to ownership of an asset. Title may or
may not eventually be transferred.
 Gross investment in the lease is the aggregate of: (a) The
minimum lease payments receivable by the lessor under a
finance lease; and (b) Any unguaranteed residual value
accruing to the lessor.
12/1/2023 By: Abatneh M. (MSc) 123

IPSAS 14—EVENTS AFTER THE REPORTING DATE
 Objective: The objective of this Standard is to prescribe:
(a) When an entity should adjust its financial statements for
events after the reporting date; and
(b) The disclosures that an entity should give about the date
when the financial statements were authorized for
issue, and about events after the reporting date.
this Standard in the accounting for, and disclosure of, events
after the reporting date.
12/1/2023 By: Abatneh M. (MSc) 124

Definitions
 Events after the reporting date are those events, both favorable
and unfavorable, that occur between the reporting date and the
date when the financial statements are authorized for issue.
Two types of events can be identified:
 (a) Those that provide evidence of conditions that existed at the
reporting date (adjusting events after the reporting date); and
 (b)Those that are indicative of conditions that arose after the
reporting date (non-adjusting events after the reporting ate).
12/1/2023 By: Abatneh M. (MSc) 125

(IPSAS) 15, Financial Instruments: Disclosure and Presentation
 International Public Sector Accounting Standard
(IPSAS) 15, Financial Instruments: Disclosure and
Presentation has been superseded by IPSAS 28, Financial
Instruments: Presentation; IPSAS 29, Financial
Instruments: Recognition and Measurement; and IPSAS
30, Financial Instruments: Disclosures.
 These Standards apply for annual financial statements
covering periods beginning on or after January 1, 2013. As a
result IPSAS 15 is no longer applicable and has been
removed.
12/1/2023 By: Abatneh M. (MSc) 126

IPSAS 16—INVESTMENT PROPERTY
accounting treatment for investment property and related
disclosure requirements.
this Standard in accounting for investment property.
 This Standard does not apply to: (a) Biological assets related to
agricultural activity (see IPSAS 27, Agriculture and IPSAS 17,
Property, Plant, and Equipment); and (b) Mineral rights and
mineral reserves such as oil, natural gas, and similar non-
regenerative resources.
12/1/2023 By: Abatneh M. (MSc) 127

Cont….
 Leases, including:
(a) Classification of leases as finance leases or operating
leases;
(b) Recognition of lease revenue from investment property (see
also IPSAS 9, Revenue from Exchange Transactions);
(c) Measurement in a lessee’s financial statements of property
interests held under a lease accounted for as an operating lease;
(d) Measurement in a lessor’s financial statements of its net
Investment in a finance lease;
(e) Accounting for sale and leaseback transactions; and
(f) Disclosure about finance leases and operating leases.
12/1/2023 By: Abatneh M. (MSc) 128

Definitions
 Carrying amount (for the purpose of this Standard) is the
amount at which an asset is recognized in the statement of
financial position.
 Cost is the amount of cash or cash equivalents paid or the
fair value of other consideration given to acquire an asset
at the time of its acquisition or construction.
 Investment property is property (land or a building - or
part of a building - or both) held to earn rentals or for
capital appreciation, or both, rather than for:
12/1/2023 By: Abatneh M. (MSc) 129

Cont….
 (a) Use in the production or supply of goods or services,
or for administrative purposes; or
 (b) Sale in the ordinary course of operations.
 Owner-occupied property is property held (by the owner
or by the lessee under a finance lease) for use in the
production or supply of goods or services, or for
administrative purposes.
12/1/2023 By: Abatneh M. (MSc) 130

IPSAS 17—PROPERTY, PLANT, AND EQUIPMENT
accounting treatment for property, plant, and equipment so
that users of financial statements can discern information
about an entity’s investment in its property, plant, and
equipment and the changes in such investment.
 The principal issues in accounting for property, plant, and
equipment are (a) the recognition of the assets, (b) the
determination of their carrying amounts, and (c) the
depreciation charges and impairment losses to be recognized
in relation to them.
12/1/2023 By: Abatneh M. (MSc) 131

Cont….
this Standard in accounting for property, plant, and equipment,
except:
 (a) When a different accounting treatment has been adopted in
accordance with another IPSAS; and
(b) In respect of heritage assets.
 However, the disclosure requirements of paragraphs 88, 89,
and 92 apply to those heritage assets that are recognized.
12/1/2023 By: Abatneh M. (MSc) 132

Cont….
 This Standard applies to property, plant, and equipment
including:
(a) Weapons systems;
(b) Infrastructure assets; and
(c) Service concession arrangement assets after initial
recognition and measurement in accordance with IPSAS 32,
Service Concession Arrangements: Grantor.
12/1/2023 By: Abatneh M. (MSc) 133

IPSAS 19—PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT
ASSETS
 Objective: The objective of this Standard is to (a) define
provisions, contingent liabilities, and contingent assets,
and (b) identify the circumstances in which provisions
should be recognized, how they should be measured, and
the disclosures that should be made about them.
 The Standard also requires that certain information be
disclosed about contingent liabilities and contingent
assets in the notes to the financial statements, to enable
users to understand their nature, timing, and amount.
12/1/2023 By: Abatneh M. (MSc) 134

Cont….
this Standard in accounting for provisions, Contingent
liabilities, and contingent assets, except:
 (a) Social benefits within the scope of IPSAS 42;
 (b) Those covered by another IPSAS;
 (c) Those arising in relation to income taxes or income tax
equivalents; and
 (d) Those arising from employee benefits, except employee
termination benefits that arise as a result of a restructuring,
as dealt with in this Standard.
12/1/2023 By: Abatneh M. (MSc) 135

IPSAS 20—RELATED PARTY DISCLOSURES
 Objective: The objective of this Standard is to require the
disclosure of the existence of related party relationships where
control exists, and the disclosure of information about
transactions between the entity and its related parties in
certain circumstances.
 This information is required for accountability purposes,
and to facilitate a better understanding of the
financial position and performance of the reporting
entity. The principal issues in disclosing information
about related parties are
12/1/2023 By: Abatneh M. (MSc) 136

Cont….
(a) identifying which parties control or significantly
influence the reporting entity, and
(b) determining what information should be disclosed
about transactions with those parties.
statements under the accrual basis of accounting shall
apply this Standard in disclosing information about
related party relationships and certain transactions with
related parties.
12/1/2023 By: Abatneh M. (MSc) 137

IPSAS 21—IMPAIRMENT OF NON-CASH-GENERATING ASSETS
procedures that an entity applies to determine whether a non-
cash-generating asset is impaired, and to ensure that
impairment losses are recognized. This Standard also specifies
when an entity would reverse an impairment loss, and
prescribes disclosures
this Standard in accounting for impairment of non-cash-
generating assets, except:
12/1/2023 By: Abatneh M. (MSc) 138

Cont….
(a) Inventories (see IPSAS 12, Inventories);
(b) Assets arising from construction contracts (see
IPSAS 11,Construction Contracts);
(c) Financial assets that are included in the scope of IPSAS 41,
Financial Instruments;
(d) Investment property that is measured using the fair value
model (see IPSAS 16, Investment Property);
12/1/2023 By: Abatneh M. (MSc) 139

IPSAS 22—disclosure Of Financial Information About The
General Government Sector
disclosure requirements for governments that elect to present
information about the general government sector (GGS)
in their consolidated financial statements.
 The disclosure of appropriate information about the GGS of a
government can enhance the transparency of financial
reports, and provide for a better understanding of the
relationship between the market and non-market activities of
the government, and between financial statements and
statistical bases of financial reporting.
12/1/2023 By: Abatneh M. (MSc) 140

IPSAS 23—REVENUE FROM NON-EXCHANGE TRANSACTIONS
(TAXES AND TRANSFERS)
 Objective: The objective of this Standard is to prescribe requirements
for the financial reporting of revenue arising from non-exchange
transactions, other than non-exchange transactions that give rise to
a public sector combination. This Standard deals with issues that
need to be considered in recognizing and measuring revenue
from non-exchange transactions.
under the accrual basis of accounting shall apply this Standard in
accounting for revenue from non-exchange transactions such as:
Taxes; and Transfers (whether cash or noncash), including grants,
debt forgiveness, fines, bequests, gifts, donations, goods and
services in-kind.
12/1/2023 By: Abatneh M. (MSc) 141

Definitions
 Conditions on transferred assets are stipulations that
specify that the future economic benefits or service potential
embodied in the asset is required to be consumed by the
recipient as specified or future economic benefits or
service potential must be returned to the transferor.
 Control of an asset arises when the entity can use or
otherwise benefit from the asset in pursuit of its objectives,
and can exclude or otherwise regulate the access of others to
that benefit.
 Expenses paid through the tax system are amounts that are
available to beneficiaries regardless of whether or not they pay
taxes.
12/1/2023 By: Abatneh M. (MSc) 142

Cont….
 Fines are economic benefits or service potential received or
receivable by public sector entities, as determined by a court or
other law enforcement body, as a consequence of the breach of
laws or regulations.
 Transfers are inflows of future economic benefits or service
potential from non-exchange transactions, other than taxes.
 Taxes are economic benefits or service potential compulsorily
paid or payable to public sector entities, in accordance with laws
and/or regulations
12/1/2023 By: Abatneh M. (MSc) 143

IPSAS 24—PRESENTATION OF BUDGET INFORMATION IN
FINANCIAL STATEMENTS
 Objective: This Standard requires a comparison of
budget amounts and the actual amounts arising
from execution of the budget to be included in the
financial statements of entities that are required to, or
elect to, make publicly available their approved budget(s),
and for which they are, therefore, held publicly
accountable.
 This Standard also requires disclosure of an explanation
of the reasons for material differences between the
budget and actual amounts.
12/1/2023 By: Abatneh M. (MSc) 144

Cont….
 Compliance with the requirements of this Standard will
ensure that public sector entities discharge their
accountability obligations and enhance the transparency of
their financial statements by demonstrating
(a) compliance with the approved budget(s) for which they
are held publicly accountable and
(b) where the budget(s) and the financial statements are
prepared on the same basis, their financial performance in
achieving the budgeted results.
12/1/2023 By: Abatneh M. (MSc) 145

INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARD (IPSAS) 25
 International Public Sector Accounting Standard (IPSAS)
25, Employee Benefits has been superseded by IPSAS 39,
Employee Benefits. This Standard applies for annual
financial statements covering periods beginning on or
after January 1, 2018. As a result IPSAS 25 is no longer
applicable and has been removed.
12/1/2023 By: Abatneh M. (MSc) 146

IPSAS 26―IMPAIRMENT OF CASH-GENERATING ASSETS
procedures that an entity applies to determine whether a
cash-generating asset is impaired, and to ensure that
impairment losses are recognized. This Standard also specifies
when an entity should reverse an impairment loss, and
prescribes disclosures.
this Standard in accounting for the impairment of cash-
generating assets,
12/1/2023 By: Abatneh M. (MSc) 147

IPSAS 27―AGRICULTURE
accounting treatment and disclosures for agricultural activity.
this Standard for the following when they relate to agricultural
activity:
 (a) Biological assets, except for bearer plants; and
 (b) Agricultural produce at the point of harvest.
12/1/2023 By: Abatneh M. (MSc) 148

Cont….
 This Standard does not apply to:
(a) Land related to agricultural activity (see IPSAS 16,
Investment Property and IPSAS 17, Property, Plant, and
Equipment);
(b) Bearer plants related to agricultural activity (see IPSAS 17).
However, this Standard applies to the produce on those bearer
plants.
(c) Intangible assets related to agricultural activity
(see IPSAS 31, Intangible Assets); and
(d) Biological assets held for the provision or supply of services.
12/1/2023 By: Abatneh M. (MSc) 149

Cont….
Biological assets Agricultural produce Products that are the result
of processing after harvest
Sheep Wool Yarn, carpet
Trees in a timber plantation
forest
Felled trees Logs, lumber
Dairy cattle Milk Cheese
Pigs Carcass Sausages, cured hams
Cotton plants Harvested cotton Thread, clothing
Sugarcane Harvested cane Sugar
Tobacco plants Picked leaves Cured tobacco
Tea bushes Picked leaves Tea
Grape vines Picked grapes Wine
Fruit trees Picked fruit Processed fruit
Oil Palms Picked fruit Palm Oil
Rubber trees Harvested latex Rubber products
12/1/2023 By: Abatneh M. (MSc) 150

Definitions
 Agricultural activity is the management by an entity of the
biological transformation and harvest of biological assets for:
1. Sale;
2. Distribution at no charge or for a nominal charge; or
3. Conversion into agricultural produce or into additional
biological assets
 Agricultural produce is the harvested produce of the entity’s
biological assets.
 A biological asset is a living animal or plant.
12/1/2023 By: Abatneh M. (MSc) 151

Cont….
 Biological transformation comprises the processes of
growth, degeneration, production, and procreation that
cause qualitative or quantitative changes in a biological
asset.
 A group of biological assets is an aggregation of similar
living animals or plants.
 Harvest is the detachment of produce from a biological
asset or the cessation of a biological asset’s life processes.
12/1/2023 By: Abatneh M. (MSc) 152

Cont….
 A bearer plant is a living plant that:
(a) Is used in the production and supply of agricultural
produce;
(b) Is expected to bear produce for more than one period;
(c) Has a remote likelihood of being sold as agricultural
produce, except for incidental scrap sales.
12/1/2023 By: Abatneh M. (MSc) 153

IPSAS 28—FINANCIAL INSTRUMENTS: PRESENTATION
 Objective: The objective of this Standard is to establish
principles for presenting financial instruments as liabilities or
net assets/equity and for offsetting financial assets and
financial liabilities.
 It applies to the classification of financial instruments,
from the perspective of the issuer, into financial assets,
financial liabilities and equity instruments; the
classification of related interest, dividends or similar
distributions, losses and gains; and the circumstances in which
financial assets and financial liabilities should be offset.
12/1/2023 By: Abatneh M. (MSc) 154

IPSAS 29—FINANCIAL INSTRUMENTS: RECOGNITION AND
MEASUREMENT
 This Standard shall be applied by all entities to all
financial instruments within the scope of IPSAS 41,
Financial Instruments if, and to the extent that:
(a) IPSAS 41 permits the hedge accounting
requirements of this Standard to be applied; and
(b) The financial instrument is part of a hedging
relationship that qualifies for hedge accounting in
accordance with this Standard.
12/1/2023 By: Abatneh M. (MSc) 155

IPSAS 30—FINANCIAL INSTRUMENTS: DISCLOSURES
 Objective: The objective of this Standard is to require entities
to provide disclosures in their financial statements that
enable users to evaluate:
(a) The significance of financial instruments for the entity’s
financial position and performance; and
(b) The nature and extent of risks arising from financial
instruments to which the entity is exposed during the period and
at the end of the reporting period, and how the entity manages
those risks.
12/1/2023 By: Abatneh M. (MSc) 156

IPSAS 31—INTANGIBLE ASSETS
the accounting treatment for intangible assets that are not
dealt with specifically in another Standard. This Standard
requires an entity to recognize an intangible asset if, and
only if, specified criteria are met.
 The Standard also specifies how to measure the carrying
amount of intangible assets, and requires specified
disclosures about intangible assets.
12/1/2023 By: Abatneh M. (MSc) 157

IPSAS 32—SERVICE CONCESSION ARRANGEMENTS:
GRANTOR
the accounting for service concession arrangements by the
grantor, a public sector entity.
 An entity that prepares and presents financial statements
under the accrual basis of accounting shall apply this
Standard in accounting for service concession
arrangements.
12/1/2023 By: Abatneh M. (MSc) 158

IPSAS 33—FIRST-TIME ADOPTION OF ACCRUAL BASIS INTERNATIONAL
PUBLIC SECTOR ACCOUNTING STANDARDS (IPSASS)
 The objective of this Standard is to provide guidance to a first-
time adopter that prepares and presents financial statements
following the adoption of accrual basis IPSASs, in order to
present high quality information:
(a) That provides transparent reporting about a first-time
adopter’s transition to accrual basis IPSASs;
(b) That provides a suitable starting point for accounting in
accordance with accrual basis IPSASs irrespective of the basis of
accounting the first-time adopter has used prior to the date of
adoption; and (c) Where the benefits are expected to exceed the costs.
12/1/2023 By: Abatneh M. (MSc) 159

IPSAS 34—SEPARATE FINANCIAL STATEMENTS
the accounting and disclosure requirements for
investments in controlled entities, joint ventures and
associates when an entity prepares separate financial
statements.
12/1/2023 By: Abatneh M. (MSc) 160

IPSAS 35—CONSOLIDATED FINANCIAL STATEMENTS
 Objective: The objective of this Standard is to establish
principles for the presentation and preparation of
consolidated financial statements when an entity
controls one or more other entities.
12/1/2023 By: Abatneh M. (MSc) 161

IPSAS 36—investments in associates and joint ventures
Objective: The objective of this Standard is to prescribe the
accounting for investments in associates and joint ventures and
to set out the requirements for the application of the equity
method when accounting for investments in associates and joint
ventures.
Scope: An entity that prepares and presents financial statements
under the accrual basis of accounting shall apply this Standard
in accounting for investments in associates and joint ventures.
 This Standard shall be applied by all entities that are investors
with significant influence over, or joint control of, an investee
where the investment leads to the holding of a quantifiable
ownership interest.
12/1/2023 By: Abatneh M. (MSc) 162

Definitions
 An associate is an entity over which the investor has significant
influence.
 Binding arrangement: For the purposes of this Standard, a binding
arrangement is an arrangement that confers enforceable rights
and obligations on the parties to it as if it were in the form of a
contract. It includes rights from contracts or other legal rights.
 Consolidated financial statements are the financial statements of
an economic entity in which assets, liabilities, net assets/equity,
revenue, expenses and cash flows of the controlling entity and its
controlled entities are presented as a single economic entity.
 A joint arrangement is an arrangement of which two or more
parties have joint control.
12/1/2023 By: Abatneh M. (MSc) 163

Con’d
 Joint control is the agreed sharing of control of an arrangement by way of
a binding arrangement, which exists only when decisions about the
relevant activities require the unanimous consent of the parties sharing
control.
 A joint venture is a joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the
arrangement.
 A joint venturer is a party to a joint venture that has joint control of that
joint venture.
 Significant influence is the power to participate in the financial and
operating policy decisions of another entity but is not control or joint
control of those policies.
12/1/2023 By: Abatneh M. (MSc) 164

IPSAS 37—JOINT ARRANGEMENTS
 Objective: The objective of this Standard is to establish principles for
financial reporting by entities that have an interest in arrangements
that are controlled jointly (i.e., joint arrangements).
determining the type of joint arrangement in which it is involved and
in accounting for the rights and obligations of the joint arrangement.
 Binding arrangement: For the purposes of this Standard, a binding
arrangement is an arrangement that confers enforceable rights and
obligations on the parties to it as if it were in the form of a contract. It
includes rights from contracts or other legal rights.
12/1/2023 By: Abatneh M. (MSc) 165

Definitions
 A joint arrangement is an arrangement of which two or more parties
have joint control.
 Joint control is the agreed sharing of control of an arrangement by way
of a binding arrangement, which exists only when decisions about the
relevant activities require the unanimous consent of the parties sharing
control.
 A joint operation is a joint arrangement whereby the parties that have
joint control of the arrangement have rights to the assets, and
obligations for the liabilities, relating to the arrangement.
 A joint operator is a party to a joint operation that has joint control of
that joint operation.
12/1/2023 By: Abatneh M. (MSc) 166

IPSAS 38—DISCLOSURE OF INTERESTS IN OTHER ENTITIES
Objective: The objective of this Standard is to require an entity to disclose
information that enables users of its financial statements to evaluate:
(a) The nature of, and risks associated with, its interests in
controlled entities, unconsolidated controlled entities, joint arrangements
and associates and (b) The effects of those interests on its financial
position, financial performance and cash flows.
 Scope: An entity that prepares and presents financial statements under
the accrual basis of accounting shall apply this Standard in disclosing
information about its interests in controlled entities, unconsolidated
controlled entities, joint arrangements and associates.
12/1/2023 By: Abatneh M. (MSc) 167

Cont’d
 This Standard shall be applied by an entity that has an interest in
any of the following:
(a) Controlled entities;
(b) Joint arrangements (i.e., joint operations or joint ventures);
(c) Associates; or
d) Structured entities that are not consolidated.
 This Standard does not apply to:(a) Post-employment benefit plans or
other long-term employee benefit plans to which IPSAS 39, Employee
Benefits applies. (b) An entity’s separate financial statements to which
IPSAS 34, Separate Financial Statements,
12/1/2023 By: Abatneh M. (MSc) 168

IPSAS 39—EMPLOYEE BENEFITS
Objective: The objective of this Standard is to prescribe the accounting
and disclosure for employee benefits. The standard requires an entity
to recognize:
(a) A liability when an employee has provided service in exchange for
employee benefits to be paid in the future; and
(b) An expense when the entity consumes the economic benefits or
service potential arising from service provided by an employee in
exchange for employee benefits.
 Scope: This Standard shall be applied by an employer in accounting for
all employee benefits, except share-based transactions .
12/1/2023 By: Abatneh M. (MSc) 169

Cont’d
 Employee benefits are all forms of consideration given by an entity in
exchange for service rendered by employees or for the termination of
employment.
 Short-term employee benefits are employee benefits (other than
termination benefits) that are due to be settled wholly before twelve months
after the end of the reporting period in which the employees render the
related service.
 Post-employment benefits are employee benefits (other than termination
benefits and short-term employee benefits) that are payable after the
completion of employment.
 Other long-term employee benefits are all employee benefits other than
short-term employee benefits, post-employment benefits and termination
benefits.
12/1/2023 By: Abatneh M. (MSc) 170

IPSAS 40—PUBLIC SECTOR COMBINATIONS
 Objective: The objective of this Standard is to improve the
relevance, faithful representativeness and comparability of the
information that a reporting entity provides in its financial
statements about a public sector combination and its effects.
accounting for public sector combinations.
 This Standard applies to a transaction or other event that meets
the definition of a public sector combination. This Standard
does not apply to: The accounting for the formation of a joint
arrangement in the financial statements of the joint
arrangement itself.
12/1/2023 By: Abatneh M. (MSc) 171

IPSAS 41—FINANCIAL INSTRUMENTS
 Objective: Is to establish principles for the financial reporting of
financial assets and financial liabilities that will present relevant
and useful information to users of financial statements for their
assessment of the amounts, timing and uncertainty of an entity’s future
cash flows.
 Scope: This Standard shall be applied by all entities to all types of
financial instruments except: (a) Those interests in controlled
entities, associates and joint ventures that are accounted for in
accordance with their standards. (B) Rights and obligations under
leases to which IPSAS 13, Leases applies
12/1/2023 By: Abatneh M. (MSc) 172

IPSAS 42—SOCIAL BENEFITS
 Objective: The objective of this Standard is to improve the
relevance, faithful representativeness and comparability of the
information that a reporting entity provides in its financial
statements about social benefits as defined in this Standard.
under the accrual basis of accounting shall apply this Standard
in accounting for social benefits.
12/1/2023 By: Abatneh M. (MSc) 173

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