The consultation document, entitled Strategy Consultation, identifies a number of key influences on the future direction of the IPSASB, including an increased focus on public sector financial management resulting from the sovereign debt crisis, increased interest in International Public Sector Accounting Standards (IPSASs), and an expectation that the IPSASB's work on the Public Sector Conceptual Framework will be completed, freeing up a significant amount of IPSASB resources.
It is also acknowledged that the final recommendations from the IPSASB Governance Review Group review of the governance and oversight of the IPSASB, which are expected later in 2014, will impact the IPSASB's operations. It also provides an overview of the IPSASB's operations, and focuses on the impacts of the existing resource constraints the IPSASB faces, noting the following:
The IPSASB continues to monitor the outputs of the IASB with a view to maintaining convergence. Since the IASB is a fully compensated board with significantly higher staff resources it is challenging to keep pace with their outputs. Also, there have been calls for a mechanism to address urgent or emerging accounting issues and provide interpretations of IPSASs. This would require a significant increase in staff capacity.
The consultation document proposes the following strategic objective for the IPSASB:
|Strengthening public financial management and knowledge globally through increasing adoption of accrual-based IPSASs by:
- developing high-quality financial reporting standards;
- developing other publications for the public sector; and
- raising awareness of the IPSASs and the benefits of their adoption.
The strategic objective gives rise to two key outcomes the IPSASB wishes to achieve:
- Improved ability of public sector entities to reflect the full economic reality of their finances as well as of stakeholders to understand
- Increased awareness of IPSASs and their public finance management benefits in order to influence their adoption.
Work programme 2015-2019
The consultation paper acknowledges that the IPSASB needs to balance many factors in developing its work plan for the 2015-2019 period. The consultation paper identifies a number of potential projects for constituents to consider, grouped into four broad categories:
- Public sector specific projects- this includes biological assets, heritage assets, infrastructure assets, public sector specific measurement issues, military assets, natural resources, non-exchange expenses, government as owner rather than government, impact of sovereign powers on financial reporting and trust funds
- Maintaining existing IPSASs- including borrowing costs, construction contracts, disclosures about the general government sector, employee benefits, non-exchange revenues, presentation of financial statements, related party transactions, revenue and segment reporting
- Convergence with IFRS- extractive industries, insurance contracts, non-current assets held for sale and discontinued operations, and rate regulated industries
- Other- differential reporting, integrated reporting and interim financial reporting.
In addition, the consultation paper notes that a number of existing projects will continue into the 2015-2019 period, including on public sector combinations, government business enterprises, financial instruments (updating existing standards for the impacts of the IASB's work on IFRS 9 Financial Instruments and separate consideration of public sector financial instruments), IPSASs and Government Finance Statistics (GFS), emissions trading schemes and social benefits.
Future of the Cash Basis IPSAS
The IPSASB had previously commenced a project on its existing Cash Basis IPSAS, with a view to identifying major difficulties in its application. A task force at the time reported that the the Cash Basis IPSAS is not widely adopted and identified a number of obstacles to adopters. The consultation paper asks for feedback on whether the Cash Basis IPSAS is a valuable resource in strengthening public finance management and knowledge globally by increasing the adoption of accrual-based IPSASs, identifying three possible approaches:
- Retain the Cash Basis IPSAS and complete the review project using existing IPSASB resources
- Retain the Cash Basis IPSAS unchanged, suspending the review project
- Withdraw the Cash Basis IPSAS from the IPSASB Handbook.
The consultation paper is open for comment until 31 July 2014, and the IPSASB intends to finalise its strategy and work programme at its December 2014 meeting. Click for (links to IFAC website):