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IPSASB releases standard for the first-time adoption of IPSAS

  • IPSASB (International Public Sector Accounting Standards Board) (mid gray) Image

30 Jan 2015

The International Public Sector Accounting Standards Board (IPSASB) has released IPSAS 33 'First-time Adoption of Accrual Basis IPSASs'.

The new International Public Sector Accounting Standard (IPSAS) addresses the transition from either a cash basis, or an accrual basis under another reporting framework, or a modified version of either the cash or accrual basis of accounting. Consequently, the IPSASB states that the new IPSAS is not aimed at IFRS convergence. Nevertheless, the IPSASB did consider the transitional exemptions included in IFRS 1 First-time Adoption of International Financial Reporting Standards in developing the standard.

Main feature of IPSAS 33 is that allows first-time adopters three years to recognise specified assets and liabilities in order to give preparers sufficient time to develop reliable models for recognising and measuring assets and liabilities during the transition period. These assets and liablilties include inventories, investment property, property, plant and equipment, defined benefit plans and other long-term employee benefits, biological assets and agricultural produce, intangible assets, service concession assets and the related liabilities, and financial instruments.

The IPSASB is aware that where a first-time adopter takes advantage of the exemptions above, fair presentation and compliance with accrual basis IPSASs will be affected and the first-time adopter will not be able to make an unreserved statement of compliance with accrual basis IPSASs until the exemptions have expired or the relevant items are recognised and measured in accordance with the applicable IPSASs. Still, the IPSASB believed that the transition period meets the needs of both preparers and users of financial statements and might be a further incentive for entities to make the decision to apply IPSASs. Nevertheless, the IPSASB encourages first-time adopters to comply in full with all the requirements of the applicable IPSASs as soon as possible.

IPSAS 33 shall be applied if a first-time adopters first IPSAS financial statements are for a period beginning on or after 1 January 2017. Earlier application is permitted. Please access the new standard and a corresponding press release on the IPSASB website.

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