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IPSASB policy paper on reducing differences between IPSAS and government statistics

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

Feb 20, 2014

The International Public Sector Accounting Standards Board (IPSASB) has released a policy paper outlining how Government Finance Statistics (GFS) will be considered in the further development of International Public Sector Accounting Standards (IPSASs). The paper sets an objective of eliminating unnecessary differences between GFS and IPSASs while remaining consistent with the IPSASB Conceptual Framework and International Financial Reporting Standards (IFRSs).

GFS reporting guidelines include the International Monetary Fund (IMF) Government Finance Statistics Manual (GFSM) and the European System of Accounts (ESA). Such frameworks aim to be consistent with the overarching standards in the United Nations System of National Accounts (SNA), which is an internationally agreed on, standard set of recommendations on how to compile measures of economic activity.

The policy paper, Process for Considering GFS Reporting Guidelines During Development of IPSASs, notes that the IPSASB, in pursuing its objective of developing high-quality accounting standards for use by public sector entities in preparing general purpose financial reports, "supports the convergence of . . . accounting and statistical bases of financial reporting where appropriate." The paper further notes that both IPSAS and GFS reporting guidelines have significant overlap with respect to financial information, the assets, liabilities, revenues and expenses of governments, and information about cash flows. However, the paper notes that GFS reports have different uses to general purpose financial reports, since GFS reports focus on government policy and evaluating the impact of government on the economy, notwithstanding that many countries adopt GFS reporting for their fiscal reporting.

The policy paper expresses the impact of these differences as follows:

GFS reporting guidelines and IPSASs have different objectives. Although the two sets of financial information necessary to meet these different objectives have many similarities, the different objectives do result in some fundamental differences on how, what and where information is reported. In considering scope to reduce differences the IPSASB will remain true to the objectives of financial reporting. Where differences appear to warrant referral to the statistical community for its consideration, the IPSASB recognizes that the statistical community’s consideration of issues will be in light of the objectives of the GFS reporting framework.

Accordingly, the paper envisions that amendments to both IPSASs and the GFS reporting guidelines may need to be considered as part of the harmonization process. In the event the GFS reporting guidelines require revision, the paper notes that although consistency with the SNA may be problematic and revisions to the SNA "a major endeavor," revisions to the SNA "may be possible in the longer term."

As outlined in the paper, some of the steps the IPSASB intends to follow in seeking to eliminate differences between IPSASs and GFS reporting guidelines include:

  • A table of the main differences between IPSASs and GFS reporting guidelines will be maintained, including assessments of whether differences should be resolved through changes in IPSASs or changes in the GFS guidelines.
  • IPSASB observers at the IMF and Eurostat will provide input.
  • Differences that can be resolved through relatively minor revisions to IPSASs may be included in the IPSASB biennial improvements process, but only where they (1) are minor, (2) are consistent with the IPSASB Framework, and (3) do not conflict with existing IPSASs (including those converged with IFRSs).
  • The process for each IPSASB project will address differences relevant to that project (and projects will seek to avoid introducing new differences) and will explicitly consider such differences to be part of deliberations.
  • Issues may be referred to the statistical community for resolution, after input is sought from the IPSASB, IMF, and Eurostat observers.

The paper notes that "fundamental differences" arising from underlying conceptual differences will be difficult to eliminat, but instead "are expected to continue and will need to be managed." In addition, in some cases, nonfundamental differences may be addressed through accounting policy choices, guidance on application of existing requirements, and the design of information systems to allow preparation of both IPSAS and GFS information.

Concerning the impacts on the ongoing convergence efforts between IPSASs and IFRSs, the paper notes the following:

The IPSASB’s Process for Reviewing and Modifying IASB Documents sets out the process the IPSASB follows when considering IASB documents for convergence, including determining whether public sector issues warrant departures from the IASB document. Step 1 of that process includes consistency with the statistical bases as one factor for consideration when making decisions. This document is intended to complement and support that process, rather than conflict with it.

The policy paper is available on the IFAC's Web site.

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