IPSASB releases standard on first-time adoption of IPSASs
Jan 30, 2015
The International Public Sector Accounting Standards Board (IPSASB) has released IPSAS 33, “First-time Adoption of Accrual Basis IPSASs.”
The new IPSAS addresses the transition from a cash basis, an accrual basis under another reporting framework, or a modified version of either the cash or accrual basis of accounting. Although the new IPSAS is not aimed at IFRS convergence, the IPSASB considered the transition exemptions in IFRS 1, First-time Adoption of International Financial Reporting Standards, in developing the standard.
IPSAS 33 allows first-time adopters three years to recognize specified assets and liabilities so that preparers have sufficient time to develop reliable models for recognizing and measuring assets and liabilities during the transition period. These assets and liabilities 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.
Under IPSAS 33, when 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 recognized 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 decide to apply IPSASs. Nevertheless, the IPSASB encourages first-time adopters to fully comply with all the requirements of the applicable IPSASs as soon as possible.
First-time adopters must apply IPSAS 33 when their first IPSAS financial statements are for a period beginning on or after January 1, 2017. Earlier application is permitted. The new standard and related press release are available on IFAC’s Web site.