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.