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IPSASB publishes proposed guidance on public sector combinations

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

29 Jan 2016

The International Public Sector Accounting Standards Board (IPSASB) has released for comment Exposure Draft ED 60 'Public Sector Combinations'.

ED 60 classifies public sector combinations as either amalgamations or acquisitions taking into account control and other factors. Gaining of control over an operation creates a rebuttable presumption that the combination is an acquisition. If the acquisition presumption is rebutted, then the transaction is treated as an amalgamation. This approach is different to that proposed in the June 2012 consultation paper on the same topic and addresses concerns raised by stakeholders.

For recognition and measurement of amalgamations, ED 60 proposes use of the “modified pooling of interests” method of accounting. This method recognises the amalgamation on the date it takes place. For acquisitions, ED 60 proposes use of the “acquisition” method of accounting, applying the same approach as in IFRS 3 Business Combinations. This is supplemented with guidance for public sector-specific situations such as public sector combinations lacking a profit motive, often being conducted by non-exchange transactions, and the frequent involuntary imposition of such combinations by law or other authority.

Please click to access the press release and ED 60 on the IPSASB website. Comments are requested by 30 June 2016.

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