Proposal for Public Sector Entities moving to Accrual Accounting Released by the IPSASB

Saturday, October 26, 2013 Print Email

An exposure draft has been released by the International Public Sector Accounting Standards Board (IPSASB) that outlines the process of first time adoption of accrual basis International Public Sector Accounting Standards (IPSASs). During a transition period, public sector entities will be allowed exemption from complete compliance with the IPSAS. They will be allowed to use deemed costs for historical costs in some cases and will have optional exemption from disclosing comparative information.

ED 53 First Time Adoption of Accrual Basis International Public Sector Accounting Standards deals with the transition from cash basis to accrual basis. It also deals with the transition from accrual basis under some other financial reporting framework. This proposal will be applicable when an entity adopts accrual basis for the first time and during the transition period.

The exposure drafts includes following proposals:

· A 3 years transitional relief period will be available in relation to measurement and recognition of different items such as property, plant and equipment, investment property, intangible assets, and financial instruments.

· In circumstances where reliable cost information is not available, fair value can be used as deemed cost of investment property, intangible assets, inventory, financial instruments, and property, plant and equipment.

· Disclosure of comparative information will not be mandatory during the transitional financial statements.

· During the 3 year transitional period, the entities will be given relief in relation to borrowing costs, exchange differences, and segment information.

· The entity will not be able to make explicit statement of compliance with the IPSASs if it has taken advantage of the allowed exemptions.

· In the first IPSAS compliant financial statements and during the transitional period, the entity will be required to provide additional disclosures related to deemed costs, modifications, and exemptions.

This exposure draft is not part of the IPSASB's ongoing efforts for convergence with IFRSs. However, IPSASB took into consideration the guidelines of IFRS 1 First-time Adoption of International Financial Reporting Standards. 

Source: Ready Ratios

Login to ReadyRatios


Have you forgotten your password?

Are you a new user?

Login As
You can log in if you are registered at one of these services: