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IPSASB Publishes Exposure Draft 61 Proposing Revisions to the Cash Basis IPSAS

Feb 3, 2016 | New York, New York | English

The International Public Sector Accounting Standards Board® (IPSASB®) today released for comment Exposure Draft (ED) 61, Amendments to Financial Reporting under the Cash Basis of Accounting (the Cash Basis IPSAS™).

The Cash Basis IPSAS has two parts. Part 1 identifies requirements that a reporting entity needs to adopt to claim that its financial statements comply with the IPSAS. It presently includes requirements for preparation of consolidated financial statements and for disclosure of information about external assistance and payments made by third parties. ED 61 proposes that these requirements be revised, recast as encouragements, and moved into Part 2 of the IPSAS. Part 2 identifies encouraged disclosures that an entity may choose to provide, but which are not required to claim compliance with the IPSAS.

The ED also proposes amendments to ensure that the existing requirements and encouragements of the Cash Basis IPSAS are better aligned with the equivalent accrual IPSAS, unless there is a reason to deviate as a result of adopting the cash basis of accounting. This will better support entities’ expected use of the Cash Basis IPSAS as a platform from which to transition to accrual IPSAS.

“The amendments proposed in ED 61 aim to remove practical obstacles to implementation of the Cash Basis IPSAS,” said IPSASB Chair Ian Carruthers. “These proposals respond to views expressed by our constituents that wider adoption of the Cash Basis IPSAS will enhance financial reporting by governments in developing economies that adopt a cash basis of accounting. They should also strengthen the Cash Basis IPSAS in its role as an important transition path to adoption of accrual IPSAS. We look forward to receiving constituents’ views on these proposals.”

First issued in 2003, the Cash Basis IPSAS is the only IPSASB pronouncement that deals with the cash basis of accounting. Respondents to the IPSASB’s 2014 strategy consultation supported retaining the Cash Basis IPSAS.

“The primary role that the Cash Basis IPSAS plays in the IPSASB’s overall standard-setting strategy is as a stepping stone to adoption of accrual IPSAS,” explained Mr. Carruthers. “While robust reporting on the cash basis contributes significantly to broader improvements in public sector financial management in many jurisdictions, it provides only part of the information that the users of financial statements need for accountability and decision-making purposes. Such information is best provided by adoption of accrual IPSAS.”

How to Comment

The IPSASB seeks comment on those paragraphs or sections of the Cash Basis IPSAS that are proposed for amendment. To enhance understanding of the proposals, a marked-up version of the Cash Basis IPSAS reflecting the changes proposed in ED 61 is available on the IPSASB website.

To access the ED, the marked-up proposed IPSAS, and the At-a-Glance document, which provides a summary of the ED, or to submit a comment, please visit the IPSASB website at www.ipsasb.org. Comments on the ED are requested by July 31, 2016. The IPSASB encourages IFAC members, associates, and regional accountancy organizations to promote the availability of this ED to their members and employees.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. It receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the Chartered Professional Accountants of Canada, the South African Accounting Standards Board, and the governments of Canada, New Zealand, and Switzerland.

Working at IPSASB
The IPSASB is currently seeking self-motivated individuals with strong project management skills and an interest in technical accounting issues. Candidates should possess good interpersonal skills, and a background in standard-setting or experience in technical accounting analysis. Visit Working at IFAC or email a resume (CV) and cover letter to jobs@ifac.org.

About IFAC
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.