IPSAS 40, Public Sector Combinations

IPSAS 40 provides the first international accounting requirements that specifically address the needs of the public sector when accounting for combinations of entities and operations. The standard classifies public sector combinations as either amalgamations or acquisitions.

For amalgamations, the standard requires use of the “modified pooling of interests” method of accounting, which is a variation of the pooling of interests method of accounting (also referred to as “merger accounting”), in which the amalgamation is recognized on the date it takes place.

For acquisitions, IPSAS 40 requires use of the “acquisition” method of accounting, applying the same approach as in IFRS 3, Business Combinations. This is supplemented with additional guidance for public sector specific situations.

The At a Glance provides an overview of the Final Pronouncement.