Institute of Certified Public Accountants in Rwanda · Institute of Certified Public Accountants in Rwanda ... the identifiable assets received and liabilities ... Institute of Certified

October 2017

Institute of Certified Public Accountants in RwandaEnhancing Public Sector

Performance and

Compliance:

New developments

under IPSAS - Accrual

based approach in Public

sector

2

Document Classification: KPMG Public

© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Agenda IPSAS Overview

New Developments under IPSAS

The Need for Accruals accounting in public sector and benefits

The journey to IPSAS Accrual

Where are we in Rwanda and the region?

3




IPSAS Overview1. Accrual IPSAS

Issued by IPSASB and based on IFRS and applicable to public

sector entities

Accruals accounting guided by IPSAS 1- IPSAS 40

IPSAS 33 guides First time adoption- effective 1 January 2017

IPSAS 33 provides exemptions for 3 years after adopting IPSAS

3. Cash accounting is is allowed under IPSAS Cash basis

4




New Developments under IPSAS Accrual1. New standards

The Applicability of IPSAS- definition of public sector entities

covered by IPSAS clarified and wording on GBEs removed.

IPSAS are for a public sector entities which meet the following:

1.Responsible for delivery of services to benefit public/redistribute income

or wealth

2.Mainly finances activities by means of taxes and/or transfers from other

levels of government, social contributions, fees or debt

3.Do not have primary objective to make profit.

IPSAS 40- Public sector combinations- New standard effective 1

Jan 2019. Based on IFRS 3. Classifies public sector combinations as

either amalgamations or acquisitions

IPSAS 39- Employee benefits-Standard was revised to reflect

December 2015 amendments to IAS 19. Effective 1 Jan 2018

(replacing IPSAS 25)

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IPSAS 40-Public Sector combinationsAccounting for amalgamation- Modified pooling of interests method

Identify the resulting entity. It is resulting entity that accounts for amalgamation

Determine the amalgamation date

Recognise and measure the identifiable assets received and liabilities

assumed and any non-controlling interests in the combining operations,

consistent with other IPSAS (carrying amounts in financial statements)

Recognise and measure components of net assets/equity and any

amalgamation adjustments, either as a single opening balance or separate

components of net assets/equity.

No goodwill arises for amalgamation

Accounting for acquisitions- Acquisition method of accounting

Acquirer accounts for the acquisition using Acquisition method of accounting

Identify the acquirer and acquisition date

Recognise and measure identifiable assets acquired and liabilities assumed

and non-controlling interests in the acquired operation (at fair value)

Recognise and measure goodwill (gain or loss from the acquisition)

6




IPSAS 39-Employee benefits In January 2016, IPSASB issued ED 59 to make amendments to IPSAS

25 to align it with amendments made on IAS 19 in the 2011-2015 period

IPSAS 39 adopted the guidance of IAS 19, except as follows:

1. IPSAS 39 provides additional guidance on public sector bonus plans

2. Flexibility on discount rate in IPSAS 39 (IAS 19 requires high yield

bonds/ IPSAS 39 generally considers value for money and discount

rate to be disclosed)

3. IPSAS 39 recognises re-measurements of net defined liability (asset)

in net assets/equity. IAS 19 recognises them in other comprehensive

income.

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Other Developments under IPSAS1. Exposure drafts

ED 62: Financial instruments- Issued on 24 August 2017. Will address Public

Sector specific financial instruments and convergence with IFRS 9. Comments

due by 31 December 2017

ED 61- Amendments to financial reporting under cash accounting

Consultative papers issued by IPSASB

2. Consultative paper on Revenue and non exchange expenses- This

Consultation Paper discusses two potential approaches for recognition of

revenue for transactions that have performance obligations. Comments due by

15 Jan 2018

3. Consultative paper on Financial reporting for heritage in public sector-

seeks to provide clarity. IPSAS 17 includes guidance on accounting for heritage

assets but does not require entities to apply IPSAS 17 measurement

requirements. Issued 11/4/2017. Comments due 30 Sep 2017.

4. Consultative paper on Recognition and measurement of social benefits-

IPSAS Board to produce an ED. Comments due on 31 Jan 2016.

IPSASB Projects

5. Emissions trading schemes: To develop a standard(s) that provides

requirements applicable to both administrators and participants in Emissions

Trading Schemes (ETS)

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The need for IPSAS accruals and benefits

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The journey to IPSAS Accrual IPSAS 39 effective 1 January 2018

IPSAS 40 effective 1 January 2019

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The journey to IPSAS Accrual-CTD

Accounting and regulatory changes

Resources & Time to transition to Accrual

People and change

System and Processes

Application of standards

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Where are we in Rwanda and the region?1. Rwanda: Started off with modified cash basis in 2006. Now

developing a detailed blue print for migration to full IPSAS accruals

by 2022.

2. Tanzania- successfully moved to fully accruals since 2014. Only

PPE pending incorporation in financial statements by 30 June

2016. Compiling fixed assets register was ongoing then.

3. Uganda: Using modified cash basis but intends to adopt full

IPSAS accrual by 2020 (Accountant General presentation in May

2017)

4. Kenya: Using cash basis of accounting with detailed disclosures of

non- cash information since 2014. Set up Public Sector Accounting

Standards Board in 2014 to oversee public sector accounting.

(Presentation by head of PSASB secretariat Kenya-April 2017).

Planning for full transition to accrual (timeline not yet known)

5. Burundi: Information on adoption of IPSAS not published.

6. South Sudan: Adopted IPSAS cash basis of accounting.

Transition plan to full IPSAS Accruals not published.

Thank you!


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independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss

entity. All rights reserved.

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Institute of Certified Public Accountants in Rwanda · Institute of Certified Public Accountants in Rwanda ... the identifiable assets received and liabilities ... Institute of Certified