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IPSASB IPSASB Financial Management Institute Public Financial Management Institute Public Sector Management Workshop Sector Management Workshop International Federation of International Federation of Accountants Accountants International Public Sector Accounting International Public Sector Accounting Standards Board (IPSASB) Standards Board (IPSASB) Joy Keenan Joy Keenan Regina June 2, 2009

IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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Page 1: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

IPSASBIPSASBIPSASBIPSASB

Financial Management Institute Public Sector Financial Management Institute Public Sector Management WorkshopManagement Workshop

International Federation of AccountantsInternational Federation of Accountants

International Public Sector Accounting International Public Sector Accounting Standards Board (IPSASB)Standards Board (IPSASB)

Joy KeenanJoy Keenan

Regina June 2, 2009

Page 2: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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Overview of SessionOverview of Session

• Introduce IFAC and IPSASBIntroduce IFAC and IPSASB

• Discuss IPSASB’s mission and strategic themesDiscuss IPSASB’s mission and strategic themes

• Provide an overview of various projects under way Provide an overview of various projects under way

• Q & AQ & A

Regina June 2, 2009

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What is IFAC?What is IFAC?• Expanding organization – currently, 157 member bodies Expanding organization – currently, 157 member bodies

and associates in 123 countriesand associates in 123 countries

• Represents over 2.5 million accountants in public practice, Represents over 2.5 million accountants in public practice, education, government service, industry and commerceeducation, government service, industry and commerce

• Sets standards for auditing & assurance, ethics, education Sets standards for auditing & assurance, ethics, education and public sector accountingand public sector accounting

• Also issues guidance to support professional accountants in Also issues guidance to support professional accountants in business, small and medium practices, and developing business, small and medium practices, and developing nationsnations

IFACIFAC

Regina June 2, 2009

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What is IPSASB?What is IPSASB?• Standing IFAC BoardStanding IFAC Board• Consists of 18 volunteer Members from around the world, including Consists of 18 volunteer Members from around the world, including

two from Canada:two from Canada:– 15 Members nominated through IFAC member bodies and 3 members serve as 15 Members nominated through IFAC member bodies and 3 members serve as

public memberspublic members

– Experience and expertise in public sector financial reportingExperience and expertise in public sector financial reporting

– Ministries of finance, government audit institutions, public practice and public Ministries of finance, government audit institutions, public practice and public members – but, they serve as individuals not as representatives of their members – but, they serve as individuals not as representatives of their organizationorganization

– Staff is mainly Toronto-based Staff is mainly Toronto-based

• Issues and promotes benchmark guidance and facilitates the exchange Issues and promotes benchmark guidance and facilitates the exchange of information among its constituentsof information among its constituents

Regina June 2, 2009

Page 5: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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IPSASBIPSASB Membership Membership

Regina June 2, 2009

Page 6: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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Strategic PartnershipsStrategic PartnershipsThe IPSASB receives assistance from various of its The IPSASB receives assistance from various of its constituents in developing its standards:constituents in developing its standards:

• Supported by Canadian, US and Swiss governmentsSupported by Canadian, US and Swiss governments•United Nations – major adopterUnited Nations – major adopter•World Bank and Development Banks (IADB, ADB)World Bank and Development Banks (IADB, ADB)•IMFIMF•IFAC – Developing Nations CommitteeIFAC – Developing Nations Committee•IASBIASB•National Standard Setters, including the CICA – provide staff National Standard Setters, including the CICA – provide staff supportsupport•INTOSAIINTOSAI

Regina June 2, 2009

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The IFAC IPSASB MissionThe IFAC IPSASB MissionTo serve the public interest by developing To serve the public interest by developing high quality accounting standards for use by high quality accounting standards for use by public sector entities around the world, public sector entities around the world, including international organisations, in the including international organisations, in the preparation of general purpose financial preparation of general purpose financial statements. statements.

Regina June 2, 2009

Page 8: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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What the IFAC IPSASB DoesWhat the IFAC IPSASB Does

The IPSASB achieves its objectives by:The IPSASB achieves its objectives by:

• Issuing International Public Sector Accounting Issuing International Public Sector Accounting Standards (IPSASs)Standards (IPSASs)

• Publishing other documents which provide guidance Publishing other documents which provide guidance on issues and experiences in financial reporting in on issues and experiences in financial reporting in the public sectorthe public sector

• Promoting their acceptance and the international Promoting their acceptance and the international convergence to these standardsconvergence to these standards

Regina June 2, 2009

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What are the IPSASs?What are the IPSASs?

• The IPSASs represent international best practice in financial The IPSASs represent international best practice in financial reporting by public sector entitiesreporting by public sector entities

• In many jurisdictions, the application of the requirements of In many jurisdictions, the application of the requirements of IPSASs will enhance the accountability and transparency of the IPSASs will enhance the accountability and transparency of the financial reports prepared by governments and their agenciesfinancial reports prepared by governments and their agencies

• High-quality financial reporting and financial management by High-quality financial reporting and financial management by international organizations and governments worldwide is vital international organizations and governments worldwide is vital to economic growth and stability for both developed and to economic growth and stability for both developed and developing countries - this is particularly important now developing countries - this is particularly important now because of the global economic crisisbecause of the global economic crisis

Regina June 2, 2009

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Public Sector StudiesPublic Sector Studies

• 14 studies issued to date14 studies issued to date

• Most recent – Most recent – Transition to the Accrual Basis of Transition to the Accrual Basis of Accounting: Guidance for Governments and Accounting: Guidance for Governments and Government Entities Government Entities

– This Study is intended to assist governments and This Study is intended to assist governments and government entities wishing to migrate to the accrual basis government entities wishing to migrate to the accrual basis of accounting in accordance with IPSASsof accounting in accordance with IPSASs

Regina June 2, 2009

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Strong Evidence of ProgressStrong Evidence of Progress

• Adoption of IPSASsAdoption of IPSASs– UN System (28 bodies)UN System (28 bodies)

– OECD, NATO (21 bodies), EC, IFAC, INTERPOLOECD, NATO (21 bodies), EC, IFAC, INTERPOL

– Over 70 countries have agreed processes or have a project Over 70 countries have agreed processes or have a project in place to adopt IPSASs or align with IPSASsin place to adopt IPSASs or align with IPSASs

Regina June 2, 2009

Page 12: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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IPSASB Strategic ThemesIPSASB Strategic Themes

• Public sector conceptual frameworkPublic sector conceptual framework

• IFRS ConvergenceIFRS Convergence

• Public sector specific projectsPublic sector specific projects

• Promotion, communications and outreachPromotion, communications and outreach

Regina June 2, 2009

Page 13: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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Public Sector Conceptual FrameworkPublic Sector Conceptual Framework• Series of interrelated papersSeries of interrelated papers

• Phase 1 Consultation Paper (CP) issued Sept 2008 that addressed:Phase 1 Consultation Paper (CP) issued Sept 2008 that addressed:– scope of the financial statementsscope of the financial statements

– objectives & users of general purpose financial statementsobjectives & users of general purpose financial statements

– reporting entityreporting entity

– qualitative characteristics of financial informationqualitative characteristics of financial information

• Phase 2 CP to address:Phase 2 CP to address:– definition & recognition of elements of financial assets (e.g., assets, liabilities, revenues definition & recognition of elements of financial assets (e.g., assets, liabilities, revenues

and expenses)and expenses)

• Phase 3 CP to address the measurement bases consistent with the objectives of Phase 3 CP to address the measurement bases consistent with the objectives of financial reporting, the qualitative characteristics of financial information and the financial reporting, the qualitative characteristics of financial information and the recognition criteria recognition criteria

• In May 2009, the IPSASB discussed the responses to CP1 as well as preliminary In May 2009, the IPSASB discussed the responses to CP1 as well as preliminary drafts of CP2 and CP3drafts of CP2 and CP3

Regina June 2, 2009

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Conceptual Framework (cont’d)Conceptual Framework (cont’d)

• This is not a convergence projectThis is not a convergence project– The IPSASB is not bound by the timetable and principles in the The IPSASB is not bound by the timetable and principles in the

IASB projectIASB project

• The conceptual framework will help answer The conceptual framework will help answer questions such as:questions such as:

– Is GM an investment of the federal and Ontario governments?Is GM an investment of the federal and Ontario governments?

– Is it a public sector entity because of public ownership?Is it a public sector entity because of public ownership?

– Is it something else?Is it something else?

– On what basis and at what amount should it be measured?On what basis and at what amount should it be measured?

Regina June 2, 2009

Page 15: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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IFRS ConvergenceIFRS Convergence• Target date December 31, 2009 for IFRS as at Target date December 31, 2009 for IFRS as at

December 31, 2008December 31, 2008

• Major projects to be completed:Major projects to be completed:• Financial instrumentsFinancial instruments

• Intangible assetsIntangible assets

• Entity combinationsEntity combinations

• AgricultureAgriculture

• Renewed focus on regular liaison with IASB Renewed focus on regular liaison with IASB (Chair, Vice-Chair, Public Member)(Chair, Vice-Chair, Public Member)

Regina June 2, 2009

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IFRS Convergence EDs ApprovedIFRS Convergence EDs Approved• Four Exposure Drafts (EDs) were approved at Four Exposure Drafts (EDs) were approved at

IPSASB’s February 2009 meeting:IPSASB’s February 2009 meeting:– ED 36 – ED 36 – Agriculture (IAS 41)Agriculture (IAS 41)– ED 37 – ED 37 – Financial Instruments: Presentation (IAS 32)Financial Instruments: Presentation (IAS 32)– ED 38 – ED 38 – Financial Instruments: Recognition and Financial Instruments: Recognition and

Measurement (IAS 39)Measurement (IAS 39)– ED 39 – ED 39 – Financial Instruments: Disclosures (IFRS 7)Financial Instruments: Disclosures (IFRS 7)

Regina June 2, 2009

Page 17: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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IFRS Convergence EDs Approved IFRS Convergence EDs Approved (cont’d)(cont’d)

• Two EDs were approved out-of-session and issued Two EDs were approved out-of-session and issued in May:in May:

– ED 40 – ED 40 – Intangible Assets (IAS 38)Intangible Assets (IAS 38)

– ED 41 – ED 41 – Entity Combinations from Exchange Entity Combinations from Exchange Transactions (IFRS 3)Transactions (IFRS 3)

• All the EDs are available at: All the EDs are available at: http://www.ifac.org/PublicSector/ExposureDrafts.http://www.ifac.org/PublicSector/ExposureDrafts.phpphp

Regina June 2, 2009

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Financial InstrumentsFinancial Instruments• The IPSASB’s quick response in converging these standards The IPSASB’s quick response in converging these standards

recognizes the important public sector role in addressing the global recognizes the important public sector role in addressing the global economic crisiseconomic crisis

• Convergence with IFRS 7, IAS 32 and IAS 39Convergence with IFRS 7, IAS 32 and IAS 39• Changes made only to address specific public sector issues (e.g., in ED 39, Changes made only to address specific public sector issues (e.g., in ED 39,

additional disclosures proposed for concessionary loans)additional disclosures proposed for concessionary loans)

• The IPSASB has just issued a press release indicating it will The IPSASB has just issued a press release indicating it will proceed with developing these standards – any changes made proceed with developing these standards – any changes made by the IASB will be addressed in due courseby the IASB will be addressed in due course

• ED response date: July 31, 2009ED response date: July 31, 2009

• Staff contact: [email protected] Staff contact: [email protected]

Regina June 2, 2009

Page 19: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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AgricultureAgriculture

• IAS 41 convergenceIAS 41 convergence

• Minor changes in terminologyMinor changes in terminology

• Inclusion of non-exchange transactionsInclusion of non-exchange transactions

• Scope excludes biological assets held for the Scope excludes biological assets held for the supply of servicessupply of services

• ED response date: June 30, 2009ED response date: June 30, 2009

• Staff contact: [email protected] Staff contact: [email protected]

Regina June 2, 2009

Page 20: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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Intangible AssetsIntangible Assets

• IAS 38 convergenceIAS 38 convergence

• Incorporates SIC-32 guidance for web site costsIncorporates SIC-32 guidance for web site costs

• Does not address powers to grant rights and to Does not address powers to grant rights and to taxtax

• ED response date: August 15, 2009ED response date: August 15, 2009

• Staff contact: [email protected] contact: [email protected]

Regina June 2, 2009

Page 21: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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Entity CombinationsEntity Combinations• Two projectsTwo projects

• Entity Combinations from Exchange TransactionsEntity Combinations from Exchange Transactions– IFRS 3 ConvergenceIFRS 3 Convergence– ED response date: August 15, 2009ED response date: August 15, 2009

• Entity Combinations from Non-Exchange TransactionsEntity Combinations from Non-Exchange Transactions– Public sector specific project (e.g., recent government Public sector specific project (e.g., recent government

interventions)interventions)– Work is under wayWork is under way

• Staff contact: [email protected] Staff contact: [email protected]

Regina June 2, 2009

Page 22: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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Public Sector Specific ProjectsPublic Sector Specific Projects• Long-term fiscal sustainabilityLong-term fiscal sustainability• Review of cash basis standardReview of cash basis standard• Service concession arrangements (SCAs)Service concession arrangements (SCAs)• Social benefitsSocial benefits• Heritage assetsHeritage assets

See IPSASB project pages for additional details and contact information

http://www.ifac.org/PublicSector/Projects.php#InProgress

Regina June 2, 2009

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Long-term Fiscal SustainabilityLong-term Fiscal Sustainability• This project has taken on increased importance in light of public This project has taken on increased importance in light of public

sector interventions to respond to the global economic crisissector interventions to respond to the global economic crisis

• The IPSASB discussed a draft Consultation Paper (CP) at its The IPSASB discussed a draft Consultation Paper (CP) at its May 18-21, 2009 meetingMay 18-21, 2009 meeting

• Project will consider issues including:Project will consider issues including:– Defining what is meant by “fiscal sustainability”Defining what is meant by “fiscal sustainability”

– Explaining why it is importantExplaining why it is important

– Exploring how it can be reported in GPRS, including what indicators should be Exploring how it can be reported in GPRS, including what indicators should be reportedreported

• Staff contact: [email protected] Staff contact: [email protected]

Regina June 2, 2009

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Review of Cash Basis IPSASReview of Cash Basis IPSAS• Primary objective is to identify the major technical issues Primary objective is to identify the major technical issues

that public sector entities in developing economies have that public sector entities in developing economies have encountered, or are anticipated to encounter, in encountered, or are anticipated to encounter, in implementing the standardimplementing the standard

– The IPSASB will then consider whether to modify the Standard in light of The IPSASB will then consider whether to modify the Standard in light of these difficulties and/or whether to provide further guidance on its these difficulties and/or whether to provide further guidance on its applicationapplication

• The review will also identify whether additional reporting The review will also identify whether additional reporting requirements should be added to the standardrequirements should be added to the standard

• Staff contact: [email protected] Staff contact: [email protected]

Regina June 2, 2009

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Service Concession ArrangementsService Concession Arrangements• CP issued in March 2008CP issued in March 2008• Respondents expressed broad support for the proposed views in Respondents expressed broad support for the proposed views in

the CPthe CP• Work is under way to develop an ED that will:Work is under way to develop an ED that will:

– Define an SCADefine an SCA

– Determine when to report the property as an asset using a control-based approachDetermine when to report the property as an asset using a control-based approach

– Provide accounting and reporting guidance and examples in a variety of scenarios, Provide accounting and reporting guidance and examples in a variety of scenarios, including when the control criteria are not metincluding when the control criteria are not met

– Give guidance on accounting for and reporting guarantees, contingent liabilities Give guidance on accounting for and reporting guarantees, contingent liabilities and contingent assets related to SCAsand contingent assets related to SCAs

• Staff contact: [email protected] Staff contact: [email protected]

Regina June 2, 2009

Page 26: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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Looking AheadLooking Ahead• Completion of convergence initiative and Completion of convergence initiative and

completion of the conceptual framework will allow completion of the conceptual framework will allow increased focus on public sector issuesincreased focus on public sector issues

– Improve consistency, transparency and Improve consistency, transparency and accountability in financial reporting among accountability in financial reporting among public sector entitiespublic sector entities

– Improve harmonization between statistical and Improve harmonization between statistical and accrual bases of accountingaccrual bases of accounting

Regina June 2, 2009

Page 27: IPSASBIPSASB Financial Management Institute Public Sector Management Workshop International Federation of Accountants International Public Sector Accounting

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Promoting Acceptance of the IPSASsPromoting Acceptance of the IPSASs

• Members and staff are involved in ongoing and Members and staff are involved in ongoing and extensive promotion, communications and extensive promotion, communications and outreach activities both within their own outreach activities both within their own jurisdictions and internationally to promote the jurisdictions and internationally to promote the IPSASs IPSASs

• Widespread adoption is our ultimate goalWidespread adoption is our ultimate goal

Regina June 2, 2009

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International Federation of AccountantsInternational Federation of Accountantswww.ifac.orgwww.ifac.org

Regina June 2, 2009