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IFAC Board
The Conceptual Framework
for General Purpose Financial
Reporting by Public Sector
Entities
Exposure Draft
October 2011
Comments due: February 29, 2012
Final Pronouncement
October 2014
This document was developed and approved by the International Public Sector Accounting Standards
Board (IPSASB).
The objective of the IPSASB is to serve the public interest by setting high-quality public sector accounting
standards and by facilitating the adoption and implementation of these, thereby enhancing the quality and
consistency of practice throughout the world and strengthening the transparency and accountability of
public sector finances.
In meeting this objective, the IPSASB sets International Public Sector Accounting Standards (IPSASs)
and Recommended Practice Guidelines (RPGs) for use by public sector entities, including national,
regional, and local governments, and related governmental agencies.
IPSASs relate to the general purpose financial statements (financial statements) and are authoritative.
RPGs are pronouncements that provide guidance on good practice in preparing general purpose financial
reports (GPFRs) that are not financial statements. Unlike IPSAS, RPGs do not establish requirements.
Currently all pronouncements relating to GPFRs that are not financial statements are RPGs. RPGs do not
provide guidance on the level of assurance (if any) to which information should be subjected.
The structures and processes that support the operations of the IPSASB are facilitated by the International
Federation of Accountants (IFAC).
Copyright October 2014 by the International Federation of Accountants (IFAC). For copyright,
trademark, and permissions information, please see page 120.
3
THE CONCEPTUAL FRAMEWORK FOR GENERAL PURPOSE
FINANCIAL REPORTING BY PUBLIC SECTOR ENTITIES
CONTENTS
Page
Introduction................................................................................................................................... 45
Preface ......................................................................................................................................... 69
Chapter 1: Role and Authority of the Conceptual Framework ................................................. 1013
Chapter 2: Objectives and Users of General Purpose Financial Reporting ............................ 1428
Chapter 3: Qualitative Characteristics ..................................................................................... 2944
Chapter 4: Reporting Entity ...................................................................................................... 4550
Chapter 5: Elements in Financial Statements ........................................................................... 5173
Chapter 6: Recognition in Financial Statements ...................................................................... 7478
Chapter 7: Measurement of Assets and Liabilities in Financial Statements ............................. 79103
Chapter 8: Presentation in General Purpose Financial Reports .............................................. 104119
4
Introduction
This Introduction provides background on the development of the Conceptual Framework for General
Purpose Financial Reporting by Public Sector Entities (the Conceptual Framework) and includes details of
the IPSASBs due process. The Conceptual Framework establishes and makes explicit the concepts that
are to be applied in developing International Public Sector Accounting Standards (IPSASs) and
Recommended Practice Guidelines.
IPSASs are developed to apply across countries and jurisdictions with different political systems, different
forms of government and different institutional and administrative arrangements for the delivery of services
to constituents. The International Public Sector Accounting Standards Board (IPSASB) recognizes the
diversity of forms of government, social and cultural traditions, and service delivery mechanisms that exist
in the many jurisdictions that may adopt IPSASs. In developing the Conceptual Framework, the IPSASB
has attempted to respond to and embrace that diversity.
The IPSASB initiated the Conceptual Framework project in 2006. It was developed in four phases as
follows:
Phase 1
Chapter 1, Role and Authority of the Conceptual Framework (issued January 2013)
Chapter 2, Objectives and Users of General Purpose Financial Reporting (issued January
2013)
Chapter 3, Qualitative Characteristics (issued January 2013)
Chapter 4, Reporting Entity (issued January 2013)
Phase 2
Chapter 5, Elements in Financial Statements
Chapter 6, Recognition in Financial Statements
Phase 3
Chapter 7, Measurement of Assets and Liabilities in Financial Statements
Phase 4
Chapter 8, The Presentation of Information in General Purpose Financial Reports
The Conceptual Framework acknowledges that, to respond to users information needs, GPFRs may
include financial statements and information that enhances, complements, and supplements the financial
statements. Chapters 1, 2, 3, 4 and 8 deal with concepts that are applicable to all matters that may be
encompassed within the scope of GPFRs. Chapters 5, 6 and 7 deal with concepts applicable to the financial
statements and do not apply to the more comprehensive areas of financial reporting outside the financial
statements.
During the development of the Conceptual Framework, the IPSASB issued the following due process
documentsConsultation Papers and Exposure Drafts:
5
Title Date Issued Consultation Period Ended
Consultation Paper, The
Objectives of Financial
Reporting; The Scope of
Financial Reporting; The
Qualitative Characteristics of
Information Included in General
Purpose Financial Reports; The
Reporting Entity
September 30, 2008 March 30, 2009
Consultation Paper, Elements
and Recognition in Financial
Statements
December 15, 2010 June 14, 2011
Consultation Paper,
Measurement of Assets and
Liabilities in Financial Statements
December 15, 2010 June 14, 2011
Exposure Draft 1, Role, Authority
and Scope; Objectives and
Users; Qualitative
Characteristics; and Reporting
Entity
December 15, 2010 June 14, 2011
Exposure Draft, Key
Characteristics of the Public
Sector with Potential Implications
for Financial Reporting
April 29, 2011 August 31, 2011
Consultation Paper, Presentation
in General Purpose Financial
Reports
January 29, 2012 May 31, 2012
Exposure Draft 2, Elements and
Recognition in Financial
Statements
November 7, 2012 April 30, 2013
Exposure Draft 3, Measurement
of Assets and Liabilities in
Financial Statements
November 7, 2012 April 30, 2013
Exposure Draft 4, Presentation in
General Purpose Financial
Reports
April 17, 2013 August 15, 2013
6
The Preface to the Conceptual Framework for General Purpose Reporting by
Public Sector Entities
Introduction
1. The Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities (the
Conceptual Framework) establishes the concepts that are to be applied in developing International
Public Sector Accounting Standards (IPSASs) and Recommended Practice Guidelines (RPGs)
applicable to the preparation and presentation of general purpose financial reports (GPFRs) of public
sector entities1.
2. The primary objective of most public sector entities is to deliver services to the public, rather than to
make profits and generate a return on equity to investors. Consequently the performance of such
entities can be only partially evaluated by examination of financial position, financial performance and
cash flows. GPFRs provide information to users for accountability and decision-making purposes.
Therefore, users of the GPFRs of public sector entities need information to support assessments of
such matters as:
Whether the entity provided its services to constituents in an efficient and effective manner;
The resources currently available for future expenditures, and to what extent there are
restrictions or conditions attached to their use;
To what extent the burden on future-year taxpayers of paying for current services has changed;
and
Whether the entitys ability to provide services has improved or deteriorated compared with the
previous year.
3. Governments generally have broad powers, including the ability to establish and enforce legal
requirements, and to change those requirements. Globally the public sector varies considerably in
both its constitutional arrangements and its methods of operation. However, governance in the public
sector generally involves the holding to account of the executive by a legislative body (or equivalent).
4. The following sections highlight characteri