IPSASB issues finalised public sector conceptual framework

The International Public Sector Accounting Standards Board (IPSASB) has issued its 'Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities' providing concepts that will underpin the development of International Public Sector Accounting Standards (IPSASs) and Recommended Practice Guidelines (RPGs) in the coming years.

The framework was developed in a multi-phase project after it was initiated in 2006. Phase 1 dealing with Role and Authority of the Conceptual Framework, Objectives and Users of General PurposeFinancial Reporting, Qualitative Characteristics, and Reporting Entity was completed in January 2013. These chapters laid the groundwork completing the other three phases of the project, which saw exposure drafts on Elements in Financial Statements, Recognition in Financial Statements, andMeasurement of Assets and Liabilities in Financial Statements in November 2012 and on The Presentation of Information in General Purpose Financial Reports in April 2013.

The exposure drafts have now been finalised and combined into the new framework together with the chapters already issued and a preface discussing the characteristics of public sector entities. The most marked change in comparison with the exposure drafts is that the definitions of elements have been brought closer to the definitions in the the IASB Conceptual Framework.

Especially noteworthy is the fact that 'deferred inflows' and 'deferred outflows' have been dropped from the definitions of the elements of financial statements. Nevertheless, the IPSASB continues to believe that there may be circumstances under which the six elements defined in the framework (assets, liabilities, revenue, expense, ownership contributions, and ownership distributions) may not provide all the information in the financial statements that is necessary to meet users' needs. The chapter on elements therefore states:

In some circumstances, to ensure that the financial statements provide information that is useful for a meaningful assessment of the financial performance and financial position of an entity, recognition of economic phenomena that are not captured by the elements as defined in this Chapter may be necessary. Consequently, the identification of the elements in this Chapter does not preclude IPSASs from requiring or allowing the recognition of resources or obligations that do not satisfy the definition of an element identified in this Chapter [...] when necessary to better achieve the objectives of financial reporting.

The finalised framework will enable the IPSASB to further improve the consistency of its standard-setting by strengthening the linkage between IPSASs and enhance the IPSASB's accountability through improved transparency of the concepts underpinning the development of IPSASs and RPGs.

The new framework can be accessed through the press release on the IPSASB website. The press release also states that the IPSASB will be making decisions on new projects in early 2015.