Responding to COVID-19: insight, support and guidance
2017 is a landmark year for international standard setting in public sector financial reporting.
The only international standard setter that caters for public sector financial reporting is the International Public Sector Accounting Standards Board (IPSASB). This is a standard setting board of the International Federation of Accountants (IFAC), and it has the sole function of developing and promoting International Public Sector Accounting Standards (IPSAS) in order to advance public financial management worldwide. IPSASB has recently completed the 20th year of IPSAS standard setting and development.
It all began with a more general purpose group, the IFAC Public Sector Committee. Formed in 1986 to cover all matters relating to the public sector, in the late 1990s it began the IPSAS programme that was to become its defining feature.
In 1997, the Committee developed the first accrual basis IPSAS. By 2003, some 20 accrual IPSAS had been issued, as well as a single standard on cash basis financial reporting for those jurisdictions that were not yet ready to implement accrual basis reporting.
Initially the IPSAS covered areas where the differences between public and private sectors were not so significant. They were developed by reference to International Accounting Standards (IAS) – now subsumed within International Financial Reporting Standards (IFRS), and their main feature was that they used language which was less commercial and more appropriate to the government context.
However, from the start of the IPSAS project it was clear that standards which covered public sector specific issues would be helpful, and indeed necessary. Formally reconstituted as the International Public Sector Accounting Standards Board, between 2004 and 2007 consultations were progressed relating to:
Although only some of these consultations resulted in standards, they attracted considerable interest and helped establish IPSASB as a thought leader in financial reporting matters.
At the same time, there were very significant developments in private sector IFRS, and for a while IPSASB needed to play ‘catch-up’ in updating its IPSAS standards to reflect new thinking and improvements. This had a particular benefit when the IPSASB formalised and made public its approach to maintaining alignment with IFRS when appropriate, and developing public sector specific material in other cases.
Once the initial catch-up was complete, IPSASB progressed another major project, developing a conceptual framework setting out the basis standard setting on general purpose public sector financial reporting. This addressed a number of problem issues in earlier standard setting consultations, and laid the groundwork for IPSASB to address the key remaining public sector issues for which standards had not yet been developed. Each of these were, by their nature, quite difficult, but the recent and current IPSASB programme includes projects on:
As a champion of improved public financial management, CIPFA, the Chartered Institute for Public Finance and Accountancy, has supported these initiatives throughout. Along with members of other UK institutes, CIPFA members have been members and sometimes chairs of the IPSASB, and the current chair of IPSASB is Ian Carruthers, CIPFA’s policy and technical director. And the chair of CIPFA International is now Ian Ball, the former chair of IFAC Public Sector Committee.
So happy birthday IPSASB, we’re greatly looking forward to collaborating with you over the next 20 years to strengthen public financial management across the world.