IPSASB issued new standard on IPSAS 42 – Social benefits

On January 31 2019 IPSASB issued a new standard IPSAS 42 on SOCIAL BENEFITS. The objective of this standard is to improve the relevance, faithful representativeness and comparability of the information that a reporting entity provides in its financial statements about social benefits. The information provided should help users of the financial statement and general purpose financial reports assess: the nature of social benefits provided by the entity, the key features of the operation of those social benefit schemes and the impact of such social benefits provided on the entity’s financial performances, financial position and cash flows.

To accomplish this IPSAS 42 establishes principles and requirements for recognizing, measuring, presenting, and determining what information to disclose.

The effective date of IPSAS 42 is January 1, 2022, with earlier adoption encouraged.

For more information please visit: http://www.ipsasb.org/projects/soical-benefits.

http://www.ifac.org/publications-resources/2018-handbook-international-public-sector-accounting-pronouncements

International Public Sector Accounting Standards (IPSAS)

International Public Sector Accounting Standards (IPSAS) are issued by the international Public Sector Accounting Standards Board (IPSASB). The following are full list of IPSAS and IFRSs Equivalent as at October 1, 2018

IPSAS Number Title Description Based on
IPSAS 1 Presentation of Financial Statement Presentation of Financial Statements sets out the overall considerations for the presentation of financial statements, guidance for their structure and minimum requirements for the content of financial statements prepared under the accrual basis of accounting IAS 1
IPSAS 2 Cash Flow Statements Cash Flow Statements requires the provision of information about the changes in cash and cash equivalents during the financial period from operating, investing and financing activities. IAS 7
IPSAS 3 Accounting Policies, Changes in Accounting Estimates and Errors Accounting Policies, Changes in Accounting Estimates and Errors specifies the accounting treatment for changes in accounting estimates, changes in accounting policies and the correction of material errors. IAS 8
IPSAS 4 The effect of Changes in Foreign Exchange Rates The Effects of Changes in Foreign Exchange Rates deals with accounting for foreign currency transactions and foreign operations, sets out the requirements for determining which exchange rate to use for the recognition of certain transactions and balances, and prescribes how to recognize the financial effect of changes in exchange rates within the financial statements. IAS 21
IPSAS 5 Borrowing Cost Borrowing Costs prescribes the accounting treatment for borrowing costs and requires either the immediate expensing of borrowing costs or, as an allowed alternative treatment, the capitalization of borrowing costs that are directly attributable to the acquisition, Construction, or production of a qualifying asset. IAS 23
IPSAS 6 Consolidated and Separate Financial Statements Consolidated and Separate Financial Statements require all controlling entities to prepare consolidated financial statements, which consolidate all controlled entities on a line-by-line basis. Note that it is replaced by IPSAS 34 and IPSAS 35 from January 1 2017. IAS 27
IPSAS 7 Investment in Associates Investments in Associates require all such investments to be accounted for in the consolidated financial statements using the equity method of accounting. Note that it is replaced by IPSAS 36 from January 1 2017. IAS 28
IPSAS 8 Interests in Joint Ventures Interests in Joint Ventures require proportionate consolidation to be adopted as the benchmark treatment, and the equity method of accounting as an allowed alternative to account for joint ventures. Note that it is replaced by IPSAS 37 from January 1 2017. IFRS 11
IPSAS 9 Revenue form Exchange Transactions Revenue from Exchange Transactions establishes the conditions for the recognition of revenue arising from exchange transactions, and requires such revenue to be measured at the fair value of the consideration received or receivable. IFRS 15
IPSAS10 Financial Reporting in Hyperinflationary Economies Financial Reporting in Hyperinflationary Economies describes the characteristics of a Hyperinflationary economy and requires financial statements of entities that operate in such economies to be restated so that the financial information provided is meaningful. IAS 29
IPSAS 11 Construction Contracts construction contracts defines construction contracts and establishes requirements for the recognition of revenues and expenses arising from such contracts IFRS 15
IPSAS 12 Inventories inventories establishes the measurements requirements for inventories (including those held for distribution at no or normal change) and provides guidance on the assignment of costs IAS 2
IPSAS 13 Leases Leases establishes requirements for the accounting treatment of operating and finance leases by lessees and lessors IFRS 16
IPSAS 14 Events after the Reporting Date Events After the Reporting Date establishes requirements for the treatment of certain events that occur after the reporting date, and distinguishes between adjusting and non-adjusting events IAS 10
IPSAS 16 Investment Property Investment Property establishes the accounting treatment and related disclosures for investment property, providing for application of either a fair value or historical cost model IAS 40
IPSAS 17 Property Plant and Equipment Property, Plant and Equipment (PPE) establishes the accounting treatment for property, plant and equipment, including the basis and timing of their initial recognition, and the determination of their ongoing carrying amounts and related depreciation IAS 16
IPSAS 18 Segment Reporting Segment Reporting establishes requirements for the disclosure of financial information of the distinguishable activities of reporting entities. IFRS 8
IPSAS 19 Provisions, Contingent Liabilities and Contingent Assets Provisions, Contingent Liabilities and Contingent Assets establish requirements for the recognition and measurement of provisions, and the disclosure of contingent liabilities and contingent assets. IAS 37
IPSAS 20 Related Party Disclosures Related Party Disclosures establishes requirements for the disclosure of transactions with parties that are related to the reporting entity. IAS 24
IPSAS 21 Impairment of Non-Cash –Generating Assets Impairment of Non-Cash-Generating Assets prescribes the procedures that apply to determine whether a non-cash-generating asset is impaired and to ensure that impairment losses are recognized. Partially IAS 36
IPSAS 22 Disclosure of Financial Information about the General Government Sector Disclosure of Financial Information About the General Government Sector prescribes disclosure requirements for governments that elect to present information about the general government sector in their consolidated financial statements NA
IPSAS 23 Revenue from Non-exchange Transactions (Taxes and transfers) Revenue from Non-Exchange Transactions deals with issues that need to be considered in recognizing and measuring revenue from non-exchange transactions. Partially IAS 20
IPSAS 24 Presentation of Budget Information in Financial Statements Presentation of Budget Information in Financial Statements sets out the requirement for a comparison of budget amounts and the actual amounts arising from execution of the budget to be included in the financial statements, and a reconciliation
of the actual amounts in the budget to actual amounts in the financial statements.
NA
IPSAS 25 Employee Benefits Employee Benefits prescribes the accounting treatment and disclosure requirements of employee benefits, including the timing of recognition of liabilities and expenses. Note that it is replaced by IPSAS 39 from January 1 2018. IAS 19
IPSAS 26 Impairment of Cash – Generating Asset Impairment of Cash-Generating Assets prescribes the procedures that apply to determine whether a cash-generating asset is impaired and to ensure that impairment losses are recognized. IAS 36
IPSAS 27 Agriculture Agriculture prescribes the accounting treatment and disclosures for biological assets and agricultural produce at the point of harvest when they relate to agricultural activity IAS 41
IPSAS 28 Financial Instruments: Presentations Financial Instruments: Presentation establishes principles for presenting financial instruments as liabilities or net assets/equity and for offsetting financial assets and financial liabilities IAS 32
IPSAS 29 Financial instruments: Recognition and Measurements Financial Instruments: Recognition and Measurement establishes principles for recognizing and measuring financial assets, financial liabilities, and some contracts to buy or sell non-financial items. IAS 39
IPSAS 30 Financial Instruments: Disclosures Financial Instruments Disclosures: requires entities to provide disclosures in their financial statements that enable users to evaluate (a) the significance of financial instruments for the entity’s financial position and performance; and (b) the
nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the end of the reporting period, and how the entity manages those risks.
IFRS 7
IPSAS 31 Intangible Assets Intangible Assets prescribes the accounting treatment for recognizing and measuring intangible assets. IAS 38
IPSAS 32 Service concession Arrangements: Grantor Service Concession Arrangements prescribes the accounting for service concession arrangements by the grantor, a public sector entity. IFRIC 12
IPSAS 33 First-time Adoption of Accrual basis IPSASs First-time Adoption of Accrual basis of IPSASs grants transitional exemptions to entities adopting accrual basis IPSASs for the first time, providing a major tool to help entities along their journey to implement IPSASs. An entity shall apply those amendments for annual financial statements covering periods beginning on or after 1 January 2017. IFRS 1
IPSAS 34 Separate Financial Statements Separate Financial Statements requires all controlling entities to prepare consolidated financial statements, which consolidate all controlled entities on a line-by-line basis. An entity shall apply this Standard for annual financial statements covering periods beginning on or after 1 January 2017 IAS 27
IPSAS 35 Consolidated Financial Statements This standard still requires that control be assessed having regard to benefits and power, but the definition of control have changed and the standard now provides considerably more guidance on assessing control. An entity shall apply this Standard for annual financial statements covering periods beginning on or after 1 January 2017. IFRS10
IPSAS 36 Investments in Associates and Joint Ventures It explains the application of the equity method of accounting, which is used to account for investments in associates and joint ventures. An entity shall apply this Standard for annual financial statements covering periods beginning on or after 1January 2017. IAS 28
IPSAS 37 Joint Arrangements Establishes requirements for classifying joint arrangements and accounting for those different types of joint arrangements. Joint arrangements are classified as either joint operations or joint ventures. An entity shall apply this Standard for annual financial statements covering periods beginning on or after 1 January 2017. IFRS 11
IPSAS 38 Disclosure of Interests of Other Entities It brings together the disclosures previously including in IPSASs 6-8. It also introduces new disclosure requirements, including those related to structured entities that are not consolidated and controlling interests acquired with the intention of disposal. An entity shall apply this Standard for annual financial statements covering periods beginning on or after 1 January2017. IFRS 12
IPSAS 39 Employee Benefits Employee Benefits prescribes the accounting treatment and disclosure requirements of employee benefits, including the timing of recognition of liabilities and expenses. Effective date is January 1, 2018 and earlier application encouraged. IAS 19
IPSAS 40 Public Sector Combinations Public sector combinations classify public sector combinations as either amalgamations or acquisitions taking into account control and other factors. The idea that gaining of control over an operation creates a rebuttable presumption that the combination is an acquisition. For recognition and measurement of amalgamations, IPSAS 40 requires use of the modified pooling of interest method of accounting. Effective date is 1 January 2019, early application encouraged. IFRS 3
IPSAS 41 Financial instrument: Recognition and Measurement Establishes a single classification and measurement model for financial assets by considering characteristics of the asset’s cash flows and the objective for which the asset is held; a single forward looking expected credit loss model for all financial instruments subjected to impairment; and hedge accounting. Effective date: January 1, 2022. IFRS 9
Not Applicable Cash Basis of Accounting The IPSASB issues IPSAS dealing with financial reporting under the cash basis of accounting. This standard comprises two parts which includes mandatory and non mandatory parts. NA

Discussion paper: – Financial Instruments with Characteristics of Equity

International Accounting Standards Board (IASB) has published for comment Discussion Paper DP/2018/1 Financial Instruments with Characteristics of Equity on 28 July 2018

The proposed discussion papers refine/clarify to improve the information companies provide in their financial statements about financial instruments they have issued, by:

  • Investigating challenges with the classification of financial instruments applying IAS 32 Financial Instruments: Presentation; and
  • Considering how to address those challenges through clearer principles for classification and enhanced requirements for presentation and disclosure.

Accounting and Auditing Board of Ethiopia (AABE) encourage you to read the discussion paper and provide your comments on the proposals.

AABE is committed to adopting quality international standards. Generally, once a standard has been issued by IASB, AABE then issues the standard for reporting entities under its jurisdiction. Issues of concern by Ethiopian Stakeholder can be taken into accounts through actively involving in commenting on Discussion Papers and Exposure Drafts. Moreover, you will keep informed yourselves through reading with the new updates of international standards.

Therefore, this is opportunity to comment on the proposed future standard to be issued by IASB and to be adopted by AABE.

You can access the Discussion document

https://www.ifrs.org/-/media/project/fice/discussion-paper/published-documents/dp-fice-june-2018.pdf

If you are familiar with Ethiopian specific matters, send your comments – both formal and informal – by December 7, 2018 to AABE address as follows:

Postal address:

Accounting and Financial Reporting Directorate

Accounting and Auditing Board of Ethiopia

P.O. Box 80263

6 kilo Madagascar Street

Addis Ababa, Ethiopia

Email: infoaabe@ethionet.et

AABE also encourage you to send comments directly to the IASB, by January 7/2019 and we will be glad if you send us the copy.

You can email your comments to the IASB commentletters@ifrs.org or electronically using ‘comment on a proposal’ page on the http://www.ifrs.org/open-to-comment/Pages/International-Accounting-Standards-Board-Open-to-Comment.aspx .  For your information you need to register as an eIFRS basic subscriber to submit comment.

Note

  • AABE would appreciate receiving a copy of your comment in Microsoft word format if electronically
  • Please do not forget to provide on behalf of whom you are commenting
  • AABE publish all comments it receive on its website (unless the comments are damaging the good reputation of anyone or the commenter request not to). You are encouraged to specify part of your comment that you would like to withhold from being publicized.

The International Public Sector Accounting Standards Board (IPSASB) has issued Exposure Draft 67 -Collective and individual services and emergency relief (amendments to IPSAS 19­)

On January 31, 2019 IPSASB issued exposure draft 67 on collective and individual services and emergency relief.

The objective of this exposure draft is to propose improvements to the relevance, faithful representativeness and comparability of the information that a reporting entity provides in its financial statement about collective services, individual services and emergency relief

This exposure draft forms part of the IPSASB’s broader non-exchange expenses project. While a number of IPSAS provide guidance on the recognition of specific exchange expenses and liabilities, there is very little guidance on the recognition of expenses and liabilities arising from non-exchange transactions. Therefore, the objective of the non-exchange expenses project is to develop new or amended standards, in order to provide accounting requirements that result in consistent accounting for non-exchange expense transaction specifically for collective, individual services and emergency relief.

Accounting and Auditing Board of Ethiopia (AABE) encourage you to read the exposure draft and provide your comments on the proposals.

AABE is committed to adopting quality international standards. Generally, once a standard has been issued by IPSASB then issues the standard for reporting entities under its jurisdiction. Issues of concern by Ethiopian Stakeholder can be taken into accounts through actively involving in commenting on Exposure Drafts. Moreover, you will keep informed yourselves through reading with the new updates of international standards.

Therefore, this is opportunity to comment on the proposed future standard to be issued by IPSASB and to be adopted by AABE.

You can access the document

https://www.ifac.org/publications-resources/exposure-draft-67-collective-and-individual-services-and-emergency-relief

If you are familiar with Ethiopian specific matters, send your comments – both formal and informal – by:  May 15, 2019 to AABE’s address as follows:

Postal address:

Accounting and Financial Reporting Standards Directorate

Accounting and Auditing Board of Ethiopia

P.O. Box 80263

6 kilo Madagascar Street

Leadership Institute Building 4th floor

Addis Ababa, Ethiopia

Email: infoaabe@ethionet.et

AABE also encourage you to send comments directly to the IPSASB, by May 31, 2019 and we will be glad if you send us the copy.

You can email your comments to the IPSASB electronically using ‘submit comment’ page. For your information you need to register as basic subscriber on IFAC’s website http://www.ifac.org to submit comment.

Note

  • AABE would appreciate receiving a copy of your comment in Microsoft word format if electronically
  • Please do not forget to provide on behalf of whom you are commenting
  • AABE publish all comments it receive on its website (unless the comments are damaging the good reputation of anyone or the commenter request not to). You are encouraged to specify part of your comment that you would like to withhold from being publicized.

The International Public Sector Accounting Standards Board (IPSASB) has issued exposure draft 66: – Long-Term Interests in Associates and Joint Ventures and Prepayment Features with Negative Compensation

On August 20, 2018, IPSASB issued exposure draft on long-term interest in associates and joint ventures and prepayment features with negative compensation. This Exposure Draft, Long-term Interests in Associates and Joint Ventures (Amendments to IPSAS 36) and Prepayment Features with Negative Compensation (Amendments to IPSAS 41), was developed and approved by the International Public Sector Accounting Standards Board.

The objective of Part I of this Exposure Draft is to propose amendments to IPSAS to converge with the narrow-scope amendments to IAS 28, Investments in Associates and Joint Ventures; made by the IASB in Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) (issued October 2017).

The objective of Part II of this Exposure Draft is to propose amendments to IPSAS to converge with the narrow-scope amendments to IFRS 9, Financial Instruments; made by the IASB in Prepayment Features with Negative Compensation (Amendments to IFRS 9) (issued October 2017).

Accounting and Auditing Board of Ethiopia (AABE) encourage you to read the exposure draft and provide your comments on the proposals.

AABE is committed to adopting quality international standards. Generally, once a standard has been issued by IPSASB then issues the standard for reporting entities under its jurisdiction. Issues of concern by Ethiopian Stakeholder can be taken into accounts through actively involving in commenting on Exposure Drafts. Moreover, you will keep informed yourselves through reading with the new updates of international standards.

Therefore, this is opportunity to comment on the proposed future standard to be issued by IPSASB and to be adopted by AABE.

You can access the document

http://www.ifac.org/publications-resources/exposure-draft-66-long-term-interests-associates-and-joint-ventures-and

If you are familiar with Ethiopian specific matters, send your comments – both formal and informal – by:  September 22, 2018 to AABE’s address as follows:

Postal address:

Accounting and Financial Reporting Standards Directorate

Accounting and Auditing Board of Ethiopia

P.O. Box 80263

6 kilo Madagascar Street

Leadership Institute Building 4th floor

Addis Ababa, Ethiopia

Email: infoaabe@ethionet.et

AABE also encourage you to send comments directly to the IPSASB, by October 22, 2018 and we will be glad if you send us the copy.

You can email your comments to the IPSASB electronically using ‘submit comment’ page. For your information you need to register as basic subscriber on IFAC’s website http://www.ifac.org to submit comment.

Note

  • AABE would appreciate receiving a copy of your comment in Microsoft word format if electronically
  • Please do not forget to provide on behalf of whom you are commenting
  • AABE publish all comments it receive on its website (unless the comments are damaging the good reputation of anyone or the commenter request not to). You are encouraged to specify part of your comment that you would like to withhold from being publicized.

Clarification on definition of ‘material’

On October 31, 2018 the International Accounting Standards Board (IASB) issued amendments to definition of material to make it easier for reporting entities in applying materiality judgments.

The definition of material, an important accounting concept in IFRS Standards, helps reporting entities decide whether information should be included in their financial statements. The updated definition amends IAS 1- Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

These amendments are made by the Board in response to findings that some reporting entities experienced difficulties using the old definition when judging whether information was material for inclusion in the financial statements.

  • The Old definition: Omissions or misstatements of items are material if they could, individually or collectively; influence the economic decisions that users make on the basis of the financial statement. [IAS 1.7 and IAS 8.5].
  • The New definition: Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

The amendments clarify the definition of material and how it should be applied by including in the definition guidance that until now has featured elsewhere in IFRS Standards. In addition, the explanations accompanying the definition have been improved.

Finally, the amendments ensure that the definition of material is consistent across all IFRS Standards. Accounting and Auditing Board of Ethiopia would like to update you accordingly.

The effective date of this amendment is 1 January 2020 with early adoption permitted.

For more information please see https://www.ifrs.org/news-and-events/2018/10/iasb-clarifies-its-definition-of-material/

IASB amend definition of business in IFRS 3

On October 22, 2018 the International Accounting Standards Board has issued narrow-scope amendments to IFRS 3 Business Combinations to improve the definition of a business. The amendments will help companies determine whether an acquisition made is of a business or a group of assets.

  • The existing definition of a business: An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members or participants.[IFRS 3, Appendix A]
  • The new definition of a business: An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interest) or generating other income from ordinary activities.

The amended definition emphasizes that the output of a business is to provide goods and services to customers, whereas the previous definition focused on returns in the form of dividends, lower costs or other economic benefits to investors and others. In addition to amending the wording of the definition, the Board has provided supplementary guidance on how to.

Distinguishing between a business and a group of assets is important because an acquirer recognizes goodwill only when acquiring a business.

The amendments arose from a post-implementation review (PIR) of IFRS 3, an assessment carried out to determine whether an IFRS Standard works as intended. Following feedback from the PIR, the Board is also working on another project linked to IFRS 3 in which it is exploring possible improvements to the accounting for goodwill.

The effective date of the narrow scope amendment is on business acquisitions that occur on or after 1 January 2020. Earlier application is permitted.

The standard was the result of a joint project between the IASB (International Accounting Standard Board) and FASB (Financial Accounting Standards Board). The FASB amended its definition of a business last year. The IASB’s clarification to its definition brings the two Boards’ respective Standards closer.

For more the relevant link of IASB amendment is: https://www.ifrs.org/news-and-events/2018/10/iasb-amends-definition-of-business-in-ifrs-standard-on-business-combinations/

http://www.ifac.org/publications-resources/2018-handbook-international-public-sector-accounting-pronouncements