IPSASB consults on public sector accounting for financial instruments

The International Public Sector Accounting Standards Board (IPSASB) is consulting on amendments to IPSAS 41, Financial Instruments to clarify how to account for a number of important categories of financial instruments that are specific to the public sector

Exposure Draft 69 (ED), Public Sector Financial Instruments, Amendments to IPSAS 41 will see the inclusion of additional non-authoritative guidance in the standard to clarify the requirements for classifying, recognising and measuring public sector specific financial instruments.

The proposed new standard will supplement existing guidance and improve the quality of the standard by introducing additional guidance on:

  • monetary gold;
  • currency in circulation;
  • IMF quota subscriptions; and
  • special drawing rights.

For example, the guidance expands the advice on monetary gold, which has similar characteristics to a financial asset. However, like gold bullion, it is not a financial instrument as there is no contractual right to receive cash or another financial asset inherent in the item. However, given that monetary gold has many of the characteristics of a financial asset, applying the principles set out in IPSAS 41 is generally appropriate, the IPSASB consultation suggests.

ED 69 proposes adding guidance in IPSAS 41 clarifying it is appropriate to account for monetary gold by applying the financial asset principles in certain circumstances.

The extra guidance in IPSAS 41 will specifically address public sector specific financial instruments to help in the preparation of financial reporting information that is relevant, representative and comparable for public sector transactions.

‘The topics addressed in this exposure draft are unique to the public sector and have a significant impact on government finances,’ said IPSASB chair Ian Carruthers. ‘The final guidance will ensure users of IPSAS-based financial statements have the information they need about these important items for accountability and decision-making purposes.’

The closing date for comment is 31 December 2019.

Exposure Draft 69 (ED), Public Sector Financial Instruments, Amendments to IPSAS 41

Sara White

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