IPSASB eNews: December 2018
The IPSASB held its fourth and final meeting of the year from December 4-7, 2018 in Kuala Lumpur, Malaysia.
The IPSASB considered draft Exposure Draft (ED) 67, Collective and Individual Services and Emergency Relief, which proposes application guidance to IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets. Detailed discussion focused on emergency relief, with the Board distinguishing between emergency relief that is an ongoing activity of government, and emergency relief that responds to specific events. The IPSASB approved ED 67, which will be published in late January 2019.
ED 67 proposes that no provision for collective or individual services is recognized. Under certain circumstances emergency relief that responds to specific events may give rise to a provision. Entities apply IPSAS 19 in deciding whether to recognize a provision.
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The IPSASB discussed the responses to ED 66, Long-term Interests in Associates and Joint Ventures (Amendments to IPSAS 36, Investments in Associates and Joint Ventures) and Prepayment Features with Negative Compensation (Amendments to IPSAS 41, Financial Instruments).
The IPSASB approved the amendments proposed in ED 66 with no significant changes. The IPSASB also agreed to an effective date of January 1, 2022 in order to align with the effective date for IPSAS 41.
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The IPSASB supported the initial analysis of Public Sector Specific Financial Instruments (PSSFI) developed by its Financial Instruments Task Force. This analysis outlined which PSSFI meet the definition of a financial instrument in IPSAS 28, Financial Instruments: Presentation, for which non-authoritative guidance will be developed. Where an asset or liability does not satisfy the definition of a financial instrument, the Task Force will continue to evaluate the appropriate guidance for development.
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The IPSASB reviewed and modified newly developed application guidance for historical cost, replacement cost, fair value, and the cost of fulfillment. The IPSASB confirmed that it would issue a Consultation Paper including an outline ED, Public Sector Measurement. This will allow constituents to consider the IPSASB’s preliminary views on issues such as borrowing costs, transaction costs and fair value and to provide views on the format and structure of the envisaged IPSAS.
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The IPSASB approved the scope of a draft ED that will provide requirements and guidance for transactions within the scope of IFRS 15, Revenue from Contracts with Customers, and transactions that can be addressed through the Public Sector Performance Obligation Approach (PSPOA). In its discussions, the IPSASB also clarified the definition of ‘a binding arrangement’ and considered the terminology in IFRS 15 from a public sector perspective, deciding that the term ‘purchaser’ should replace ‘customer’. In light of this decision, Staff will consider a suitable title for the draft ED.
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Grants and Transfers - Time Requirements
The IPSASB tentatively decided that transactions with enforceable mechanisms that can be activated by the resource provider should be accounted for under the PSPOA. Revenue arising from transactions that are not enforceable is to be recognized when the revenue is receivable by the recipient. The intentions and expectations of resource providers are to be communicated via enhanced display and disclosure. Staff will develop options for consideration at the March 2019 meeting. The IPSASB also decided to stop using the term ‘term requirements’, as it implies enforceability when there may be none.
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The IPSASB reviewed a roadmap for further development of the Leases project in light of responses to ED 64, Leases. The IPSASB decided:
a) To confirm the tentative decision made in September to adopt the lessee accounting requirements in ED 64, Leases, subject to decisions on lessor accounting and concessionary leases;
b) Not to publish lessee accounting requirements based on ED 64 in the near future; and
c) To create a Task Force to consider all the issues raised by respondents.
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The IPSASB approved its Strategy and Work Plan 2019-2023 and an accompanying Consultation Summary. Both documents are planned for publication in February 2019. The finalized Strategy and Work Plan communicates the IPSASB’s strategic objective and five underpinning themes, as well as its forward Work Plan for the 2019-2023 period. The Consultation Summary highlights the key changes resulting from the consultation process, including the action arising from both written submissions and feedback from four regional roundtables.
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A podcast highlighting key points of the December 2018 meeting is now available here.
The IPSASB considered draft IPSAS 42, Social Benefits. The IPSASB made minor changes prior to approving IPSAS 42, which will be published in late January 2019. IPSAS 42 fills one of the last significant omissions in IPSASB’s literature.
IPSAS 42 has an effective date of January 1, 2022. The IPSASB considered that this would allow sufficient time for preparers to make arrangements for the standard’s requirements. The effective date for IPSAS 42 is also intended to align with the effective date of application guidance on collective and individual services and emergency relief.
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