International Public Sector Accounting Standards (IPSASs)
International Public Sector Accounting Standards (IPSASs) are accounting reporting guidelines developed specifically to offer reporting guidance to general purpose financial reporting officers in the public sector.
IPSASs are developed and issued by the International Public Sector Accounting Standards Board (IPSASB), a specialty board of the International Federations of Accountants (IFAC) headquartered in New York, USA.
IPSASB therefore, is an independent standard-setting board with special consideration to public sector financial reporting standards on ethics and public sector accounting. As a board of IFAC, IPSASB also issues guidance to support professional accountants working for the public sector organizations. In addition, IPSASB issues policy positions on topics of public interest.
Adoption of IPSAS by Governments
The need to achieve high standards of accountability through adoption of consistent accounting basis and user friendly financial reporting formats is vital. Government leaders need to plan for periods ahead. The quality of their decisions can be improved and made better only if they have access to a reliable source of performance reports, which give periodic comparisons and recognize all transactions in a transparent manner. The answer to this challenge lies in adoption of the International public Sector Accounting Standards (IPSASs).
Long-term fiscal sustainability is the ability of a government to meet its service delivery and financial commitments both now and in the future. A number of demographic and technological factors have created fiscal pressures for many governments. The global financial crisis has significantly increased these pressures in many cases, which has led to heightened interest in the long-term financial consequences of government interventions. Amidst the challenges of unfavourable climatic conditions, poor infrastructural systems, ever rising unemployment levels etc, the question that lingers is whether the government can apply the limited resources at its disposal to meet these challenges.
Scope and Authority of IPSASs
- IPSAS are designed to apply to the general purpose financial statements of all public sector entities. Public sector entities include national (central), regional and local governments, and their component entities such as departments, agencies, boards, commissions et cetera. It is important to note that IPSAS do not apply to Government Business Enterprises (GBE).
- IPSAS are developed and set out to recognize, measure, present and disclose requirements dealing with transactions and events in general purpose financial statements.
- There are two sets of IPSAS; one set that apply to accrual basis of accounting and another set that apply to the cash basis accounting however, there is a move towards adoption of IPSAS hinging on accrual basis of accounting.
The adoption of IPSAS by governments will improve both quality and comparability of financial information reported by their departments and agencies. The IPSASB encourages the adoption of IPSASs and advocates for the harmonization of national reporting requirements with IPSASs. By adopting IPSASs therefore, the government will have undertaken to benchmark its financial reporting against the global best practices.