International Federation of Accountants545 Fifth Avenue, 14th FloorNew York, New York 10017 USA This publication was prepared by the International Federation of Accountants (IFAC). Itsmissionistoservethepublicinterest,strengthentheworldwideaccountancy professionandcontributetothedevelopmentofstronginternationaleconomiesby establishing and promoting adherence to high quality professional standards, furthering theinternationalconvergenceofsuchstandardsandspeakingoutonpublicinterest issues where the professions expertise is most relevant. Thispublicationmaybedownloadedfree-of-chargefromtheIFACwebsite http://www.ifac.org. The approved text is published in the English language. IFAC welcomes any comments you may have regarding this handbook. Comments may be sent to the address above or emailed to IPSASBpubs@ifac.org. Copyright May 2010 by the International Federation of Accountants (IFAC). All rights reserved. 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ISBN: 978-1-60815-058-8 2010 IFAC HANDBOOK OF INTERNATIONAL PUBLIC SECTOR ACCOUNTING PRONOUNCEMENTS Scope of the Handbook This handbook brings together for continuing reference background information about theInternationalFederationofAccountants(IFAC)andthecurrentlyeffective pronouncements for the public sector issued by IFAC as of January 15, 2010.Volume I CONTENTS Page Changes of Substance from the 2009 Handbook.................................................1 International Public Sector Accounting Standards Board Terms of Reference....... 3 International Federation of Accountants..............................................................8 Preface to International Public Sector Accounting Standards.............................11 Introduction to the International Public Sector Accounting Standards .................20 IPSAS 1Presentation of Financial Statements.................................................21 IPSAS 2Cash Flow Statements........................................................................82 IPSAS 3Accounting Policies, Changes in Accounting Estimates and Errors ........104 IPSAS 4The Effects of Changes in Foreign Exchange Rates..........................135 IPSAS 5Borrowing Costs................................................................................160 IPSAS 6Consolidated and Separate Financial Statements...............................172 IPSAS 7Investments in Associates..................................................................207 IPSAS 8Interests in Joint Ventures..................................................................227 IPSAS 9Revenue from Exchange Transactions...............................................251 IPSAS 10Financial Reporting in Hyperinflationary Economies......................274 IPSAS 11Construction Contracts.....................................................................288 IPSAS 12Inventories.......................................................................................314 IPSAS 13Leases...............................................................................................333 IPSAS 14Events After the Reporting Date......................................................369 IPSAS 15Financial Instruments: Disclosure and Presentation........................385 2009 IFAC HANDBOOK OF INTERNATIONAL PUBLIC SECTORACCOUNTING STANDARDS BOARD PRONOUNCEMENTS IPSAS 16Investment Property.........................................................................443 IPSAS 17Property, Plant, and Equipment........................................................476 IPSAS 18Segment Reporting...........................................................................517 IPSAS 19Provisions, Contingent Liabilities and Contingent Assets...............548 IPSAS 20Related Party Disclosures................................................................592 IPSAS 21Impairment of Non-Cash-Generating Assets...................................613 IPSAS 22Disclosure of Information about the GeneralGovernment Sector.......................................................................................652 IPSAS 23Revenue from Non-Exchange Transactions(Taxes and Transfers)...................................................................................678 IPSAS 24Presentation of Budget Information in Financial Statements...........735 IPSAS 25Employee Benefits...........................................................................763 Volume II CONTENTS Page IPSAS 26Impairment of Cash-Generating Assets ............................................845 IPSAS 27Agriculture.....................................................................................904 IPSAS 28Financial Instruments: Presentation...............................................933 IPSAS 29Financial Instruments: Recognition and Measurement..................1022 IPSAS 30Financial Instruments: Disclosures................................................1287 IPSAS 31Intangible Assets............................................................................1337 Introduction to the International Public Sector Accounting Standard underthe Cash Basis of Accounting ........................................................................ 1388 Cash Basis IPSASFinancial Reporting Under the Cash Basis ofAccounting.................................................................................................... 1389 Glossary of Defined Terms in IPSAS 1 to IPSAS 31.......................................... 1514 Guideline 2Applicability of International Standards on Auditing to Audits of Financial Statements of Government Business Enterprises...................... 1554 Summary of Other Documents............................................................................ 1557 CHANGES1CHANGES OF SUBSTANCE FROM THE 2009 HANDBOOK Pronouncements Issued by the International Public Sector Accounting Standards Board This handbook contains references to the Public Sector Committee (the Committee, or the PSC) of IFAC. Effective November 10, 2004, the International Public Sector Accounting Standards Board (IPSASB) of IFAC replaced the PSC. This handbook contains references to the International Auditing Practices Committee (IAPC) ofIFAC.EffectiveApril1,2002,theInternationalAuditingandAssurance Standards Board (IAASB) of IFAC replaced the IAPC. ThishandbookalsocontainsreferencestotheInternationalAccountingStandards Committee (IASC). As of April 1, 2002, International Financial Reporting Standards (previouslyreferredtoasInternationalAccountingStandards)areissuedbythe International Accounting Standards Board (IASB). TheIASBPublicationsDepartmentislocatedat30CannonStreet,LondonEC4M 6XH, United Kingdom.E-mail: publications@iasb.org Internet: http://www.iasb.org In2009theIPSASBfinalizedthefollowingStandardswhichareincludedinthis Handbook: IPSAS 27, Agriculture IPSAS 28, Financial Instruments: PresentationIPSAS 29, Financial Instruments: Recognition and Measurement IPSAS 30, Financial Instruments: Disclosures IPSAS 31, Intangible Assets These Standards are effective from the dates noted in the Standards. As noted in the IPSASs, a number of IPSASs were amended by the issuance of these Standards. These amendments are effective from the dates noted in the Standards.Amendments AnumberofIPSASswereamendedasaresultoftheIPSASBsImprovements project.Thisprojectinvolvesmakingnon-urgentbutnecessarychangestoIPSASs as a result of changes made by the IASB to various IFRSs. The following documents have been amended: IPSAS 1, Presentation of Financial Statements; IPSAS 2, Cash Flow Statements; CHANGES CHANGES2IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors; IPSAS 7, Investments in Associates; IPSAS 8, Interests in Joint Ventures; IPSAS 10, Financial Reporting in Hyperinflationary Economies; IPSAS 14, Events after the Reporting Date; IPSAS 16, Investment Property; IPSAS 17, Property, Plant and Equipment;IPSAS 25, Employee Benefits; andIPSAS 26, Impairment of Cash-Generating Assets. Theseamendmentsareeffectiveforannualfinancialstatementscoveringperiods beginningonorafterJanuary1,2011.The2009editionofthisHandbookcontains thesupersededversionsoftheseStandardsandwillremainavailableon www.ifac.org until the end of 2011. IPSASB TERMS OF REFEREENCE3PUBLIC SECTOR INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS BOARDTERMS OF REFERENCE (Approved November 2004) CONTENTS Paragraph Purpose of the International Public Sector Accounting Standards Board....... 13 Appointment of Members............................................................................... 48 Nature, Scope and Authority of Pronouncements........................................... 912 Working Procedures....................................................................................... 1318 Language........................................................................................................ 19 IPSASB TERMS OF REFEREENCE4INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS BOARD Terms of Reference Purpose of the International Public Sector Accounting Standards Board 1.The mission of the International Federation of Accountants (IFAC), as set out initsconstitution,istoservethepublicinterest,IFACwillcontinueto strengthentheworldwideaccountancyprofessionandcontributetothe development of strong international economies by establishing and promoting adherencetohigh-qualityprofessionalstandards,furtheringtheinternational convergenceofsuchstandardsandspeakingoutonpublicinterestissues wheretheprofessionsexpertiseismostrelevant.Inpursuingthismission, theIFACBoardhasestablishedtheInternationalPublicSectorAccounting StandardsBoard(IPSASB)todevelophigh-qualityaccountingstandardsfor usebypublicsectorentitiesaroundtheworldinthepreparationofgeneral purpose financial statements. In this regard: Thetermpublicsectorreferstonationalgovernments,regional(e.g., state,provincial,territorial)governments,local(e.g.,city,town) governmentsandrelatedgovernmentalentities(e.g.,agencies,boards, commissions and enterprises); and Generalpurposefinancialstatementsreferstofinancialstatements issuedforusersthatareunabletodemandfinancialinformationto meet their specific information needs. 2.TheIFACBoardhasdeterminedthatdesignationoftheIPSASBasthe responsiblebodyforthedevelopmentofsuchstandards,underitsown authorityandwithinitsstatedtermsofreference,bestservesthepublic interest in achieving this aspect of its mission. 3.TheIPSASBfunctionsasanindependentstandard-settingbodyunderthe auspices of IFAC. It achieves its objectives by:Issuing International Public Sector Accounting Standards (IPSASs);Promotingtheiracceptanceandtheinternationalconvergencetothese standards; and Publishingotherdocumentswhichprovideguidanceonissuesand experiences in financial reporting in the public sector. Appointment of Members 4.ThemembersoftheIPSASBareappointedbytheBoardofIFAC.The IPSASBcomprises18members,15ofwhomarenominatedbythemember INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS BOARD TERMS OF REFERENCE IPSASB TERMS OF REFEREENCE5PUBLIC SECTOR bodiesofIFACandthreeofwhomareappointedaspublicmembers.Public members may be nominated by any individual or organization.5.Candidates put forward are considered for appointment by the IFAC Nominating Committee.Theselectionprocessisbasedonthebestpersonforthejob.In recommendingappointmentstotheBoard,theNominatingCommitteeseeksto ensurethattheIPSASBcomprisesamembershipwhichpossessesappropriate technicalexpertise,knowledgeofinstitutionalarrangementsencompassedbyits constituency, technical proficiencies of users, preparers and auditors, and a broad geographical spread. 6.IPSASB members are appointed for an initial term of up to three years which may be renewed for further three-year terms. Appointments will be made annually in such a way that one-third of the members shall be rotated each year. Continuous service on the Board by the same person shall be limited to two consecutive three-year terms, unless that member is appointed to serve as Chair for a further term. The members of the IPSASB will be primarily engaged in the public sector. For voting purposes, each IPSASB member has one vote. 7.EachmemberoftheIPSASBmaybejoinedatthemeetingtablebyone technical advisor who will have the full privilege of the floor but will not be entitled to vote.8.TheIPSASBmayappointasobservers,representativesofappropriate organizations that have a strong interest in financial reporting in the public sector, provideongoinginputtotheworkoftheIPSASBandhaveaninterestin endorsing and supporting IPSASs. These observers will have the privilege of the floorbutwillnotbeentitledtovote.Theywillbeexpectedtopossessthe technicalskillstoparticipatefullyintheIPSASBdiscussionsandtoattend IPSASBmeetingsregularlytomaintainanunderstandingofcurrentissues.The IPSASB will review the composition and role of observers on an annual basis. Nature, Scope and Authority of Pronouncements 9.The IPSASB has been given the authority, on behalf of the Board of IFAC, to issue:InternationalPublicSectorAccountingStandards(IPSASs)asthe standards to be applied by members of the profession in the preparation ofgeneralpurposefinancialstatementsofpublicsectorentities.The IPSASB adopts a due process for the development of IPSASs which providesallinterestedpartieswiththeopportunitytoprovideinputto the standards development process. Studiestoprovideadviceonfinancialreportingissuesinthepublic sector. They are based on study of the best practices and most effective methods for dealing with the issues being addressed. INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS BOARD TERMS OF REFERENCE IPSASB TERMS OF REFEREENCE6OccasionalPapersandResearchReportstoprovideinformationthat contributestothebodyofknowledgeaboutpublicsectorfinancial reportingissuesanddevelopments.Theyareaimedatprovidingnew informationorfreshinsightsandgenerallyresultfromresearch activities such as: literature searches, questionnaire surveys, interviews, experiments, case studies and analysis. 10.Indevelopingitsstandards,theIPSASBseeksinputfromitsConsultative Group and considers and makes use of pronouncements issued by: TheInternationalAccountingStandardsBoard(IASB)totheextent they are applicable to the public sector; Nationalstandard-setters,regulatoryauthoritiesandotherauthoritative bodies; Professional accounting bodies; and Other organizations interested in financial reporting in the public sector. The IPSASB will ensure that its pronouncements are consistent with those of theIASBtotheextentthosepronouncementsareapplicableandappropriate to the public sector. 11.TheobjectiveoftheIPSASBConsultativeGroupistoprovideaforumin whichtheIPSASBcanconsultwithrepresentativesofdifferentgroupsof constituentstoobtaininputandfeedbackonitsworkprogram,project priorities,majortechnicalissues,dueprocessandactivitiesingeneral.The ConsultativeGroupdoesnotvoteonInternationalPublicSectorAccounting Standards or other documents issued by the IPSASB. 12.TheIPSASBcooperateswithnationalstandard-settersinpreparingand issuingStandardstotheextentpossible,withaviewtosharingresources, minimizingduplicationofeffortandreachingconsensusandconvergencein standardsatanearlystageintheirdevelopment.Italsopromotesthe endorsementofIPSASsbynationalstandard-settersandotherauthoritative bodiesandencouragesdebatewithusers,includingelectedandappointed representatives;Treasuries,MinistriesofFinanceandsimilarauthoritative bodies; and practitioners throughout the world to identify user needs for new standards and guidance. Working Procedures 13.TheIPSASBissuesexposuredraftsofallproposedstandardsforpublic comment.Insomecases,theIPSASBmayalsoissueanInvitationto CommentpriortothedevelopmentofanExposureDraft.Thisprovidesan opportunityforthoseaffectedbyIPSASBpronouncementstoprovideinput andpresenttheirviewsbeforethepronouncementsarefinalizedand INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS BOARD TERMS OF REFERENCE IPSASB TERMS OF REFEREENCE7PUBLIC SECTOR approved.TheIPSASBconsidersallcommentsreceivedonInvitationsto Comment and Exposure Drafts in developing an IPSAS. 14.EachIPSASBmeetingrequiresthepresence,inpersonorbysimultaneous telecommunications link, of at least twelve appointed members. 15.EachmemberoftheIPSASBhasonevote.Anaffirmativevoteofatleast two-thirdsofthevotingrightsoftheIPSASBisnecessarytoapprove InvitationstoComment,ExposureDraftsandIPSASs.AnIPSASBmember may authorize an individual present at an IPSASB meeting to vote on behalf of the member. 16.IPSASB meetings to discuss the development, and to approve the issuance, of standards or other technical documents are open to the public. Agenda papers, includingminutesofthemeetingsoftheIPSASB,arepublishedonthe IPSASBs website. 17.IPSASBpublishesanannualreportoutliningitsworkprogram,itsactivities and the progress made in achieving its objectives during the year. 18.IFACwillreviewtheeffectivenessoftheIPSASBsprocessesatleastevery three years.Language 19.TheapprovedtextofapronouncementisthatpublishedbyIPSASBinthe Englishlanguage.MemberbodiesofIFACareauthorizedtoprepare,after obtainingIFACapproval,translationsofsuchpronouncementsattheirown cost, to be issued in the language of their own countries as appropriate. IFAC BACKGROUND8THE INTERNATIONAL FEDERATION OF ACCOUNTANTS The Organization TheInternationalFederationofAccountants(IFAC)istheworldwideorganizationfor the accountancy profession. Founded in 1977, its mission is to serve the public interest by continuingtostrengthentheworldwideaccountancyprofessionandcontributingtothe development of strong international economies by establishing and promoting adherence tohigh-qualityprofessionalstandards,furtheringtheinternationalconvergenceofsuch standards, and speaking out on public interest issues where the professions expertise is most relevant. IFACiscomprisedof159membersandassociatesin124countriesworldwide, representingapproximately2.5millionaccountantsinpublicpractice,industryand commerce, the public sector, and education. No other accountancy body in the world and fewotherprofessionalorganizationshavethebroad-basedinternationalsupportthat characterizes IFAC. IFACs governing bodies, staff and volunteers are committed to the values of integrity, transparencyandexpertise.IFACalsoseekstoreinforceprofessionalaccountants adherencetothesevaluesthroughtheInternationalEthicsStandardsBoardfor Accountants Code of Ethics for Professional Accountants (IESBA Code). Visit the IFAC website at http://www.ifac.org for further information. Standard-Setting Initiatives IFAChaslongrecognizedthatafundamentalwaytoprotectthepublicinterestisto develop,promote,andenforceinternationallyrecognizedstandardsasameansof ensuringthecredibilityofinformationuponwhichinvestorsandotherstakeholders depend. TheInternationalAuditingandAssuranceStandardsBoard(IAASB),theInternational AccountingEducationStandardsBoard(IAESB),theInternationalEthicsStandards BoardforAccountants(IESBA),andtheInternationalPublicSectorAccounting Standards Board (IPSASB) follow a rigorous due process that supports the development ofhigh-qualitystandardsinthepublicinterestinatransparent,efficient,andeffective manner.Theseindependentstandard-settingboardsallhaveConsultativeAdvisory Groups, which provide public interest perspectives, and include public members. These boards issue the following pronouncements: Code of Ethics for Professional Accountants InternationalStandardsonAuditing,Review,OtherAssurance,andRelated Services International Standard on Quality Control International Education Standards International Public Sector Accounting Standards BACKGROUND INFORMATION ON IFAC AND OTHER RESOURCES IFAC BACKGROUND9IFACTheIAASB,IAESB,IESBAandIPSASBarecollectivelyreferredtoasthePublic InterestActivityCommittees.TheIAASB,IAESBandIESBAarealsosubjectto oversightbythePublicInterestOversightBoard.Seehttp://www.ipiob.org/formore information. TheComplianceAdvisoryPanel(CAP)overseesIFACsmemberbodycompliance programwhichrequiresIFACmembersandassociatestodemonstratehowtheyhave usedbestendeavorstoimplementthestandardsissuedbyIFACandtheInternational AccountingStandardsBoard.MemberbodiesobligationsaresetouttheIFACs Statements of Membership Obligations. See http://www.ifac.org/complianceprogram for more information. Other Initiatives IFACdevelopsbenchmarkguidanceandpromotesthesharingofresourcestoserve professionalaccountantsinbusiness.Ithasalsoestablishedgroupstoaddressissues pertainingtosmallandmediumpractices(SMPs)andentities(SMEs)anddeveloping nations, all of which play a critical role in the global economy. Professional Accountants in Business Committee Thecommitteedevelopsgoodpracticeguidanceandotherresources,and facilitates the exchange of knowledge among its member bodies. These address a widerangeofprofessionalissues,encouragehigh-qualityperformanceby professionalaccountantsinbusiness,andbuildpublicawarenessand understandingoftherolestheseindividualsplayintheirorganizations.See http://www.ifac.org/paib for more information. Small and Medium Practices Committee The committee provides direct input from an SMP/SME perspective into the work of international standard setters to shape their work agenda and ensuring standards produced are applicable to SMPs and SMEs. The committee also issues practical supportforSMPssuchasimplementationguidesandweb-basedresourceson topicssuchasefficientimplementationofinternationalstandardsandproficient practicemanagement.Thecommitteeengagesinoutreachactivitiessuchasthe annualSMPforum,tokeepabreastofemergingissuesandtofacilitatetimely respondtoitsconstituentsneeds.Seehttp://www.ifac.org/smpformore information. Developing Nations Committee Thecommitteesupportsthedevelopmentoftheaccountancyprofession internationally by representing and addressing the interests of developing nations and by providing guidance in relevant areas. The committee also seeks resources anddevelopmentassistancefromthedonorcommunityandIFACmemberson behalf of developing nations. Further, the committee engages in outreach activities suchasitsannualforums.Seehttp://www.ifac.org/developingnationsormore information. BACKGROUND INFORMATION ON IFAC AND OTHER INFORMATION IFAC BACKGROUND10Transnational Auditors Committee The committee is dedicated to representing and meeting the needs of the members oftheForumofFirms(FoF).ThemembershipoftheFoFismadeupof international firms that perform audits of financial statements that are or may be used across national borders are represented in IFAC through the Forum of Firms. The firms commitment to the membership obligations of the FoF contributes to raisingthestandardsoftheinternationalpracticeofauditing,thusservingthe public interest. See http://www.ifac.org/Forum_of_Firms/ for more information. Other Resources IFAC has a wide range of publications and resource materials. Other available handbooks are as follows: HandbookofInternationalQualityControl,Auditing,Review,OtherAssurance, and Related Services Pronouncements Handbook of International Education Pronouncements Handbook of the Code of Ethics for Professional Accountants Handbook of International Public Sector Accounting Pronouncements IFAC also publishes adoption and implementation support materials, exposure drafts, consultationpapers,newsletters,andeNews.Themajorityofthesepublicationsare madeavailableinelectronicformatontheIFACwebsitefordownloadfree-of-charge.Printedcopiesofthehandbooksarealsoavailableforpurchase.See http://web.ifac.org/publications for more information.Copyright and Translation IFACspolicywithregardtocopyrightofitspublicationsisoutlinedinitsPolicy Statement, Policy for Reproducing, or Translating and Reproducing, Publications Issued by the International Federation of Accountants. IFAC recognizes that it is important that preparers and users of financial statements, auditors, regulators, lawyers, academia, students, and other interested groups in non-Englishspeakingcountrieshaveaccesstoitsstandardsintheirnativelanguage. IFACspolicywithregardtotranslationandreproductionofitsinternational standards(infinalform)isoutlinedinitsPolicyStatement,PolicyforTranslating andReproducingStandardsIssuedbytheInternationalFederationofAccountants. See http://www.ifac.org/translations for more information. PREFACE11December 2006 PREFACE TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS CONTENTS Paragraph Introduction.................................................................................................14 Objectives of the IPSASB............................................................................59 Membership of the IPSASB.................................................................7 IPSASB Meetings.................................................................................89 Scope and Authority of International Public Sector AccountingStandards..............................................................................................1028 Scope of the Standards.........................................................................1014 General Purpose Financial Statements.................................................1517 IPSASs for the Accrual and Cash Bases...............................................1820 Moving from the Cash Basis to the Accrual Basis...............................2125 Authority of the International Public SectorAccounting Standards....................................................................2629 Due Process.................................................................................................3035 Language.....................................................................................................36 PREFACE12PREFACE TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS Introduction 1.ThisprefacetotheInternationalPublicSectorAccountingStandards (IPSASs) sets out the objectives and operating procedures of the International Public Sector Accounting Standards Board (IPSASB) and explains the scope and authority of the IPSASs. The preface should be used as a reference for interpreting Invitations to Comment, discussion documents, Exposure Drafts and Standards approved and published by the IPSASB. 2.The mission of the International Federation of Accountants (IFAC), as set out in its constitution, is to serve the public interest, strengthen the accountancy professionworldwideandcontributetothedevelopmentofstrong internationaleconomiesbyestablishingandpromotingadherencetohigh-qualityprofessionalstandards,furtheringtheinternationalconvergenceof suchstandards,andspeakingoutonpublicinterestissueswherethe professionsexpertiseismostrelevant.Inpursuingthismission,IFAC established the IPSASB. 3.The IPSASB (formerly Public Sector Committee (PSC)) is a Board of IFAC formedtodevelopandissueunderitsownauthorityInternationalPublic SectorAccountingStandards(IPSASs).IPSASsarehighqualityglobal financialreportingstandardsforapplicationbypublicsectorentitiesother than Government Business Enterprises (GBEs). 4.TheIPSASBsConsultativeGroupisappointedbytheIPSASB.The Consultative Group is a non-voting group. It provides a means by which the IPSASBcanconsultwithandseekadviceasnecessaryfromabroad constituentgroup.TheConsultativeGroupischairedbytheChairofthe IPSASB. The Consultative Group is primarily an electronic forum. However, regionalchaptersoftheConsultativeGroupmeetwiththeIPSASBin conjunctionwithanyIPSASBmeetingsintheirregion.AllConsultative Group members are invited to these meetings. In addition, a full meeting of all members of the Consultative Group may be held if considered necessary. Objectives of the IPSASB 5.The objectives of the IPSASB are to serve the public interest by developing high quality public sector financial reporting standards and by facilitating the convergenceofinternationalandnationalstandards,therebyenhancingthe qualityanduniformityoffinancialreportingthroughouttheworld.The IPSASB achieves its objectives by: IssuingInternationalPublicSectorAccountingStandards(IPSASs);Promoting their acceptance and the international convergence to these standards; and PREFACE TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS PREFACE13Publishingotherdocumentswhichprovideguidanceonissuesand experiences in financial reporting in the public sector. 6.TheIPSASsaretheauthoritativerequirementsestablishedbytheIPSASB. ApartfromdevelopingIPSASs,theIPSASBissuesothernon-authoritative publicationsincludingstudies,researchreportsandoccasionalpapersthat deal with particular public sector financial reporting issues. Membership of the IPSASB 7.The members of the IPSASB are appointed by the IFAC Board to serve on the IPSASB. The IPSASB comprises 18 members, 15 of whom are nominated by memberbodiesofIFACandthreeofwhomarepublicmembers.Public members may be nominated by any individual or organization. In addition, a limited number of observers from bodies that have an interest in public sector financialreportingareappointedtothe IPSASB.These observers havethe privilege of the floor but are not entitled to vote. IPSASB Meetings 8.EachIPSASBmeetingrequiresaquorumofatleasttwelveappointed members, in person or by simultaneous telecommunications link. 9.IPSASB meetings to discuss the development and to approve the issuance of IPSASs or other papers are open to the public. Agenda papers, including the minutesofthemeetingsoftheIPSASB,arepublishedontheIPSASBs website: http://www.ifac.org/publicsector Scope and Authority of International Public Sector Accounting Standards Scope of the Standards 10.The IPSASB develops IPSASs which apply to the accrual basis of accounting and IPSASs which apply to the cash basis of accounting. 11.IPSASssetoutrecognition,measurement,presentationanddisclosure requirements dealing with transactions and events in general purpose financial statements. 12.The IPSASs are designed to apply to the general purpose financial statements ofallpublicsectorentities.Publicsectorentitiesincludenational governments,regionalgovernments(forexample,state,provincial, territorial), local governments (for example, city, town) and their component entities(forexample,departments,agencies,boards,commissions),unless otherwisestated.TheStandardsdonotapplytoGBEs.GBEsapply International Financial Reporting Standards (IFRSs) which are issued by the InternationalAccountingStandardsBoard(IASB).IPSASsincludea definition of GBEs. PREFACE TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS PREFACE1413.Any limitation of the applicability of specific IPSASs is made clear in those standards. IPSASs are not meant to apply to immaterial items. 14.The IPSASB has adopted the policy that all paragraphs in IPSASs shall have equalauthority,andthattheauthorityofaparticularprovisionshallbe determined by the language used. To avoid any unintended consequences the IPSASB has determined to apply this policy prospectively as it reviews and reissuespreviouslyissuedIPSASs.Consequently,IPSASsapprovedbythe IPSASBafterJ anuary1,2006includeparagraphsinboldandplaintype, whichhaveequalauthority.Paragraphsinboldtypeindicatethemain principles. An individual IPSAS should be read in the context of the objective and Basis for Conclusions (if any) stated in that IPSAS and this preface. General Purpose Financial Statements 15.Financialstatementsissuedforusersthatareunabletodemandfinancial informationtomeettheirspecificinformationneedsaregeneralpurpose financialstatements.Examplesofsuchusersarecitizens,voters,their representativesandothermembersofthepublic.Thetermfinancial statements used in this preface and in the standards covers all statements and explanatory material which are identified as being part of the general purpose financial statements. 16.When the accrual basis of accounting underlies the preparation of the financial statements,thefinancialstatementswillincludethestatementoffinancial position, the statement of financial performance, the cash flow statement and thestatementofchangesinnetassets/equity.Whenthecashbasisof accounting underlies the preparation of the financial statements, the primary financial statement is the statement of cash receipts and payments. 17.In addition to preparing general purpose financial statements, an entity may prepare financial statements for other parties (such as governing bodies, the legislatureandotherpartieswhoperformanoversightfunction)whocan demand financial statements tailored to meet their specific information needs. Such statements are referred to as special purpose financial statements. The IPSASB encourages the use of IPSASs in the preparation of special purpose financial statements where appropriate. IPSASs for the Accrual and Cash Bases 18.The IPSASB develops accrual IPSASs that: Are converged with International Financial Reporting Standards (IFRSs) issuedbytheInternationalAccountingStandardsBoard(IASB)by adapting themto a public sector context when appropriate. In undertaking thatprocess,theIPSASBattempts,whereverpossible,tomaintainthe accountingtreatmentandoriginaltextoftheIFRSsunlessthereisa significant public sector issue which warrants a departure; and PREFACE TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS PREFACE15Dealswithpublicsectorfinancialreportingissuesthatareeithernot comprehensively dealt with in existing IFRSs or for which IFRSs have not been developed by the IASB. 19.As many accrual based IPSASs are based on IFRSs, the IASBs Framework forthePreparationandPresentationofFinancialStatementsisarelevant reference for users of IPSASs. 20.The IPSASB has also issued a comprehensive Cash Basis IPSAS that includes mandatory and encouraged disclosures sections. Moving from the Cash Basis to the Accrual Basis 21.The Cash Basis IPSAS encourages an entity to voluntarily disclose accrual based information, although its core financial statements will nonetheless be prepared under the cash basis of accounting. An entity in the process of moving fromcash accounting to accrual accounting may wish to include particular accrual based disclosures during this process. The status (for example, audited or unaudited) and locationofadditionalinformation(forexample,inthenotestothefinancial statementsorinaseparatesupplementarysectionofthefinancialreport)will dependonthecharacteristicsoftheinformation(forexample,reliabilityand completeness)andanylegislationorregulationsgoverningfinancialreporting within a jurisdiction. 22.The IPSASB also attempts to facilitate compliance with accrual based IPSASs through the use of transitional provisions in certain standards. Where transitional provisionsexist,theymayallowanentityadditionaltimetomeetthefull requirementsofaspecificaccrualbasedIPSASorproviderelieffromcertain requirements when initially applying an IPSAS. An entity may at any time elect to adopt the accrual basis of accounting in accordance with IPSASs. At this point, the entity shall apply all the accrual based IPSASs and could choose to apply any transitional provisions in an individual accrual based IPSAS. 23.Having decided to adopt accrual accounting in accordance with IPSASs, the transitional provisions would govern the length of time available to make the transition. On the expiry of the transitional provisions, the entity shall report in full in accordance with all accrual based IPSASs. 24.International Public Sector Accounting Standard (IPSAS) 1, Presentation of Financial Statements includes the following requirement: AnentitywhosefinancialstatementscomplywithInternational PublicSectorAccountingStandardsshoulddisclosethatfact. Financialstatementsshouldnotbedescribedascomplyingwith InternationalPublicSectorAccountingStandardsunlessthey comply with all the requirements of each applicable International Public Sector Accounting Standard. PREFACE TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS PREFACE1625.IPSAS 1 also requires disclosure of the extent to which the entity has applied any transitional provisions. Authority of International Public Sector Accounting Standards 26.Withineachjurisdiction,regulationsmaygoverntheissueofgeneralpurpose financialstatements by publicsectorentities.These regulationsmay beinthe form ofstatutoryreportingrequirements,financialreportingdirectivesand instructions, and/or accounting standards promulgated by governments, regulatory bodies and/or professional accounting bodies in the jurisdiction concerned. 27.The IPSASB believes that the adoption of IPSASs, together with disclosure of compliance with themwill lead to a significant improvement in the quality of general purpose financial reporting by public sector entities. This, in turn, is likely to lead to better informed assessments of the resource allocation decisions made by governments, thereby increasing transparency and accountability. 28.The IPSASB acknowledges the right of governments and national standard-setters to establish accounting standards and guidelines for financial reporting intheirjurisdictions.Somesovereigngovernmentsandnationalstandard-settershavealreadydevelopedaccountingstandardsthatapplyto governments and public sector entities within their jurisdiction. IPSASs may assistsuchstandard-settersinthedevelopmentofnewstandardsorinthe revision of existing standards in order to contribute to greater comparability. IPSASs are likely to be of considerable use to jurisdictions that have not yet developedaccountingstandardsforgovernmentsandpublicsectorentities. TheIPSASBstronglyencouragestheadoptionofIPSASsandthe harmonization of national requirements with IPSASs. 29.Standingalone,neithertheIPSASBnortheaccountingprofessionhasthe powertorequirecompliancewithIPSASs.ThesuccessoftheIPSASBs efforts is dependent upon the recognition and support for its work from many different interested groups acting within the limits of their own jurisdiction.Due Process 30.TheIPSASBadoptsadueprocessforthedevelopmentofIPSASsthat provides the opportunity for comment by interested parties including IFAC member bodies, auditors, preparers (including finance ministries), standard-setters,andindividuals.TheIPSASBalsoconsultswithitsConsultative Group on major projects, technical issues, and work program priorities. 31.The IPSASBs due process for projects normally, but not necessarily, includes the following steps: Studyofnationalaccountingrequirementsandpracticeandan exchange of views about the issues with national standard-setters; Consideration of pronouncements issued by: PREFACE TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS PREFACE17The International Accounting Standards Board (IASB); Nationalstandard-setters,regulatoryauthoritiesandother authoritative bodies; Professional accounting bodies; and Other organizations interested in financial reporting in the public sector; Formationofsteeringcommittees(SCs),projectadvisorypanels (PAPs) or subcommittees to provide input to the IPSASB on a project; Publication of an exposure draft for public comment usually for at least 4 months. This provides an opportunity for those affected by the IPSASBs pronouncementstopresenttheirviewsbeforethepronouncementsare finalized and approved by the IPSASB. The Exposure Draft will include a Basis for Conclusion; Consideration of all comments received within the comment period on discussion documents and Exposure Drafts, and to make modifications toproposedStandardsasconsideredappropriateinthelightofthe IPSASBs objectives; and Publication of an IPSAS which includes a Basis for Conclusions that explains the steps in the IPSASBs due process and how the IPSASB reached its conclusions. Steering Committees, Project Advisory Panels and Subcommittees 32.The IPSASB may delegate the responsibility for carrying out the necessary researchandforpreparingExposureDraftsofproposedStandardsand guidelines or drafts of studies to SCs, subcommittees or individuals. 33.SCs, PAPs and subcommittees are chaired by a member of the IPSASB, but can include persons who are not members of the IPSASB or of a member body of IFAC. Approval Arrangements 34.The draft of a standard, duly revised after the exposure period, is submitted to theIPSASBforapproval.IfapprovedbytheIPSASB,itisissuedasan IPSASandbecomeseffectivefromthedatespecifiedintheStandard.On occasion,wheretherearesignificantunresolvedissuesassociatedwithan Exposure Draft, the IPSASB may decide to re-expose a proposed Standard. 35.ForthepurposesofapprovinganInvitationtoComment(ITC),EDoran IPSAS, an affirmative vote of at least two-thirds of the voting rights of the IPSASB is required. Each IPSASB member represented on the IPSASB has one vote. PREFACE TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS PREFACE18Language 36.The approved text of a pronouncement is that published by the IPSASB in the English language. Member bodies of IFAC are authorized to prepare, after obtaining IFAC approval, translations of such pronouncements at their own cost, to be issued in the language of their own countries as appropriate. PREFACE TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS PREFACE19Introduction to the International Public Sector Accounting Standards The International Federation of Accountants International Public Sector Accounting Standards Board (IPSASB) develops accounting standards for public sector entities referredtoasInternationalPublicSectorAccountingStandards(IPSASs).The IPSASB recognizes the significant benefits of achieving consistent and comparable financial information across jurisdictions and it believes that the IPSASs will play a key role in enabling these benefits to be realized. The IPSASB strongly encourages governmentsandnationalstandard-setterstoengageinthedevelopmentofits Standards by commenting on the proposals set out in its Exposure Drafts. The IPSASB issues IPSASs dealing with financial reporting under the cash basis of accounting and the accrual basis of accounting. The accrual basis IPSASs are based ontheInternationalFinancialReportingStandards(IFRSs),issuedbythe International Accounting Standards Board (IASB) where the requirements of those Standardsareapplicabletothepublicsector.Theyalsodealwithpublicsector specific financial reporting issues that are not dealt with in IFRSs. TheadoptionofIPSASsbygovernmentswillimproveboththequalityand comparability of financial information reported by public sector entities around the world.TheIPSASBrecognizestherightofgovernmentsandnationalstandard-setterstoestablishaccountingstandardsandguidelinesforfinancialreportingin theirjurisdictions.TheIPSASBencouragestheadoptionofIPSASsandthe harmonization of national requirements with IPSASs. Financial statements should be described as complying with IPSASs only if they comply with all the requirements of each applicable IPSAS. INTRODUCTION TO INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS INTRODUCTION20Introduction to the International Public Sector Accounting Standards The International Federation of Accountants International Public Sector Accounting StandardsBoard(IPSASB)developsaccountingstandardsforpublicsectorentities referredtoasInternationalPublicSectorAccountingStandards(IPSASs).The IPSASBrecognizesthesignificantbenefitsofachievingconsistentandcomparable financial information across jurisdictions and it believes that the IPSASs will play a key roleinenablingthesebenefitstoberealized.TheIPSASBstrongly encourages governmentsandnationalstandard-setterstoengageinthedevelopmentofits Standards by commenting on the proposals set out in its Exposure Drafts. The IPSASB issues IPSASs dealing with financial reporting under the cash basis of accounting and the accrual basis of accounting. The accrual basis IPSASs are based ontheInternationalFinancialReportingStandards(IFRSs),issuedbythe InternationalAccountingStandardsBoard(IASB)wheretherequirementsofthose Standardsareapplicabletothepublicsector.Theyalsodealwithpublicsector specific financial reporting issues that are not dealt with in IFRSs. TheadoptionofIPSASsbygovernmentswillimproveboththequalityand comparabilityoffinancialinformationreportedbypublicsectorentitiesaroundthe world.TheIPSASBrecognizestherightofgovernmentsandnationalstandard-setterstoestablishaccountingstandardsandguidelinesforfinancialreportingin theirjurisdictions.TheIPSASBencouragestheadoptionofIPSASsandthe harmonization of national requirements with IPSASs. Financial statements should be describedascomplyingwithIPSASsonlyiftheycomplywithalltherequirements of each applicable IPSAS. IPSAS 121PUBLIC SECTOR IPSAS 1PRESENTATION OF FINANCIAL STATEMENTS Acknowledgment ThisInternationalPublicSectorAccountingStandard(IPSAS)isdrawnprimarily fromInternationalAccountingStandard(IAS) 1(Revised2003),Presentationof Financial Statements, published by the International Accounting Standards Board (IASB). Extracts from IAS 1 are reproduced in this publication of the International PublicSectorAccountingStandardsBoard(IPSASB)oftheInternational FederationofAccountants(IFAC)withthepermissionoftheInternational Accounting Standards Committee Foundation (IASCF).TheapprovedtextoftheInternationalFinancialReportingStandards(IFRSs)is thatpublishedbytheIASBintheEnglishlanguage,andcopiesmaybeobtained directlyfromIASBPublicationsDepartment,30CannonStreet,LondonEC4M 6XH, United Kingdom. E-mail: publications@iasb.org Internet: http://www.iasb.org IFRSs, IASs, Exposure Drafts, and other publications of the IASB are copyright of the IASCF.IFRS,IAS,IASB,IASCF,InternationalAccountingStandards,and InternationalFinancialReportingStandardsaretrademarksoftheIASCFand should not be used without the approval of the IASCF. IPSAS 122December 2006 IPSAS 1PRESENTATION OFFINANCIAL STATEMENTS CONTENTS Paragraph Introduction..............................................................................................IN1IN23 Objective..................................................................................................1 Scope........................................................................................................26 Definitions...............................................................................................714 Economic Entity...............................................................................810 Future Economic Benefits or Service Potential................................11 Government Business Enterprises....................................................12 Materiality........................................................................................13 Net Assets/Equity.............................................................................14 Purpose of Financial Statements..............................................................1518 Responsibility for Financial Statements ...................................................1920 Components of Financial Statements.......................................................2126 Overall Considerations.............................................................................2758 Fair Presentation and Compliance with IPSASs...............................2737 Going Concern..................................................................................3841 Consistency of Presentation..............................................................4244 Materiality and Aggregation.............................................................4547 Offsetting..........................................................................................4852 Comparative Information..................................................................5358 Structure and Content..............................................................................59150 Introduction......................................................................................5960 Identification of the Financial Statements........................................6165 Reporting Period...............................................................................6668 Timeliness.........................................................................................69 Statement of Financial Position........................................................7098 PRESENTATION OF FINANCIAL STATEMENTS IPSAS 123PUBLIC SECTOR Current/Non-current Distinction................................................ 7075 Current Assets........................................................................... 7679 Current Liabilities...................................................................... 8087 Information to be Presented on the Face of the Statement ofFinancial Position............................................................... 8892 Information to be Presented either on the Face of the Statementof Financial Position or in the Notes.................................. 9398 Statement of Financial Performance................................................. 99117 Surplus or Deficit for the Period................................................ 99101 Information to be Presented on the Face of the Statement ofFinancial Performance........................................................ 102105 Information to be Presented either on the Face of the Statementof Financial Performance or in the Notes........................... 106117 Statement of Changes in Net Assets/Equity..................................... 118125 Cash Flow Statement........................................................................ 126 Notes................................................................................................. 127150 Structure.................................................................................... 127131 Disclosure of Accounting Policies............................................ 132139 Key Sources of Estimation Uncertainty.................................... 140148 Capital ........................................................................................148A148C Puttable Instruments Classified as Net Assets/Equity ................ 148D Other Disclosures...................................................................... 149150 Transitional Provisions............................................................................ 151152 Effective Date.......................................................................................... 153154 Withdrawal of IPSAS 1 (2000)................................................................155 Appendix A: Qualitative Characteristics of Financial Reporting Appendix B: Amendments to Other IPSASs Basis for Conclusions Implementation Guidance Comparison with IAS 1 PRESENTATION OF FINANCIAL STATEMENTS IPSAS 124 InternationalPublicSectorAccountingStandard1,PresentationofFinancial Statements,issetoutinparagraphs1155.Alltheparagraphshaveequal authority.IPSAS1shouldbereadinthecontextofitsobjective,theBasisfor Conclusions,andthePrefacetoInternationalPublicSectorAccounting Standards. IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors,providesabasisforselectingandapplyingaccountingpoliciesinthe absence of explicit guidance. PRESENTATION OF FINANCIAL STATEMENTS IPSAS 125PUBLIC SECTOR Introduction IN1.IPSAS1,PresentationofFinancialStatements,replacesIPSAS1, PresentationofFinancialStatements(issuedMay2000),andshouldbe appliedforannualreportingperiodsbeginningonorafterJanuary1,2008. Earlier application is encouraged. Reasons for Revising IPSAS 1 IN2.TheIPSASBdevelopedthisrevisedIPSAS1asaresponsetotheIASBs project on Improvements to IASs and its own policy to converge public sector accounting standards with private sector standards to the extent appropriate. IN3.IndevelopingthisrevisedIPSAS1,theIPSASBadoptedthepolicyof amendingtheIPSASforthosechangesmadetotheformerIAS1, Presentation of Financial Statements made as a consequence of the IASBs improvementsproject,exceptwheretheoriginalIPSAShadvariedfromthe provisionsofIAS1forapublicsectorspecificreason;suchvariancesare retainedinthisIPSAS1andarenotedintheComparisonwithIAS1.Any changes to IAS 1 made subsequent to the IASBs improvements project have not been incorporated into IPSAS 1. Changes from Previous Requirements IN4.The main changes from the previous version of IPSAS 1 are described below. Scope IN5.TheStandarddoesnotincluderequirementsrelatingtotheselectionand applicationofaccountingpolicies.Theserequirementsarenowincludedin IPSAS 3,AccountingPolicies,ChangesinAccountingEstimatesand Errors. IN6.The Standard includes presentation requirements for surplus or deficit for the period, these requirements were previously contained in IPSAS 3. Definitions IN7.The Standard: Defines two new terms: impracticable and notes; Changesthenameofthetermmaterialitytomaterialandamendsthe definition; Removesthefollowingunnecessarydefinitions:associates,borrowing costs,cash,cashequivalents,cashflows,consolidatedfinancial statements, control, controlled entity, controlling entity, equity method, exchangedifference,fairvalue,financialassets,foreigncurrency, foreign operation, minority interest, and qualifying assets. These terms PRESENTATION OF FINANCIAL STATEMENTS IPSAS 126aredefinedinotherIPSASsandarereproducedintheGlossaryof Defined Terms; andRemoves the following terms, which no longer exist: extraordinary items, fundamentalerrors,netsurplus/deficit,ordinaryactivities,reporting currencyandsurplus/deficitfromordinaryactivities.Thesedefinitions have also been eliminated in relevant IPSASs, e.g., IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors and IPSAS 4, The Effects of Changes in Foreign Exchange Rates. IN8.The Standard includes the interpretation of the term materiality and the notion ofcharacteristicsofusers.Previously,IPSAS1didnotcontainthis commentary. Fair Presentation and Departure from IPSASs IN9.The Standard clarifies that fair presentation requires the faithful representation oftheeffects oftransactions,otherevents andconditionsinaccordancewith thedefinitionsandrecognitioncriteriaforassets,liabilities,revenueand expensessetoutintheIPSASs.Previously,IPSAS1didnotcontainthe guidance on the meaning of fair presentation. IN10. TheStandardrequiresthatintheextremelyrarecircumstancesinwhich managementconcludesthatcompliancewitharequirementinanIPSAS wouldbesomisleadingthatitwouldconflictwiththeobjectiveoffinancial statementssetoutinIPSAS1,departurefromtherequirementisrequired unless departure is prohibited by the relevant regulatory framework. In either case,theentityisrequiredtomakespecifieddisclosures.Thesuperseded IPSAS1didnotsetupthecriterionfordeparturefromIPSASsanddidnot distinguishthecircumstancesinwhichtheregulatoryframeworkpermitsor prohibits the departure from IPSASs.IN11.TheStandarddoesnotincluderequirementsrelatedtotheselectionand applicationofaccountingpolicies.IPSAS3containssuchrequirements.The supersededIPSAS1includedrequirementsrelatedtotheselectionand application of accounting policies. Classification of Assets and Liabilities IN12.TheStandardrequiresthatanentityusestheorderofliquiditytopresent assetsandliabilitiesonlywhenaliquiditypresentationprovidesinformation that is reliable and more relevant than a current/non-current presentation. The superseded IPSAS 1 did not contain such limitation. IN13.TheStandardrequiresthataliabilityheldprimarilyforthepurposeofbeing tradedbeclassifiedascurrent.ThesupersededIPSAS1didnotspecifythis criterion for liabilities classified as current.PRESENTATION OF FINANCIAL STATEMENTS IPSAS 127PUBLIC SECTOR IN14.TheStandardrequiresthatafinancialliabilitythatisduewithintwelvemonths afterthereportingdate,orforwhichtheentitydoesnothaveanunconditional right to defer its settlement for at least twelve months after the reporting date, is classified as a current liability. This classification is required even if an agreement torefinance,ortoreschedulepayments,onalong-termbasisiscompletedafter the reporting date and before the financial statements are authorized for issue. The superseded IPSAS 1 required such liabilities to be classified as non-current. IN15.TheStandard clarifiesthataliabilityis classifiedas non-current whentheentity has, under the terms of an existing loan facility, the discretion to refinance or roll over its obligations for at least twelve months after the reporting date.IN16.TheStandardrequiresthatwhenalong-termfinancialliabilityispayableon demand because the entity has breached a condition of its loan agreement on orbeforethereportingdate,theliabilityisclassifiedascurrentatthe reportingdateevenif,afterthereportingdateandbeforethefinancial statementsareauthorizedforissue,thelenderhasagreednottodemand paymentasaconsequenceofthebreach.ThepreviousversionofIPSAS 1 required such liabilities to be classified as non-current. IN17.The Standard clarifies that the liability is classified as non-current if the lender agreedbythereportingdatetoprovideaperiodofgraceendingatleast twelve months after the reporting date, within which the entity can rectify the breach and during which the lender cannot demand immediate repayment.Presentation and Disclosure Statement of Financial Performance IN18.TheStandard setsoutthe presentation requirementsfor surplus ordeficitfor the period. These requirements were previously included in IPSAS 3.IN19.TheStandarddoesnotrequirethepresentationofthefollowinglineitems from the face of the statement of financial performance:Surplus or deficit from operating activities;Surplus or deficit from ordinary activities; andExtraordinary items.The superseded IPSAS 1 required the presentation of these items. IN20.TheStandardrequirestheseparatepresentation,onthefaceofthestatement offinancialperformance,oftheentityssurplusordeficitfortheperiod allocated between: surplus or deficit attributable to owners of the controlling entity;andsurplusordeficitattributabletominorityinterest.The superseded IPSAS 1 did not contain these presentation requirements. PRESENTATION OF FINANCIAL STATEMENTS IPSAS 128Statement of Changes in Net Assets/Equity IN21.TheStandardrequiresthepresentation,onthefaceofthestatementof changesinnetassets/equity,oftheentitystotalamountofrevenueand expensefortheperiod(includingamountsrecognizeddirectlyinnet assets/equity),showingseparatelytheamountsattributabletominority interest and owners of the controlling entity. The superseded IPSAS 1 did not require presentation of these items. Notes IN22.TheStandardrequiresthatanentityshalldisclosethejudgments,apartfrom those involving estimations, management has made in the process of applying theentitysaccountingpoliciesthathavethemostsignificanteffectonthe amounts recognized in the financial statements (e.g., managements judgment indeterminingwhetherassetsareinvestmentproperties).Thesuperseded IPSAS 1 did not contain these disclosure requirements. IN23.The Standard requires that an entity disclose the key assumptions concerning thefutureandotherkeysourcesofestimationuncertaintyatthereporting date,thathaveasignificantriskofcausingamaterialadjustmenttothe carryingamountsofassetsandliabilitieswithinthenextfinancialyear.The superseded IPSAS 1 did not contain these disclosure requirements. PRESENTATION OF FINANCIAL STATEMENTS IPSAS 129PUBLIC SECTOR Objective 1.The objective of this Standard is to prescribe the manner in which general purpose financial statements should be presented to ensure comparability bothwiththeentitysfinancialstatementsofpreviousperiodsandwith thefinancialstatementsofotherentities.Toachievethisobjective,this Standardsetsoutoverallconsiderationsforthepresentationoffinancial statements,guidancefortheirstructure,andminimumrequirementsfor thecontentoffinancialstatementspreparedundertheaccrualbasisof accounting.Therecognition,measurement,anddisclosureofspecific transactions and other events are dealt with in other IPSASs. Scope 2.ThisStandardshallbeappliedtoallgeneralpurposefinancial statementspreparedandpresentedundertheaccrualbasisof accounting in accordance with IPSASs.3.General purpose financial statements are those intended to meet the needs of users who are not in a position to demand reports tailored to meet their particularinformationneeds.Usersofgeneralpurposefinancial statementsincludetaxpayersandratepayers,membersofthelegislature, creditors, suppliers, the media, and employees. General purpose financial statementsincludethosethatarepresentedseparatelyorwithinanother public document, such as an annual report. This Standard does not apply to condensed interim financial information.4.This Standard applies equally to all entities and whether or not they need to prepare consolidated financial statements or separate financial statements, as defined in IPSAS 6, Consolidated and Separate Financial Statements.5.ThisStandardappliestoallpublicsectorentitiesotherthan Government Business Enterprises. 6.The Preface to International Public Sector Accounting Standards issued bytheIPSASBexplainsthatGovernmentBusinessEnterprises(GBEs) apply IFRSs issued by the IASB. GBEs are defined in paragraph 7 below.Definitions 7.ThefollowingtermsareusedinthisStandardwiththemeanings specified: Accrualbasismeansabasisofaccountingunderwhichtransactions and other events are recognized when they occur (and not only when cash or its equivalent is received or paid). Therefore, the transactions and events are recorded in the accounting records and recognized in thefinancialstatementsoftheperiodstowhichtheyrelate.The PRESENTATION OF FINANCIAL STATEMENTS IPSAS 130elementsrecognizedunderaccrualaccountingareassets,liabilities, net assets/equity, revenue, and expenses. Assets are resources controlled by an entity as a result of past events andfromwhichfutureeconomicbenefitsorservicepotentialare expected to flow to the entity. Contributionsfromownersmeansfutureeconomicbenefitsor servicepotentialthathasbeencontributedtotheentitybyparties external to the entity, other than those that result in liabilities of the entity, that establish a financial interest in the net assets/equity of the entity, which: (a)Conveysentitlementbothto(i)distributionsoffutureeconomic benefitsorservicepotentialbytheentityduringitslife,such distributionsbeingatthediscretionoftheownersortheir representatives,andto(ii)distributionsofanyexcessofassets over liabilities in the event of the entity being wound up; and/or (b)Can be sold, exchanged, transferred, or redeemed. Distributionstoownersmeansfutureeconomicbenefitsorservice potential distributed by the entity to all or some of its owners, either as a return on investment or as a return of investment. Economicentitymeansagroupofentitiescomprisingacontrolling entity and one or more controlled entities. Expensesaredecreasesineconomicbenefitsorservicepotential duringthereportingperiodintheformofoutflowsorconsumption ofassetsorincurrencesofliabilitiesthatresultindecreasesinnet assets/equity, other than those relating to distributions to owners. GovernmentBusinessEnterprisemeansanentitythathasallthe following characteristics: (a)Is an entity with the power to contract in its own name;(b)Hasbeenassignedthefinancialandoperationalauthorityto carry on a business; (c)Sells goods and services, in the normal course of its business, to other entities at a profit or full cost recovery; (d)Isnotreliant oncontinuinggovernment funding tobe a going concern (other than purchases of outputs at arms length); and (e)Is controlled by a public sector entity. ImpracticableApplyingarequirementisimpracticablewhenthe entity cannot apply it after making every reasonable effort to do so. PRESENTATION OF FINANCIAL STATEMENTS IPSAS 131PUBLIC SECTOR Liabilitiesarepresentobligationsoftheentityarisingfrompast events, the settlement of which is expected to result in an outflow from theentityofresourcesembodyingeconomicbenefitsorservice potential. MaterialOmissionsormisstatementsofitemsarematerialifthey could,individuallyorcollectively,influencethedecisionsor assessmentsofusersmadeonthebasisofthefinancialstatements. Materialitydependsonthenatureandsizeoftheomissionor misstatement judged in the surrounding circumstances. The nature or sizeoftheitem,oracombinationofboth,couldbethedetermining factor. Netassets/equityistheresidualinterestintheassetsoftheentity after deducting all its liabilities.Notescontaininformationinadditiontothatpresentedinthe statement of financial position, statement of financial performance, statementofchangesinnetassets/equityandcashflowstatement. Notesprovidenarrativedescriptionsordisaggregationsofitems disclosedinthosestatementsandinformationaboutitemsthatdo not qualify for recognition in those statements. Revenueisthegrossinflowofeconomicbenefitsorservice potentialduringthereportingperiodwhenthoseinflowsresultin anincreaseinnetassets/equity,otherthanincreasesrelatingto contributions from owners. Terms defined in other IPSASs are used in this Standard with the samemeaningasinthoseStandards,andarereproducedinthe Glossary of Defined Terms published separately. 7A. ThefollowingtermsaredescribedinIPSAS28,FinancialInstruments: Presentation and are used in this Standard with the meaning specified in IPSAS 28: (a)Puttablefinancialinstrumentclassifiedasanequityinstrument (described in paragraphs 15 and 16 of IPSAS 28);(b)An instrument that imposes on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidationandisclassifiedasanequityinstrument(describedin paragraphs 17 and 18 of IPSAS 28). Economic Entity 8.The term economic entity is used in this Standard to define, for financial reportingpurposes,agroupofentitiescomprisingthecontrollingentity and any controlled entities. PRESENTATION OF FINANCIAL STATEMENTS IPSAS 1329.gOthertermssometimesusedtorefertoaneconomicentityinclude administrative entity, financial entity, consolidated entity, and group. 10.Aneconomicentitymayincludeentitieswithbothsocialpolicyand commercialobjectives.Forexample,agovernmenthousingdepartment may be an economic entity that includes entities that provide housing for anominalcharge,aswellasentitiesthatprovideaccommodationona commercial basis. Future Economic Benefits or Service Potential 11.Assets provide a means for entities to achieve their objectives. Assets that areusedtodelivergoodsandservicesinaccordancewithanentitys objectives, but which do not directly generate net cash inflows, are often described as embodying service potential. Assets that are used to generate netcashinflowsareoftendescribedasembodyingfutureeconomic benefits. To encompass all the purposes to which assets may be put, this Standard uses the term future economic benefits or service potential to describe the essential characteristic of assets. Government Business Enterprises 12.GBEsincludebothtradingenterprises,suchasutilities,andfinancial enterprises,suchasfinancialinstitutions.GBEsare,insubstance,no differentfromentitiesconductingsimilaractivitiesintheprivatesector. GBEsgenerallyoperatetomakeaprofit,althoughsomemayhave limitedcommunityserviceobligationsunderwhichtheyarerequiredto provide some individuals and organizations in the community with goods andservicesateithernochargeorasignificantlyreducedcharge. IPSAS 6providesguidanceondeterminingwhethercontrolexistsfor financialreportingpurposes,andshouldbereferredtoindetermining whether a GBE is controlled by another public sector entity. Materiality 13.Assessing whether an omission or misstatement could influence decisions ofusers,andsobematerial,requiresconsiderationofthecharacteristics of those users. Users are assumed to have a reasonable knowledge of the public sector and economic activities and accounting, and a willingness to studytheinformationwithreasonablediligence.Therefore,the assessmentneedstotakeintoaccounthowuserswithsuchattributes couldreasonablybeexpectedtobeinfluencedinmaking andevaluating decisions. PRESENTATION OF FINANCIAL STATEMENTS IPSAS 133PUBLIC SECTOR Net Assets/Equity 14.Net assets/equity is the term used in this Standard to refer to the residual measure in the statement of financial position (assets less liabilities). Net assets/equitymaybepositiveornegative.Othertermsmaybeusedin place of net assets/equity, provided that their meaning is clear. Purpose of Financial Statements 15.Financialstatementsareastructuredrepresentationofthefinancial position and financial performance of an entity. The objectives of general purposefinancialstatementsaretoprovideinformationaboutthe financial position, financial performance, and cash flows of an entity that isusefultoawiderangeofusersinmakingandevaluatingdecisions abouttheallocationofresources.Specifically,theobjectivesofgeneral purposefinancialreportinginthepublicsectorshouldbetoprovide informationusefulfordecisionmaking,andtodemonstratethe accountability of the entity for the resources entrusted to it, by: (a)Providinginformationaboutthesources,allocation,andusesof financial resources; (b)Providing information about how the entity financed its activities and met its cash requirements; (c)Providing information that is useful in evaluating the entitys ability to finance its activities and to meet its liabilities and commitments; (d)Providing information about the financial condition of the entity and changes in it; and (e)Providingaggregateinformationusefulinevaluatingtheentitys performanceintermsofservicecosts,efficiency,and accomplishments. 16.Generalpurposefinancialstatementscanalsohaveapredictiveor prospectiverole,providinginformationusefulinpredictingthelevelof resourcesrequiredforcontinuedoperations,theresourcesthatmaybe generated by continued operations, and the associated risks and uncertainties. Financial reporting may also provide users with information:(a)Indicatingwhetherresourceswereobtainedandusedinaccordance with the legally adopted budget; and (b)Indicatingwhetherresourceswereobtainedandusedinaccordance withlegalandcontractualrequirements,includingfinanciallimits established by appropriate legislative authorities. 17.Tomeettheseobjectives,thefinancialstatementsprovideinformation about an entitys: PRESENTATION OF FINANCIAL STATEMENTS IPSAS 134(a)Assets; (b)Liabilities; (c)Net assets/equity; (d)Revenue; (e)Expenses;(f)Other changes in net assets/equity; and (g)Cash flows. 18.Althoughtheinformationcontainedinfinancialstatementscanbe relevantforthepurposeofmeetingtheobjectivesinparagraph 15,itis unlikelytoenablealltheseobjectivestobemet.Thisislikelytobe particularly so in respect of entities whose primary objective may not be tomakeaprofit,asmanagersarelikelytobeaccountableforthe achievementofservicedeliveryaswellasfinancialobjectives. Supplementaryinformation,includingnon-financialstatements,maybe reportedalongsidethefinancialstatementsinordertoprovideamore comprehensive picture of the entitys activities during the period. Responsibility for Financial Statements 19.Theresponsibilityforthepreparationandpresentationoffinancial statementsvarieswithinandacrossjurisdictions.Inaddition,a jurisdictionmaydrawadistinctionbetweenwhoisresponsiblefor preparingthefinancialstatementsandwhoisresponsibleforapproving orpresentingthefinancialstatements.Examplesofpeopleorpositions who may be responsible for the preparation of the financial statements of individualentities(suchasgovernmentdepartmentsortheirequivalent) include the individual who heads the entity (the permanent head or chief executive)andtheheadofthecentralfinanceagency(orthesenior finance official, such as the controller or accountant-general).20.The responsibility for the preparation of the consolidated financial statements of the government as a whole usually rests jointly with the head of the central financeagency(ortheseniorfinanceofficial,suchasthecontrolleror accountant-general) and the finance minister (or equivalent).Components of Financial Statements 21.A complete set of financial statements comprises: (a)A statement of financial position; (b)A statement of financial performance; (c)A statement of changes in net assets/equity;PRESENTATION OF FINANCIAL STATEMENTS IPSAS 135PUBLIC SECTOR (d)A cash flow statement; (e)When the entity makes publicly available its approved budget, acomparisonofbudgetandactualamountseitherasa separate additional financial statement or as a budget column in the financial statements; and (f)Notes, comprising a summary of significant accounting policies and other explanatory notes. 22.Thecomponentslistedinparagraph21arereferredtobyavarietyof namesbothwithinandacrossjurisdictions.Thestatementoffinancial position may also be referred to as a balance sheet or statement of assets andliabilities.Thestatementoffinancialperformancemayalsobe referred to as a statement of revenues and expenses, an income statement, anoperatingstatement,oraprofitandlossstatement.Thenotesmay include items referred to as schedules in some jurisdictions.23.The financial statements provide users with information about an entitys resourcesand obligations atthereporting dateandthe flowof resources betweenreportingdates.Thisinformationisusefulforusersmaking assessmentsofanentitysabilitytocontinuetoprovidegoodsand servicesatagivenlevel,andthelevelofresourcesthatmayneedtobe providedtotheentityinthefuturesothatitcancontinuetomeetits service delivery obligations. 24.Public sector entities are typically subject to budgetary limits in the form of appropriations or budget authorizations (or equivalent), which may be giveneffectthroughauthorizinglegislation.Generalpurposefinancial reportingbypublicsectorentitiesmayprovideinformationonwhether resources were obtained and used in accordance with the legally adopted budget. Entities that make publicly available their approved budget(s) are requiredtocomplywiththerequirementsofIPSAS 24,Presentation of BudgetInformationinFinancialStatements.Forotherentities,where thefinancialstatementsandthebudgetareonthesamebasisof accounting,thisStandardencouragestheinclusioninthefinancial statementsofacomparisonwiththebudgetedamountsforthereporting period. Reporting against budget(s) for these entities may be presented in various different ways, including:Theuseofacolumnarformatforthefinancialstatements,with separatecolumnsforbudgetedamountsandactualamounts.A columnshowinganyvariancesfromthebudgetorappropriation may also be presented for completeness; and Disclosurethatthebudgetedamountshavenotbeenexceeded.If anybudgetedamountsorappropriationshavebeenexceeded,or expenses incurred without appropriation or other form of authority, PRESENTATION OF FINANCIAL STATEMENTS IPSAS 136thendetailsmaybedisclosedbywayoffootnotetotherelevant item in the financial statements. 25.Entities are encouraged to present additional information to assist users in assessingtheperformanceoftheentity,anditsstewardshipofassets,as well as making and evaluating decisions about the allocation of resources. This additional information may include details about the entitys outputs and outcomes in the form of (a) performance indicators, (b) statements of serviceperformance,(c)programreviews,and(d)otherreportsby management about the entitys achievements over the reporting period.26.Entitiesarealsoencouragedtodiscloseinformationaboutcompliancewith legislative,regulatory,orotherexternally-imposedregulations.When informationaboutcomplianceisnotincludedinthefinancialstatements,it maybeusefulforanotetorefertoanydocumentsthatincludethat information.Knowledgeofnon-complianceislikelytoberelevantfor accountabilitypurposes,andmayaffectausersassessmentoftheentitys performanceanddirectionoffutureoperations.Itmayalsoinfluence decisions about resources to be allocated to the entity in the future. Overall Considerations Fair Presentation and Compliance with IPSASs 27.Financialstatementsshallpresentfairlythefinancialposition, financial performance, and cash flows of an entity. Fair presentation requiresthefaithfulrepresentationoftheeffectsoftransactions, otherevents,andconditionsinaccordancewiththedefinitionsand recognitioncriteriaforassets,liabilities,revenue,andexpensesset out in IPSASs. The application of IPSASs, with additional disclosures whennecessary,ispresumedtoresultinfinancialstatementsthat achieve a fair presentation. 28.An entity whose financial statements comply with IPSASs shall make an explicit and unreserved statement of such compliance in the notes. Financialstatementsshallnotbedescribedascomplyingwith IPSASs unless they comply with all the requirements of IPSASs.29.Invirtuallyallcircumstances,afairpresentationisachievedbycompliance with applicable IPSASs. A fair presentation also requires an entity: (a)Toselectandapplyaccountingpoliciesinaccordancewith IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors. IPSAS 3 sets out a hierarchy of authoritative guidance thatmanagementconsiders,intheabsenceofaStandardthat specifically applies to an item. PRESENTATION OF FINANCIAL STATEMENTS IPSAS 137PUBLIC SECTOR (b)Topresentinformation,includingaccountingpolicies,inamanner thatprovidesrelevant,reliable,comparable,andunderstandable information.(c)To provide additional disclosures when compliance with the specific requirementsinIPSASsisinsufficienttoenableuserstounderstand theimpactofparticulartransactions,otherevents,andconditionson the entitys financial position and financial performance. 30.Inappropriate accounting policies are not rectified either by disclosure of the accounting policies used, or by notes or explanatory material. 31.Intheextremelyrarecircumstancesinwhichmanagementconcludes thatcompliancewitharequirementinaStandardwouldbeso misleadingthatitwouldconflictwiththeobjectiveoffinancial statementssetoutinthisStandard,theentityshalldepartfromthat requirementinthemannersetoutinparagraph32iftherelevant regulatoryframeworkrequires,orotherwisedoesnotprohibit,sucha departure. 32.WhenanentitydepartsfromarequirementofaStandardin accordance with paragraph 31, it shall disclose: (a)That management has concluded that the financial statements presentfairlytheentitysfinancialposition,financial performance, and cash flows; (b)That it has complied with applicable IPSASs, except that it has departedfromaparticularrequirementtoachieveafair presentation; (c)ThetitleoftheStandardfromwhichtheentityhasdeparted, thenatureofthedeparture,includingthetreatmentthatthe Standard would require, the reason why that treatment would besomisleadinginthecircumstancesthatitwouldconflict withtheobjectiveoffinancialstatementssetoutinthis Standard, and the treatment adopted; and (d)Foreachperiodpresented,thefinancialimpactofthe departure on each item in the financial statements that would have been reported in complying with the requirement. 33.When an entity has departed from a requirement of a Standard in a priorperiod,andthatdepartureaffectstheamountsrecognizedin thefinancialstatementsforthecurrentperiod,itshallmakethe disclosures set out in paragraph 32(c) and (d). 34.Paragraph33applies,forexample,whenanentitydepartedinaprior period from a requirement in a Standard for the measurement of assets or PRESENTATION OF FINANCIAL STATEMENTS IPSAS 138liabilities, and that departure affects the measurement of changes in assets and liabilities recognized in the current periods financial statements. 35.In the extremely rare circumstances in which management concludes thatcompliancewitharequirementinaStandardwouldbeso misleadingthatitwouldconflictwiththeobjectiveoffinancial statementssetoutinthisStandard,buttherelevantregulatory frameworkprohibitsdeparturefromtherequirement,theentity shall,tothemaximumextentpossible,reducetheperceived misleading aspects of compliance by disclosing: (a)ThetitleoftheStandardinquestion,thenatureofthe requirement,andthereasonwhymanagementhasconcluded thatcomplyingwiththatrequirementissomisleadinginthe circumstancesthatitconflictswiththeobjectiveoffinancial statements set out in this Standard; and (b)For each period presented, the adjustments to each item in the financial statements that management has concluded would be necessary to achieve a fair presentation. 36.Forthepurposeofparagraphs3135,anitemofinformationwould conflictwiththeobjectiveoffinancialstatementswhenitdoesnot representfaithfullythetransactions,otherevents,andconditionsthatit either purportstorepresent orcouldreasonablybeexpectedto represent and,consequently,itwouldbelikelytoinfluencedecisionsmadeby users offinancialstatements.Whenassessingwhethercomplying witha specificrequirementinaStandardwouldbesomisleadingthatitwould conflict with the objective of financial statements set out in this Standard, management considers: (a)Whytheobjectiveoffinancialstatementsisnotachievedinthe particular circumstances; and (b)Howtheentityscircumstancesdifferfromthose of other entities thatcomplywiththerequirement.Ifotherentitiesinsimilar circumstancescomplywiththerequirement,thereisarebuttable presumptionthattheentityscompliancewiththerequirement wouldnotbesomisleadingthatitwouldconflictwiththe objective of the financial statements set out in this Standard. 37.DeparturesfromtherequirementsofanIPSASinordertocomplywith statutory/legislativefinancialreportingrequirementsinaparticular jurisdiction do not constitute departures that conflict with the objective of financialstatementssetoutinthisStandardasoutlinedinparagraph31. Ifsuchdeparturesarematerial,anentitycannotclaimtobecomplying with IPSASs. PRESENTATION OF FINANCIAL STATEMENTS IPSAS 139PUBLIC SECTOR Going Concern 38.Whenpreparingfinancialstatements,anassessmentofanentitys ability to continue as a going concern shall be made. This assessment shallbemadebythoseresponsibleforthepreparationoffinancial statements.Financialstatementsshallbepreparedonagoing concern basis unless there is an intention to liquidate the entity or to ceaseoperating,orifthereisnorealisticalternativebuttodoso. Whenthoseresponsibleforthepreparationofthefinancial statementsareaware,inmakingtheirassessment,ofmaterial uncertainties related to events or conditions that may cast significant doubtupontheentitysabilitytocontinueasagoingconcern,those uncertaintiesshallbedisclosed.Whenfinancialstatementsarenot preparedonagoingconcernbasis,thatfactshallbedisclosed, togetherwiththebasisonwhichthefinancialstatementsare preparedandthereasonwhytheentityisnotregardedasagoing concern.39.Financialstatementsarenormallypreparedontheassumptionthatthe entityisagoingconcernandwillcontinueinoperationandmeetits statutoryobligationsfortheforeseeablefuture.Inassessingwhetherthe goingconcernassumptionisappropriate,thoseresponsibleforthe preparationoffinancialstatementstakeintoaccountallavailable informationaboutthefuture,whichisatleast,butisnotlimitedto, twelve months from the approval of the financial statements.40.Thedegreeofconsiderationdependsonthefactsineachcase,and assessmentsofthegoingconcernassumptionarenotpredicatedonthe solvencytestusuallyappliedtobusinessenterprises.Theremaybe circumstanceswheretheusualgoingconcerntestsofliquidityand solvencyappearunfavorable,butotherfactorssuggestthattheentityis nonetheless a going concern. For example:(a)Inassessingwhetheragovernmentisagoingconcern,thepower to levy rates or taxes may enable some entities to be considered as agoingconcern,eventhoughtheymayoperateforextended periods with negative net assets/equity; and(b)For an individual entity, an assessment of its statement of financial positionatthereportingdatemaysuggestthatthegoingconcern assumptionisnotappropriate.However,theremaybemulti-year funding agreements or other arrangements in place that will ensure the continued operation of the entity. 41.Thedeterminationofwhetherthegoingconcernassumptionis appropriateisprimarilyrelevantforindividualentitiesratherthanfora governmentasawhole.Forindividualentities,inassessingwhetherthe goingconcernbasisisappropriate,thoseresponsibleforthepreparation PRESENTATION OF FINANCIAL STATEMENTS IPSAS 140offinancialstatementsmayneedtoconsiderawiderangeoffactors relatingto(a)currentandexpectedperformance,(b)potentialand announced restructurings of organizational units, (c) estimates of revenue orthelikelihoodofcontinuedgovernmentfunding,and(d)potential sources of replacement financing before it is appropriate to conclude that the going concern assumption is appropriate. Consistency of Presentation 42.Thepresentationandclassificationofitemsinthefinancial statements shall be retained from one period to the next unless: (a)Itisapparent,followingasignificantchangeinthenatureof theentitysoperationsorareviewofitsfinancialstatements, thatanotherpresentationorclassificationwouldbemore appropriate having regard to the criteria for the selection and application of accounting policies in IPSAS 3; or (b)An IPSAS requires a change in presentation.43.A significant acquisition or disposal, or a review of the presentation of the financialstatements,mightsuggestthatthefinancialstatementsneedto be presented differently. For example, an entity may dispose of a savings bank that represents one of its most significant controlled entities and the remainingeconomicentityconductsmainlyadministrativeandpolicy adviceservices.Inthiscase,thepresentationofthefinancialstatements basedontheprincipalactivitiesoftheeconomicentityasafinancial institution is unlikely to be relevant for the new economic entity.44.Anentitychangesthepresentationofitsfinancialstatementsonlyifthe changedpresentationprovidesinformationthatisreliableandismore relevanttousersofthefinancialstatements,andtherevisedstructureis likelytocontinue,sothatcomparabilityisnotimpaired.Whenmaking suchchangesinpresentation,anentityreclassifiesitscomparative information in accordance with paragraphs 55 and 56.Materiality and Aggregation 45.Eachmaterialclassofsimilaritemsshallbepresentedseparatelyin the financial statements. Items of a dissimilar nature or function shall be presented separately, unless they are immaterial. 46.Financial statements result from processing large numbers of transactions orothereventsthatareaggregatedintoclassesaccordingtotheirnature orfunction.Thefinalstageintheprocessofaggregationand classificationisthepresentationofcondensedandclassifieddata,which formlineitemsonthefaceofthestatementoffinancialposition, statementoffinancialperformance,statementofchangesinnet assets/equity, and cash flow statement, or in the notes. If a line item is not PRESENTATION OF FINANCIAL STATEMENTS IPSAS 141PUBLIC SECTOR individually material, it is aggregated with other items either on the face ofthosestatementsorinthenotes.Anitemthatisnotsufficiently materialtowarrantseparatepresentationonthefaceofthosestatements may nevertheless be sufficiently material for it to be presented separately in the notes. 47.Applyingtheconceptofmaterialitymeansthataspecificdisclosure requirementinanIPSASneednotbesatisfiediftheinformationisnot material.Offsetting 48.Assetsandliabilities,andrevenueandexpenses,shallnotbeoffset unless required or permitted by an IPSAS. 49.Itisimportantthatassetsandliabilities,andrevenueandexpenses,are reportedseparately.Offsettinginthestatementoffinancialperformance or the statement of financial position, except when offsetting reflects the substanceofthetransactionorotherevent,detractsfromtheabilityof users both (a) to understand the transactions, other events and conditions thathaveoccurred,and(b)toassesstheentitysfuturecashflows. Measuring assets net of valuation allowances for example, obsolescence allowances on inventories and doubtful debts allowances on receivables is not offsetting. 50.IPSAS9,RevenuefromExchangeTransactions,definesrevenueand requiresittobemeasuredatthefairvalueofconsiderationreceivedor receivable,takingintoaccounttheamountofanytradediscountsand volume rebates allowed by the entity. An entity undertakes, in the course ofitsordinaryactivities,othertransactionsthatdonotgeneraterevenue but are incidental to the main revenue-generating activities. The results of suchtransactionsarepresented,whenthispresentationreflectsthe substanceofthetransactionorotherevent,bynettinganyrevenuewith related expenses arising on the same transaction. For example: (a)Gainsandlossesonthedisposalofnon-currentassets,including investmentsandoperatingassets,arereportedbydeductingfrom theproceedsondisposalthecarryingamountoftheassetand related selling expenses; and(b)Expensesrelatedtoaprovisionthatisrecognizedinaccordance with IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets,andreimbursedunderacontractualarrangementwitha third party (for example, a suppliers warranty agreement) may be netted against the related reimbursement. 51.In addition, gains and losses arising from agroup of similar transactions arereportedonanetbasis,forexample,foreignexchangegainsand PRESENTATION OF FINANCIAL STATEMENTS IPSAS 142lossesandgainsandlossesarisingonfinancialinstrumentsheldfor trading.Suchgainsandlossesare,however,reportedseparatelyifthey are material. 52.TheoffsettingofcashflowsisdealtwithinIPSAS 2,CashFlow Statements. Comparative Information 53.ExceptwhenanIPSASpermitsorrequiresotherwise,comparative information shall be disclosed in respect of the previous period for all amountsreportedinthefinancialstatements.Comparative informationshallbeincludedfornarrativeanddescriptive informationwhenitisrelevanttoanunderstandingofthecurrent periods financial statements. 54.In some cases, narrative information provided in the financial statements forthepreviousperiod(s)continuestoberelevantinthecurrentperiod. Forexample,detailsofalegaldispute,theoutcomeofwhichwas uncertain at the last reporting date and is yet to be resolved, are disclosed inthecurrentperiod.Usersbenefitfrominformation(a)thatthe uncertainty existed at the last reporting date, and (b) about the steps that have been taken during the period to resolve the uncertainty. 55.Whenthepresentationorclassificationofitemsinthefinancial statementsisamended,comparativeamountsshallbereclassified unlessthereclassificationisimpracticable.Whencomparative amounts are reclassified, an entity shall disclose: (a)The nature of the reclassification; (b)Theamountofeachitemorclassofitemsthatisrec