The International Federation of Accountant's (IFAC) Public Sector Committee (PSC) has issued Invitations to Comment (ITCs) on two critical financial reporting issues for governments: Accounting for Social Policies of Governments and Revenue from Non-Exchange Transactions (Including Taxes and Transfers). The ITCs may be downloaded free of charge by going to the public sector section of the IFAC online bookstore, http://www.ifac.org/store/.
The PSC is committed to developing International Public Sector Accounting Standards (IPSASs) and related guidance that support high quality financial reporting by governmental and other public sector entities worldwide. Obtaining public input on its proposals is an important part of the PSC due process. Responses to the ITCs are requested by June 30, 2004. Responses will be considered as input to the preparation of an Exposure Draft of an IPSAS dealing with these issues.
“The development of these two documents marks a significant step forward for the PSC because they address issues that are specific to public sector entities and central to good quality financial reporting by those entities,” explains PSC Chair Philippe Adhémar.
“The PSC established Steering Committees that include non-PSC members to involve key constituencies at an earlier stage in the development of IPSASs. The views reflected in the two ITCs represent those of the respective Steering Committees and not necessarily those of the PSC. However, the PSC is of the view that the ITCs are comprehensive, well-argued and make a significant contribution to the body of knowledge on these topics. They provide a sound basis for informed debate on these critical topics,” adds Philippe Adhémar.
Accounting for Social Policies of Governments
The Invitation to Comment Accounting for Social Policies of Governments focuses on government obligations to account for the social benefits they provide. It addresses the financial reporting consequences of a government's actions in providing a wide range of social benefits to individuals and organizations and their undertakings to provide benefits in the future. This includes goods and/or services provided for collective and individual consumption and cash transfers to individuals, such as pensions and unemployment and similar benefits. It also considers the financial reporting consequences of undertakings governments may make to provide benefits in the future.
“The proper reporting of the financial consequences of these actions and undertakings is essential if the financial statements of governments and other public sector reporting entities are to be transparent, support informed assessments of financial condition, and discharge accountability obligations,” notes Philippe Adhémar
Revenue from Non-Exchange Transactions
The ITC Revenue from Non-Exchange Transactions deals with key public sector issues, such as the financial reporting for tax revenues and transfers, including grants, donations, appropriations, and gifts. The ITC proposes adoption of an assets and liabilities approach to recognition and measurement of revenue from non-exchange transactions.
“Taxes are the largest single revenue item for most governments, but other items can also be significant. However, there are few public documents available which address the conceptual issues underpinning financial reporting of revenue from non-exchange transactions for governments,” notes Philippe Adhémar.
Comments are requested by June 30, 2004. They may be emailed to email@example.com, faxed to +1-212-286-9570 or mailed to the attention of the Technical Director, Public Sector Committee, IFAC, 545 Fifth Avenue, 14th Floor, New York, NY 10017.