The proposed IPSAS on measurement for public sector financial reporting—recycling or reiteration?

ABSTRACT

This paper analyses the value of the IPSASB’s approach in the consultation paper on the measurement of assets and liabilities in public sector financial reporting. It shows that reference to extant standards results in a patchwork of data that may be more confusing than guiding. The paper concludes that if the proposed Exposure Draft purports to consolidate accounting theory on measurement for the public sector, it should refer to public sector accounting practices rather than concepts that have evolved from private sector accounting practices. Such an approach would strengthen accountability and transparency of the public sector because financial reporting would be compliant with a relevant suite of standards.

IMPACT

This paper highlights the paradoxical strategy adopted by the IPSASB when referring to private sector concepts in the process of developing standards for the public sector. Instead of providing guidelines that promote better accounting practices, the result seems to be complicated proposals that confuse the user. The IPSASB should mitigate this confusion by first revising and updating the measurement chapter in its Conceptual Framework (CF). The IPSASB needs to examine the status quo and reconsider whether a separate standard on measurement is really necessary, or whether it would be sufficient to align existing standards with the updated CF. This paper needs to be read by public sector accounting standard setters; and it will also be of interest to practitioners and academics.

KEYWORDS:

• Accounting practice
• accounting theory
• deprival value model
• fair value model
• historical cost
• measurement
• public sector accounting

Acknowledgements

The author acknowledges the input of her colleagues forming part of the Task Force IRSPM A&A SIG, CIGAR Network and EGPA PSG XII, particularly in the Task Force’s response for the IPSASB’s consultation on measurement.

Disclosure statement

No potential conflict of interest was reported by the author(s).