major differences between ipsas & ifrs

7/25/2019 Major Differences Between Ipsas & Ifrs

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MAJOR DIFFERENCES

BETWEEN

IPSAS/PPSAS & IFRS


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MAJOR DIFFERENCE BETWEEN

IPSAS & IFRS

Revenue

Public sector entities may derive revenues from

exchange or non-exchange transactions.

IPSAS 23 on revenue from non-exchange transactionsserves to accommodate transactions in which public

sector entities receive taxes and transfers (cash or

non-cash) without directly giving approximately equal

value in exchange, or giving value to another entity

without directly receiving approximately equal valuein exchange.


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IPSAS & IFRS

Revenue

Exchange transactions, on the other hand, are

transactions in which one entity receives assets or

services, or has liabilities extinguished, and directly

gives approximately equal value (primarily in the

form of cash, goods, services, or use of assets) to

another entity in exchange (see IPSAS 9).

For public sector entities the distinction between non-

exchange and exchange transactions is oftennecessitated as these entities will often have a

combination of both types of revenue transactions.


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IPSAS & IFRS

Revenue

IPSAS 23 calls for public sector entities to analyse the

inflow of resources and states that the entity can

recognize an asset arising from a non-exchange

transaction when it gains control of resources that

meet the definition of an asset and satisfy the

recognition criteria.


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IPSAS & IFRS

Presentation of budget information in financial

statements

IPSAS 24 on the presentation of budget information

in financial statements requires a comparison

between the budgeted amount and the actual

amounts arising from execution of the budget to be

included in the financial statements of public sector

entities which are required to, or choose to, make

publicly available the approved budget for which theyare held publicly accountable.


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IPSAS & IFRS

Presentation of budget information in financial

statements

IPSAS 24 requires that public sector entities

reporting under IPSAS disclose an explanation of any

material differences between the budget and actual

amounts. Applying IPSAS 24 shall strengthen

transparency and comparability between budget and

actual amounts as reporting in the financial

statements.


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IPSAS & IFRS

Disclosure of financial information

IPSAS 22 on the disclosure of financial information about

the general government sector establishes requirements

for preparing and presenting information about the

general government sector (GGS).The standard is only applied to a governments

consolidated financial statements.

Information disclosed in accordance with this standard

disaggregates those consolidated financial statementsaccording to the GGS boundaries as specified in

statistical bases of financial reporting. The standard does

not permit reporting entities to consolidate information

about entities that are not subject to common control


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IPSAS & IFRS

Income taxes.

Public sector entities are assumed to be generally

exempt from income taxes; thus, International

Accounting Standards (IAS) 12, Income Taxes, has no

equivalent in IPSAS. However, the latter provides

that if the public sector entity is liable for tax (which

is considered an unlikely event), the entity can refer

to the guidance in IAS 12 in accounting for the tax.


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IPSAS & IFRS

Control

IFRS 10, Consolidated Financial Statements; IFRS 11,

Joint Arrangements; and IFRS 12, Disclosures of

Interests in Other Entities, took effect in 2013.

However, IPSAS is still based on the previous

standards of IAS 27, Consolidated and Separate

Financial Statements; IAS 28, Investments in

Associates; and IAS 31, Interest in Joint Ventures.

The definition of control under IFRS 10 is verydifferent from the one in IAS 27; thus, the manner of

determining control may be different for a profit-

oriented entity applying IFRS from that of a public

sector entity applying IPSAS.


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IPSAS & IFRS

Service Potentialas a recognition criterion is

another point of difference between IFRS and IPSAS.

This concept is not referred to in the IFRS, which

considers economic benefit as a major recognition

criterion. The service potential concept isincorporated in the definition of the public sector

entitys assets, liabilities, income and expenses and is

an indicator of an assets capacity to provide goods

and services to the public, in accordance with theentitys mandate.


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IPSAS & IFRS

Impairment of non-cash-generating assets

The accounting for impairment of non-cash-

generating assets under IPSAS is also different as

there are no equivalent transactions under IFRS.

IPSAS also caters for both impairment of cash and

non-cash generating assets. IFRS assumes that all

assets will be cash-generating.

IPSAS, on the other hand, assumes that the majority

of a public sector entitys assets can be non-cash

generating. IPSAS 21 Impairment of Non-cash-

generating Assets provides specific guidance on how

to determine the value-in-use of such assets.


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IPSAS & IFRS

Share-based payments

IPSAS eliminated the concepts that are considered

peculiar in the private sector, such as accounting for

share-based payments and the requirement to

disclose earnings per share. In cases that such

concepts are applicable to the public sector entities,

these entities should refer to the relevant IFRS

major differences between ipsas & ifrs

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