The International Public Sector Accounting Standards Board has proposed new guidance to deal with the wave of government takeovers of private businesses.
The IPSASB, which operates under the auspices of the International Federation of Accountants, is expanding its existing guidance in two areas, intangible assets and entity combinations, to deal with the recent trend, an outgrowth of the financial crisis. The board has published two exposure drafts, ED 40, Intangible Assets, and ED 41, Entity Combinations from Exchange Transactions, which propose important new guidance for professional accountants working in government and other public sector entities.
During the current economic crisis, governments around the world have been acquiring business entities that might otherwise be liquidated, said IPSASB Chair Mike Hathorn (pictured) in a statement. These EDs propose financial reporting requirements that will ensure that these transactions are reported in a consistent and transparent manner, ensuring that governments remain accountable for their actions.
The issuance of the exposure drafts is part of the IPSASBs global convergence program, which will substantially converge International Public Sector Accounting Standards with International Financial Reporting Standards. The project is scheduled for completion by the end of the year.
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