The International Public Sector Accounting Standards Board has released for comment an exposure draft amending the standards for public sector entities under the cash basis of accounting.

Exposure Draft 61, Amendments to Financial Reporting under the Cash Basis of Accounting (the Cash Basis IPSAS) has two parts. Part 1 identifies requirements that a reporting entity needs to adopt to claim that its financial statements comply with the IPSAS.

It currently includes requirements for preparation of consolidated financial statements and for disclosure of information about external assistance and payments made by third parties.

ED 61 proposes that these requirements be revised, recast as encouragements, and moved into Part 2 of the IPSAS. Part 2 identifies encouraged disclosures that an entity may choose to provide, but which are not required to claim compliance with the IPSAS.

The exposure draft also proposes amendments to ensure that the existing requirements and encouragements of the Cash Basis IPSAS are better aligned with the equivalent accrual IPSAS, unless there is a reason to deviate as a result of adopting the cash basis of accounting. This will better support entities’ expected use of the Cash Basis IPSAS as a platform from which to transition to accrual IPSAS.

“The amendments proposed in ED 61 aim to remove practical obstacles to implementation of the Cash Basis IPSAS,” said IPSASB chair Ian Carruthers in a statement. “These proposals respond to views expressed by our constituents that wider adoption of the Cash Basis IPSAS will enhance financial reporting by governments in developing economies that adopt a cash basis of accounting. They should also strengthen the Cash Basis IPSAS in its role as an important transition path to adoption of accrual IPSAS. We look forward to receiving constituents’ views on these proposals.”

First issued in 2003, the Cash Basis IPSAS is the only IPSASB pronouncement that deals with the cash basis of accounting. Respondents to the IPSASB’s 2014 strategy consultation supported retaining the Cash Basis IPSAS.

“The primary role that the Cash Basis IPSAS plays in the IPSASB’s overall standard-setting strategy is as a stepping stone to adoption of accrual IPSAS,” said Carruthers. “While robust reporting on the cash basis contributes significantly to broader improvements in public sector financial management in many jurisdictions, it provides only part of the information that the users of financial statements need for accountability and decision-making purposes. Such information is best provided by adoption of accrual IPSAS.”

The IPSASB, which operates under the auspices of the International Federation of Accountants, is seeking comment on those paragraphs or sections of the Cash Basis IPSAS that are proposed for amendment. To enhance understanding of the proposals, a marked-up version of the Cash Basis IPSAS reflecting the changes proposed in ED 61 is available on the IPSASB website.

To access the document, the marked-up proposed IPSAS, and the At-a-Glance document, which provides a summary of the ED, or to submit a comment, please visit the IPSASB website at

Comments on the exposure draft are requested by July 31, 2016. The IPSASB is encouraging IFAC members, associates, and regional accountancy organizations to promote the availability of the exposure draft to their members and employees.

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