The International Public Sector Accounting Standards Board has published new guidance on how the public sector can account for employee benefits around the world and is also considering changes in how to account for financial instruments.
IPSAS 39, Employee Benefits will replace IPSAS 25, Employee Benefits, on Jan. 1, 2018, although the IPSASB is encouraging earlier adoption of the new standard.
The changes align the standard with the latest International Financial Reporting Standards for employee benefits. The main differences include removing an option that allowed an entity to defer the recognition of changes in the net defined benefit liability (known as the “corridor approach”), and introducing a net interest approach for defined benefit plans. The latest update also amends some disclosure requirements for defined benefit plans and multi-employer plans. It also simplifies some of the requirements for contributions from employees or third parties to a defined benefit plan when the contributions are applied to a simple contributory plan that is linked to service. The update also removes the requirements for Composite Social Security Programs.
“IPSAS 39, Employee Benefits, ensures that financial statements provide faithfully representative and relevant information about the financial impact of employee benefits, particularly defined benefit pension plans, while maintaining convergence with IFRS,” said IPSASB chair Ian Carruthers in a statement Thursday. “The issuance of a new standard is intended to present the new accounting requirements more clearly.”
The full document and an At-a-Glance summary are available here.
On Wednesday, the IPSASB also released for comment a consultation paper proposing changes in the standards for Public Sector Specific Financial Instruments. The IPSASB noted that International Public Sector Accounting Standards currently don’t offer guidance on how to account for a number of monetary items that the IPSASB has termed “public sector specific financial instruments.” The board believes the absence lack of such guidance leads to inconsistent reporting between different entities.
“For entities responsible for public sector financial instruments, the topics in this Consultation Paper are critically important because users need better information to evaluate the impact of these significant items on government finances,” said Carruthers. “This Consultation Paper is the first step in developing consistent financial reporting for public sector specific financial instruments. We look forward to receiving constituents’ views on the accounting approaches identified for each topic.”
The paper includes three main topics: currency, monetary gold and International Monetary Fund quota subscription and special drawing rights. To access the consultation paper and an At-a-Glance document that provides a summary of the paper, or to submit a comment, visit www.ipsasb.org. Comments are due Dec. 31, 2016.
The IPSASB operates under the auspices of the International Federation of Accountants. IFAC is encouraging IFAC members, associates, and regional accounting bodies to promote the availability of the paper to their members and employees.
Separately, IFAC also issued this week some new guidance, Engaging Professional Accountants in Business: How to Build a More Relevant PAO and Profession. The document aims to help professional accounting organizations strengthen their engagement and influence with accountants in business, the public sector and academia.
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