The International Public Sector Accounting Standards Board has approved its Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities.

The framework establishes the concepts that will guide the IPSASB’s approach to standard-setting and guidance. The IPSASB operates under the auspices of the International Federation of Accountants, whose member bodies include the American Institute of CPAs. The framework addresses concepts applicable to both public sector financial statements and a wider set of public sector financial reporting needs. The Conceptual Framework identifies and responds to the key characteristics of the public sector, notably that the primary purpose of most governments and public sector entities is to deliver services to citizens and others. Therefore, the purpose of financial reporting in the public sector is to provide useful information for service recipients and resource providers.

“Approving the Conceptual Framework is a historic achievement for the IPSASB and a landmark for setting global accounting standards for the public sector,” said IPSASB chair Andreas Bergmann in a statement. “These concepts will provide the basis for our ongoing development of consistent and useful International Public Sector Accounting Standards and Recommended Practice Guidelines. They will also provide guidance to preparers faced with financial reporting issues not dealt with by IPSASs or RPGs.”

The completed Conceptual Framework is expected to be issued by the end of October 2014. The final four chapters were approved by the IPSASB during its September meeting. Those four chapters, which address the definition, recognition, and measurement of the “elements” (or building blocks) of financial statements and presentation in General Purpose Financial Reports, join the original four chapters, which were issued early in 2013, bringing the entire Conceptual Framework to eight chapters. The development process included eight public consultations with the IPSASB‘s global constituency.

The Conceptual Framework project has been a key strategic priority for the IPSASB in recent years. Its successful completion will allow the IPSASB to focus on projects to be identified through its public consultation on strategy for 2015 forward and work program for 2015-2019, along with projects already initiated, including social benefits. The Conceptual Framework is also expected to provide a solid basis for future standard setting by the IPSASB. The IPSASB said it plans to continue to work in the public interest, responding to the global financial reporting needs of governments and other public sector entities as appropriate.

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