A HIGHLIGHT OF THE DIFFERENCES

Scope IPSAS IFRS

IPSAS applies toInternational organizationsPublic sectors

National government Local government Other government agencies

and commissions

IFRS applies toGovernment Business EntitiesPrivate sectors

Basis of AccountingIPSAS IFRS

IPSAS allowsAccrual Basis; orCash Basis

IFRS strictly usesAccrual basis

Financial Statement Presentation

IPSAS 1 IAS 1 A complete set of financial

statements comprises: Statement of financial

position; Statement of financial

performance; Statement of changes in net

assets; Cash flow statement; A comparison of budget and

accrual amounts; Notes to FS

Does not prohibit the use of extra-ordinary items

A complete set of financial statements comprises: Statement of financial

position; Income statement Statement of changes in

equity; Cash flow statement; Statement of comprehensive

income; Notes to FS

Prohibits the use of extra-ordinary items

Cash Flow StatementIPSAS 2 IAS 7

Changes in cash and cash equivalents are classified into operating, investing and financing activities.

Operating activities can be presented using either direct or indirect method.

If direct method is used, IPSAS encourages entities to disclose a reconciliation of Surplus/Deficit and Cash flows from operations

Changes in cash and cash equivalents are classified into operating, investing and financing activities.

Operating activities can be presented using either direct or indirect method.

Accounting Policies, Estimates and Errors

IPSAS 3 IAS 8Changes in accounting

estimates are treated currently and prospectively

Changes in accounting policy are accounted for retrospectively

Correction of errors are accounted for retrospectively

Retrospective application requires adjustment of Accumulated Surplus/Deficit

Changes in accounting estimates are treated currently and prospectively

Changes in accounting policy are accounted for retrospectively

Correction of errors are accounted for retrospectively

Retrospective application requires adjustment of Retained Earnings

Effects of Changes in Foreign Exchange Rates

IPSAS 4 IAS 21Foreign currency gains

and losses are recognized in surplus/deficit.

Foreign currency translation adjustments are recognized as a separate component of net assets.

Foreign currency gains and losses are recognized in profit or loss.

Foreign currency translation adjustments are recognized as part of other comprehensive income.

Borrowing costsIPSAS 5 IAS 23

Two accounting treatments are allowed: Expense model (benchmark treatment); andCapitalization model (alternative treatment)

Borrowing costs are recognized as expense when incurred.

Borrowing costs related to a qualifying asset shall be included as part of the cost of the asset.

Separate and Consolidated Financial Statements

IPSAS 6 IAS 27 and IFRS 10Allows entities to use the

equity method to account for controlled entities in the separate financial statements of controlling entities.

Requires controlling entities to disclose a list of significant controlled entities in consolidated financial statements.

Requires investment in subsidiary to be accounted for using the cost method in the separate financial statements.

IAS 27 does not require this disclosure.

Investment in Associates/ Joint Venture

IPSAS 7 and 8 IFRS 11Investments in

associates are accounted for using the equity method.

Investments in joint ventures are accounted for using:Equity method; orProportionate

consolidation.

Investments in associates are accounted for using the equity method.

Investments in joint ventures are accounted for using equity method

RevenueIPSAS 9 IAS 18

Title- Revenue from Exchange Transactions

Revenue includes those that arise from ordinary activities and gains.

Title- RevenueRevenue is limited only

to those that arise from ordinary activities.

Construction ContractsIPSAS 11 IAS 11

IPSAS 11 makes it clear that the requirement to recognize an expected deficit on a contract immediately it becomes probable that contract costs will exceed total contract revenues applies only to contracts in which it is intended at inception of the contract that contract costs are to be fully recovered from the parties to that contract.

Recognize loss immediately when the total estimated cost exceeds the total revenue from the contract.

InventoryIPSAS 12 IAS 2

Inventories are required to be measured at the lower of cost and net realizable value.

Inventories are required to be measured at the lower of cost and current replacement cost where they are held for: Distribution at no charge; or Consumption in the

production process of goods to be distributed at no charge

Inventories are required to be measured at the lower of cost and net realizable value.

LeasesIPSAS 13 IAS 17

Leases are classified into:Operating Lease; orFinance Lease

Income or expense related to operating lease is recognized on a straight line basis over the lease term

Leases are classified into:Operating Lease; orFinance Lease

Income or expense related to operating lease is recognized on a straight line basis over the lease term

Exposure draft on Leases is expected to change the accounting for leases.

Events after Reporting DateIPSAS 14 IAS 10

Events after the reporting date are classified into Adjusting event; andNon-adjusting event

IPSAS 14 notes that where the going concern assumption is no longer appropriate, entity should determine the impact of this change on the carrying value of assets and liabilities recognized in the financial statements

Events after the reporting date are classified into Adjusting event; andNon-adjusting event

If going concern assumption is no longer appropriate, IFRS 5 shall be applied (PIC)

Financial InstrumentsIPSAS 28, 29 and 30 IFRS 9

Financial assets are classified into:Financial assets at FVPLAvailable for saleHeld to maturityLoans and receivables

Financial assets are classified into:Financial assets at FVPLFinancial assets at

amortized costs

Investment PropertyIPSAS 16 IAS 40

Investment property is a real property that is held by an entity for capital appreciation, for rental, or both.

Property held to provide a social service and which also generates cash inflows is not an investment property.

Investment property is a real property that is held by an entity for capital appreciation, for rental, or both.

Property, Plant and Equipment/ Intangible AssetsIPSAS 17 and IPSAS31 IAS 16 and IAS 38 IPSAS does not require or

prohibit the recognition of heritage assets.

PPE and Intangible assets may be accounted for using either:

Cost model; or Revaluation model

Revaluation increases and decreases are offset on a class of asset basis

No guidance is provided on how to account for heritage assets.

PPE and Intangible assets may be accounted for using either:

Cost model; or Revaluation model

Revaluation increases and decreases may only be matched on an individual item basis

AgricultureIPSAS 27 IAS 41

The definition of “agricultural activity” includes transactions for the distribution of biological assets at no charge or for a nominal charge.

IPSAS 27 requires entities to provide a quantified description of each group of biological assets.

IAS 41 does not deal with such transactions.

IAS 41 encourages, but does not require, entities to provide a quantified description of each group of biological assets

Segment ReportingIPSAS 18 IFRS 8

IPSAS 18 does not specify quantitative thresholds that must be applied in identifying reportable segments.

Guidance is provided on which segments are reportable.

Impairment of non-cash generating assets

IPSAS 21 IAS 36IPSAS 21 deals with the

impairment of non-cash-generating assets.

IPSAS 21 measures the value in use of a non-cash-generating asset as the present value of the asset’s remaining service potential using a number of approaches.

Impairment testing is applied to individual assets.

IAS 36 deals with the impairment of non-financial assets.

IAS 36 measures the value in use of a non financial asset as the present value of future cash flows from the asset.

IAS 36 uses the concept of cash generating unit.

Impairment of cash generating assets

IPSAS 26 IAS 36IPSAS 26 does not apply

to cash-generating assets carried at revalued amounts. at the reporting date.

Goodwill is outside the scope of IPSAS 26.

IAS 36 does not exclude from its scope assets carried at revalued amounts.

IAS 36 includes extensive requirements and guidance on the impairment of goodwill.

IPSAS 23- Revenue from Non-exchange transactionsNon-exchange transactions are transactions

wherein an entity either receives value from another entity without directly giving approximately equal value in exchange.

An entity shall recognize an asset in respect of taxes when the taxable event occurs and the asset recognition criteria are met.

Taxation revenue shall be determined at a gross amount. It shall not be reduced for expenses paid through the tax system

IPSAS 24- Presentation of Budget Information in FSAn entity shall present a comparison of the

budget amounts either as a separate additional financial statement or as additional budget columns in the financial statements currently presented in accordance with IPSAS

Service Concession ArrangementsIPSAS 32- Grantor IFRIC 12- Operator

The grantor recognizes a service concession asset and either a financial liability or unearned revenue.

A financial liability is recognized to the extent that the grantor has an unconditional contractual right to pay cash or another financial asset.

An unearned revenue is recognized to the extent that the grantor gives the grantor a right to charge users for the public service.

The operator either recognizes a financial asset or an intangible asset.

A financial asset is recognized to the extent that the operator has an unconditional contractual right to receive cash or another financial asset.

An intangible asset is recognized to the extent that the operator receives a right or license to charge users for the public service.

Cash basisBasic financial statements shall include:

Statement of Cash Receipts and PaymentsExplanatory NotesComparison of Budget and Actual

IPSAS encourages entities to disclose accrual basis information.

-End of Presentation-

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