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Executive Summary
- This Consultation Paper is the product of Phase 1 of the IPSASB’s project to develop a Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities, and covers:
- the role and authority of the IPSASB Framework;
- the objectives of financial reporting;
- the scope of financial reporting;
- the qualitative characteristics of information included in general purpose financial reports (GPFRs); and
- the nature of the reporting entity.
The Role and Authority of the IPSASB Framework
The IPSASB Framework will establish the concepts that underpin financial reporting by public sector entities that adopt the accrual basis of financial reporting. The IPSASB Framework will not establish new authoritative requirements for financial reporting by public sector entities that adopt IPSASs, nor will it override the requirements of existing IPSASs. However, where an accounting issue is not specifically addressed in an IPSAS or other IPSASB guidance, the IPSASB Framework will be a relevant source of guidance in dealing with such issues. The Objectives of Financial Reporting
The objectives of financial reporting are determined by reference to the users of GPFRs and their information needs. The potential users of GPFRs are identified as recipients of services, providers of resources, and those with a special interest in particular services. Their information needs are summarized. The role of the legislature as a major user of GPFRs in many jurisdictions is also acknowledged. The objectives of financial reporting by public sector entities are to provide information about the reporting entity useful to users of GPFRs for accountability purposes, and for making resource allocation, political, and social decisions. The Scope of Financial Reporting
The scope of financial reporting establishes the boundary around the transactions, other events, and activities that may be reported in GPFRs. The types of information that may be included within the scope of financial reporting, and presented in GPFRs to achieve the objectives of financial reporting, are considered in detail. The scope of financial reporting should be sufficiently broad to allow GPFRs of an entity to report financial and non-financial information about the past, present, and the future, including prospective financial and other information about future service delivery activities and objectives, and the resources needed to support them. The Qualitative Characteristics of Information included in GPFRs
The qualitative characteristics are the attributes that make information included in GPFRs useful to users for the achievement of the objectives of financial reporting. The qualitative characteristics of information included in GPFRs of public sector entities are considered. They are identified as: relevance, faithful representation, understandability, timeliness, comparability, and verifiability. Materiality, cost, and achieving an appropriate balance between the qualitative characteristics are pervasive constraints on that information. The Reporting Entity
For purposes of the IPSASB Framework, a public sector entity that prepares GPFRs is described as a reporting entity. The IPSASB Framework will not identify which governments (or components of the government), or other public sector entities in any jurisdiction, are reporting entities or group reporting entities. The IPSASB Framework will, however, identify (a) key characteristics that a reporting entity is likely to possess, and (b) the criteria to be adopted for determining the entities to be included within a group reporting entity. The nature of the relationship between the legislature and the executive arm of government in many jurisdictions, and the implications of that relationship for financial reporting, are also explored. A link to the Consultation Paper is available here. |
