Feedback from the December 2023 IPSASB meeting

Exposure Draft on Exploration for and Evaluation of Mineral Resources (ED 86) and Exposure Draft on Stripping Costs in the Production Phase of a Surface Mine (ED 87)

The IPSASB approved ED 86 on Exploration for and Evaluation of Mineral Resources. The ED is based on IFRS 6 on Exploration for and Evaluation of Mineral Resources. The ED provides accounting guidance on the costs incurred in the exploration and evaluation of mineral resources.

The IPSASB approved ED 87 on Stripping Costs in the Production Phase of a Surface Mine. The ED is based on IFRIC 20 on Stripping Costs in the Production Phase of a Surface Mine. The ED provides guidance on how to account for costs incurred to remove waste material in a surface mining operation. The IPSASB agreed to expose the guidance as amendments to IPSAS 12 on Inventories as the material removed may result in inventory.

ED 86 and ED 87 are expected to have limited application in the South African public sector.

Project brief on IPSAS 33 Limited Scope Update

Following the completion of initial research on the implementation experience of a group of countries with IPSAS 33 on First Time Adoption of Accrual Basis IPSASs, the IPSASB agreed to revise the Standard to ensure it is helpful to initial adopters. The IPSASB approved a project brief for this limited-scope project.

Navigating IPSAS – practical support material

The IPSASB supported a draft feedback statement to communicate to constituents the outcome of the IPSASB’s project on Differential Reporting. The IPSASB decided to support development of practical support material by a strategic partner organisation as opposed to pursuing a standard-setting project on Differential Reporting. 

The Differential Reporting Feedback Statement can be accessed on the IPSASB’s website here.

Natural resources

The IPSASB agreed on revised recognition criteria and initial measurement proposals, consistent with the Conceptual Framework, IPSAS for tangible assets and IPSAS on Measurement. The application of the principles was specifically considered for natural resources held for conservation.

The IPSASB also decided that the guidance on natural resources should be in a standalone IPSAS. The interaction of the IPSAS with existing IPSAS will be considered further in March 2024.

The approval date of the ED has been moved from March 2024 to June 2024.

Measurement application phase

The IPSASB continued its discussion on the applicability of Current Operational Value (COV) to various IPSAS and concluded the following:

·       Amend IPSAS 3 on Accounting Policies, Changes in Accounting Estimates and Errors to clarify that a change in the measurement model is a change in accounting policy.

·       COV is an appropriate measurement basis for inventory in IPSAS 12 on Inventory. The interaction with measurement in IPSAS 27 on Agriculture and IPSAS 12 will be considered further.

·       COV is an applicable subsequent measurement basis for right of use assets (IPSAS 43 on Leases) subsequently measured in accordance with IPSAS 45 on Property, Plant and Equipment.

The IPSASB also considered examples related to IPSAS 21 on Impairment of Non-Cash-Generating Assets to better understand how COV could be applied for impairment testing.

The approval date of the ED has been moved from March 2024 to June 2024.

Presentation of Financial Statements

The IPSASB considered initial options and text for its Consultation Paper (CP) on Presentation of Financial Statements.

The IPSASB agreed its CP would explore an approach that allows different presentation approaches in IPSAS. This was supported based on the increased flexibility it would provide to public sector entities to apply a presentational approach more useful to the entities’ specific users.

Topics related to potential categorisation and sub-totals in the statement of financial performance were considered in break-out sessions.

IFRIC alignment – narrow-scope amendments

The IPSASB began to review those IFRIC and SIC Interpretations not yet considered by the Board to determine whether they were public sector relevant.

The IPSASB concluded the existing Improvements to IPSAS analysis process will be applied to determine which IFRIC and SIC Interpretations to propose for inclusion in IPSAS.

It further decided that IFRIC 7 on Applying the Restatement Approach Under IAS 29, Financial Reporting in Hyperinflationary Economies is applicable to the public sector. This guidance should be incorporated into IPSAS 10 on Financial Reporting in Hyperinflationary Economies.

The remaining outstanding items not yet considered will be discussed by the IPSASB in March 2024.

Other lease-type arrangements

The IPSASB continued to review the responses to ED 84 on Concessionary Leases and Right-of-Use Assets In-kind.

They agreed to proceed with the proposed principles and finalise the guidance by March 2024. Further work will be done to consider the interaction with IPSAS 47 on Revenue. Communication will be considered on other lease-type arrangements that are outside the scope of the guidance.

Climate related disclosures

The IPSASB reviewed the objectives, scope and conceptual foundations for the development of the draft Climate-related Disclosures standard for the public sector.

The IPSASB emphasized that there are public sector specificities that the ED should consider. These include that the public sector has:

·       a main objective to deliver services;

·       the role of a policy setter and regulator; and

·       various responsibilities at different levels of government.

In breakout sessions the IPSASB sought feedback on technical topics and issues related to governance, strategy and risk management. These will be considered further by the Board in March 2024.

2024-2028 Strategy and Work Programme Consultation

The key proposal is to focus on maintaining IPSAS during 2024-2028. The strategy confirms the IPSASB’s previous decision to develop sustainability reporting standards. The ASB has published the consultation concurrently as ED 206 with a comment deadline of 31 January 2024.

ED 85 on Improvements to IPSAS, 2023

ED 85 proposes minor amendments to IPSAS from narrow-scope projects of the International Accounting Standards Board. The changes include amendments to IPSAS 43 on Leases and IPSAS 1 on Presentation of Financial Statements.