IPSASB issues proposed IPSAS on Non-Current Assets Held for Sale and Discontinued Operations

The IPSASB approved a proposed IPSAS on Non-current Assets Held for Sale and Discontinued Operations. Views are sought from stakeholders on the proposed changes.

Background to the development of the proposed IPSAS

The IPSASB decided that guidance is needed on how to measure assets that are held for sale, as well as provide information in the financial statements on discontinued operations. As a result, the IPSASB has issued a proposed equivalent of IFRS 5 on Non-current Assets held for Sale and Discontinued Operations.

As the transactions supporting the sale of assets in the public and private sectors are the same, the IPSASB agreed that this should be a convergence project. This means that limited changes have been made to the concepts in IFRS 5 in developing the proposed IPSAS. The IPSASB agreed that additional information should be disclosed in the notes to the financial statements when the fair value less costs to sell of an asset is materially higher than the carrying amount recognised in the financial statements. The IPSASB agreed that the disclosure of the fair value less costs to sell in these circumstances would provide useful information to users of the financial statements.

The ASB revised GRAP 5 on Non-current Assets Held for Sale and Discontinued Operations in 2013 by deleting the requirements for assets held for sale. Stakeholders locally expressed concerns about applying the requirements for assets to be held for sale, particularly the requirement that the sale should be executed within one year from the reporting date. Given the regulatory environment within which entities operate, it is difficult for entities to demonstrate that they meet this requirement.

When the Exposure Draft is discussed locally, this issue – among others – will need to be revisited to assess whether they are appropriate for the environment in South Africa.

How to access the Exposure Draft

The Exposure Draft – once published – can be accessed on the IPSASB’s website by following this link.

Locally, the Secretariat will arrange roundtable discussions to discuss the proposals in the IPSASB’s Exposure Drafts.

The views expressed in this article are those of Secretariat and not the ASB Board.