Key Takeaways from the IPSASB June Meeting

The International Public Sector Accounting Standards Board (IPSASB) convened to advance its projects, including the development of a new International Public Sector Accounting Standard (IPSAS) to replace IPSAS 1, Presentation of Financial Statements.

The project is currently in the Consultation Paper (CP) development phase, with the aim of improving transparency and comparability in financial reporting. An illustrative Exposure Draft will be published with the CP to aid the comment process.

Here’s a summary of what was discussed and proposed:

Categorisation of Revenue and Expenses

The IPSASB considered categorising revenue and expense items on the Statement of Financial Performance following IFRS 18 Presentation and Disclosure of Financial Statements principles, supplemented with public sector-specific guidance. Although they also considered alignment with the Government Finance Statistics Manual (GFSM 2014), fundamental conceptual differences were noted between the IPSAS and GFSM frameworks, which led to the decision not to adopt the GFSM approach.

It was agreed that the CP should mirror the unique needs of the public sector, which are service delivery focused, a key distinction from IFRS 18 principles that focus on financial returns. As part of this approach, the CP will examine the appropriate presentation categorisation, considering various government reporting levels.

Main Operating Activities

The IPSASB proposed incorporating IFRS 18’s concept of “main business activities,” adapted as “main operating activities” for the public sector. This ensures that entities presenting financing or investment activities as core operations reflect them appropriately in the operating category, improving the relevance of performance reporting.

Presentation of Totals and Subtotals

To improve structure and comparability, the IPASAB recommended requiring:

• Operating surplus or deficit
• Surplus or deficit before financing
• Total surplus or deficit

These subtotals will provide users with clearer insights into financial performance and resource allocation.

Minimum Line Items

The IPSASB decided to retain existing IPSAS 1 Presentation of Financial Statements requirements for minimum line items but will develop guidance to help entities determine when additional line items are necessary. This ensures flexibility while maintaining consistency and relevance.

Presentation of Expenses

The IPSASB considered allowing entities to continue to have the choice to present expenses by nature or function, but with improved guidance to help them select the method that best reflects their operations and service delivery objectives. Mixed presentation (some expenses by nature, others by function) will be prohibited to maintain clarity and comparability.

The CP will explain the current IPSAS 1 Presentation of Financial Statements requirements, the previous IAS 1 Presentation of Financial Statements requirements, the new IFRS 18 Presentation and Disclosure in Financial Statements requirements and changes made by the IASB. The CP will not express a preliminary view from the IPSASB but will seek feedback from stakeholders.

Consultation Paper and Exposure Draft

📢The final CP and Illustrative Exposure Draft are scheduled for approval in December 2025. More updates will follow as the IPSASB continues to work towards finalising the CP.

Disclaimer

The article has been prepared by the Secretariat of the ASB for information purposes only. It has not been reviewed, approved, or otherwise acted on by the Board.