New public sector guidance on heritage and infrastructure assets

At its meeting held in December 2022, the International Public Sector Accounting Standards Board (IPSASB) approved an new international Public Sector Accounting Standard (IPSAS) on Property, Plant, and Equipment. This new IPSAS replaces IPSAS 17 on Property, Plant, and Equipment.

The new IPSAS includes requirements for heritage and infrastructure assets, and aligns with the new measurement principles.  

Heritage assets

The new IPSAS removed the scope exclusion for heritage assets. The Standard clarifies that when a heritage asset meets the definition of property, plant and equipment, it should be accounted for as such. Heritage assets are not defined in the IPSAS, but application guidance is included that identifies the key characteristics of heritage assets.

Additional application and implementation guidance, along with illustrative examples are  included to clarify the application of the property, plant and equipment principles to heritage assets. This includes guidance on:

• depreciation and assets having a finite or indefinite useful live. For assets with an indefinite useful live, an entity is required to review the asset’s useful life annually for impairment indications;
• control of heritage assets, such as heritage assets held temporarily and those being stored instead of being displayed to the public;
• restrictions on the use of a heritage asset and how that could impact the entity’s ability to derive its current value, either on initial recognition or subsequently; and
• the recognition of subsequent expenditure on unrecognised heritage assets.

Infrastructure assets

Infrastructure assets are a subset of property, plant and equipment and, as a result, the term “infrastructure assets” is not defined in the new IPSAS. Application guidance is included that identifies the key characteristics of an infrastructure asset. Application and implementation guidance, along with illustrative examples to clarify how the property, plant and equipment principles apply to infrastructure assets, are included in IPSAS 17 to:

• explain the potential use of asset management plans as a source for financial reporting. These plans may provide an input to help calculate depreciation, determine if there is an indication of impairment or to determine the significant parts of the asset;
• clarify control of the infrastructure and the valuation of land under, or over the infrastructure assets;
• illustrate the factors to be considered when choosing a capitalisation threshold;
• explain under-maintenance of assets; and
• illustrate and identify significant parts of infrastructure assets.

 Measurement guidance

In its measurement project, the IPSASB is updating the fair value measurement principles  to align with IFRS 13 on Fair Value Measurement. A new measurement basis has been developed to consider the unique characteristics of many assets held in the public sector, being “current operational value”. The new measurement basis is applied in the new IPSAS 17.

The new IPSAS 17 is expected to be issued in the first half of 2023 together with the suite of measurement related guidance that are currently still under development.

For more information on the new IPSAS go to www.ipsasb.org.