The International Public Sector Accounting Standards Board (IPSASB) developed proposed guidance on the recognition, measurement, presentation and disclosure of tangible natural resources. The International Public Sector Accounting Standard (IPSAS) Exposure Draft (ED) is issued concurrently as ED 212.
What is a tangible natural resource?
The IPSAS ED defines tangible natural resources as natural resources with physical substance. A natural resource is a naturally occurring item which embodies service potential, or the capacity to generate economic benefits, or both.
Tangible natural resources within the scope of the ED
To avoid the duplication of guidance, a tangible natural resource that is within the scope of another existing IPSAS is excluded from the scope of the IPSAS ED. For ex
ample, trees in a timber plantation whose biological transformation is managed for sale or distribution at no or nominal charge, fall within the scope of IPSAS 27 on Agriculture. Such resources are therefore not in the scope of the IPSAS ED.
The IPSASB identified tangible natural resources held for conservation as a likely category that falls within the scope of the ED.
An alternative view on the scope of the IPSAS ED
An alternative view disagrees with the ED being a residual IPSAS for tangible natural resources. This view considers that the scope should be limited to tangible natural resources held for conservation, as it is unlikely that other tangible natural resources will fall within the scope of the IPSAS ED and the proposed scope approach may lead to inappropriate financial reporting.
Other IPSAS on tangible assets scope items into the IPSAS based on the use and specific characteristics of the asset. Requirements and guidance to account for the tangible assets are then provided accordingly. Requirements and guidance in the ED not specific to tangible natural resources held for conservation may lead to inappropriate financial reporting for resources held for conservation. This will be explored in a future article. Requirements and guidance on tangible natural resources held for conservation should consider the unique use, characteristics and accounting considerations for these assets.
Share your views
ED 212 requests stakeholder to share their views on the proposed IPSAS as input into the IPSASB’s standard-setting process. Comments can be shared in writing to info@asb.co.za, or by participating in roundtable consultations. Look out for the “ASB Engage” post every alternate Friday to ensure that you have an invite to one of these discussions.
The local comment deadline for ED 212 is 14 February 2025.
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.