What is the status of the IPSASB’s Measurement project?

Pronouncements issued – phase 1

The IPSASB issued IPSAS 46 on Measurement in May 2023. The standard was issued as part of a package of measurement-related pronouncements. The package included:

• IPSAS 46 on Measurement;
• Updated Conceptual Framework: Chapter 7 on Measurement of Assets and Liabilities in Financial Statements; and
• IPSAS 45 on Property, Plant and Equipment.

The three pronouncements provide consistent guidance in applying principles for initial and subsequent measurement that apply throughout IPSAS.

IPSAS 46 provides new guidance in a single standard indicating how measurement should be applied in IPSAS. It discusses the measurement models, bases and techniques. It introduces a public sector specific current value measurement basis called current operational value (COV). COV is defined as the amount an entity would pay for the remaining service potential of an asset at measurement date. 

The updates to the Conceptual Framework include the deletion of unused measurement bases, thereby retaining and enhancing those bases that are commonly used.

IPSAS 45 replaces IPSAS 17 on Property, Plant and Equipment. The changes include new guidance on heritage assets and infrastructure assets. Information on the characteristics of these public sector assets as well as their recognition and measurement are included. COV has also been added to the standard as a measurement basis.

The effective date for IPSAS 45 and IPSAS 46 is 1 January 2025. Updates to the Conceptual Framework were effective when they were published in May 2023.

Measurement application – phase 2

The IPSASB is currently progressing the second phase to the measurement project – the Measurement Application phase. In this phase the applicability of COV across IPSAS literature (that had not been previously considered) will be assessed. At the June 2023 meeting, the IPSASB determined that COV is not an applicable measurement basis for the following IPSAS:

• IPSAS 16 on Investment Property;
• IPSAS 26 on Impairment of Cash-Generating Assets;
• IPSAS 27 on Agriculture;
• IPSAS 36 on Investments in Associates and Joint Ventures;
• IPSAS 37 on Joint Arrangements; and
• IPSAS 41 on Financial Instruments.

The IPSASB also decided that its update to IPSAS 21 on Impairment of Non-Cash-Generating Assets will focus on the definition and components of recoverable service amount. The applicability of COV to other IPSAS will be discussed at future meetings.

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.