25 June 2012

IFAC: IPSASB's public sector combinations consultation paper

The IPSASB released the Consultation Paper, 'Public Sector Combinations'. The objective of this Consultation Paper is to initiate discussion on the possible accounting treatment for public sector combinations in the general purpose financial statements of an entity that uses accrual-based IPSASs.

The IPSASB considers guidance on reporting public sector combinations necessary to meet the objectives of financial reporting, which are to provide information that is useful to users of General Purpose Financial Reports (GPFRs) for accountability and decision-making purposes. This project aims to present a principles-based approach to developing guidance for public sector entities on accounting for public sector combinations.

The Consultation Paper considers matters such as the timing of recognition, and the initial measurement basis or approach that could be adopted for the wide range of combinations that may occur in the public sector.

The Consultation Paper describes different types of public sector combinations and explores possible approaches to recognising and measuring public sector combinations in GPFRs. It proposes a distinction between acquisitions and amalgamations. The Consultation Paper then considers approaches to combinations of entities and operations that are not under common control and of entities and operations that are under common control.

"Acquisitions and amalgamations occur regularly in the public sectors around the world. This Consultation Paper is the first step in proposing financial reporting requirements that will ensure that these transactions are reported in a consistent and transparent manner, ensuring that users are able to obtain the information needed to evaluate the nature and financial effect of a public sector combination", explained IPSASB Chair, Andreas Bergmann.

Comments on the Consultation Paper are requested by October 31, 2012.

Press release

Public Sector Combinations

At a glance

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