Stakeholder Perspectives on the IPSAS Conceptual Framework: A Comment Letter Meta-Analysis Concerning ED76, ED77 and ED on Key Characteristics
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Natalia Aversano
,
Yuri Biondi
Abstract
Our comment letter content analysis sheds light on stakeholder perspectives and positions on conceptual matters related to the IPSASB’s conceptual framework, covering: primary users and main objectives; qualitative characteristics; public sector specificities; financial accounting bases; and financial reporting. On aggregate, responding stakeholders did not favor a straightforward move toward a full accrual basis of accounting relying upon current value accounting measurements. Instead, they pointed to a mixed approach that combines accrual-based statements with budgetary reports, as well as historical cost and current value accounting measurements. Concerning the accounting basis (model), standard-setters appeared to prefer historical cost rather than current value, according to our clustering analysis. The evergreen principle of accountability was acknowledged as paramount, while the more recent focus on users’ information needs remained relatively neglected.
Acknowledgments
This article was presented at the EGPA XII Group Spring workshop, 9–10 May, Matera (Italy).
Annex A: IPSASB’s Request for Comments Concerning ED76, ED77 and ED on Key Characteristics.
| SMCs of ED 76 | |
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| SMC 1: ED 76 proposes a measurement hierarchy. Do you agree with the three-tier hierarchy? If not, why not? How would you modify it? | SMC 2: Do you agree with the proposed inclusion of fair value as a measurement basis for assets and liabilities with the same definition as in IFRS 13, Fair Value Measurement, in the Conceptual Framework? If not, why not? |
| SMC 3: Do you agree with the proposed inclusion of current operational value as a measurement basis for assets in the Conceptual Framework? If not, why not? The Exposure Draft includes an Alternative View on current operational value. | SMC 4: It is proposed to substitute a general description of value in use (VIU) in both cash-generating and noncash-generating contexts, for the previous broader discussion of VIU. This is because the applicability of VIU is limited to impairments. Do you agree with this proposed change? If not, why not? How would you approach VIU instead and why? |
SMC 5: Noting that ED 77, Measurement, proposes the use of the cost approach and the market approach as measurement techniques, do you agree with the proposed deletion of the following measurement bases from the Conceptual Framework:
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SMC 6: The IPSASB considers that the retention of certain measurement bases that were in the 2014 Conceptual Framework is unnecessary. Do you agree with the proposed deletion of the following measurement bases from the Conceptual Framework?
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| SMC 7: Are there any other issues relating to Chapter 7: Measurement of Asset and Liabilities in Financial Statements of the Conceptual Framework that you would like to highlight? | |
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| SMCs of ED 77 | |
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SMC 1 – (paragraphs 7–16): Do you agree an item that qualifies for recognition shall be initially measured at its transaction price, unless:
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SMC 2 – (paragraph 17): Do you agree after initial measurement, unless otherwise required by the relevant IPSAS, an accounting policy choice is made to measure the item at historical cost or at its current value? This accounting policy choice is reflected through the selection of the measurement model. |
| SMC 3 – Appendix A (paragraphs A1–A6): In response to constituents’ comment letters on the Consultation Paper, Measurement, guidance on historical cost has been developed that is generic in nature (Appendix A: Historical Cost). Do you agree the guidance is appropriate for application by public sector entities? | SMC 4 – Appendix A (paragraphs A1–A6): Do you agree no measurement techniques are required when applying the historical cost measurement basis in subsequent measurement? If not, please provide your reasons, stating which measurement techniques are applicable to the subsequent measurement of an asset or liability measured at historical cost, and why. |
| SMC 5 – (paragraph 6): Do you agree current operational value is the value of an asset used to achieve the entity’s service delivery objectives at the measurement date? If not, please provide your reasons, stating clearly what principles more appropriate for the public sector, and why. The Exposure Draft includes an Alternative View on current operational value | SMC 6 – Appendix B (paragraphs B1–B41): Do you agree the proposed definition of current operational value and the accompanying guidance is appropriate for public sector entities (Appendix B: Current Operational Value)? If not, please provide your reasons, stating clearly what definition and guidance is more appropriate, and why. |
| SMC 7 – Appendix B (paragraphs B6–B7): Do you agree the asset’s current operational value should assume that the notional replacement will be situated in the same location as the existing asset is situated or used? If not, please provide your reasons, stating clearly why the asset should be measured at a different value. | SMC 8 – (paragraphs B38–B39): Do you agree the income approach is applicable to estimate the value of an asset measured using the current operational value measurement basis? If not, please provide your reasons, stating clearly why the income approach is not applicable for measuring current operational value. The Exposure Draft includes an Alternative View on current operational value. |
| SMC 9 – Appendix C (paragraphs C1–C89): In response to constituents’ comment letters on the Consultation Paper, Measurement, guidance on fair value has been aligned with IFRS 13, Fair Value Measurement (Appendix C: Fair Value). Do you agree the guidance is appropriate for application by public sector entities? If not, please provide your reasons, stating what guidance should be added or removed, and why. | SMC 10 – Appendix D (paragraphs D1–D48): In response to constituents’ comment letters on the Consultation Paper, Measurement, guidance on cost of fulfillment has been aligned with existing principles in the Conceptual Framework and throughout. IPSAS (Appendix D: Cost of Fulfillment). Do you agree the guidance is appropriate for application by public sector entities? If not, please provide your reasons, stating what guidance should be added or removed, and why. |
| SMC 11: Do you agree measurement disclosure requirements should be included in the IPSAS to which the asset or liability pertains and not in ED 77? If not, please provide your reasons, stating clearly where the measurement disclosure requirements should be included, and why. | SMC 12: Are there any measurement disclosure requirements that apply across IPSAS that should be included in ED 77, Measurement? |
| SMC 13: Do you agree current value model disclosure requirements should be applied consistently across IPSAS? For example, the same disclosure requirements should apply to inventory and property, plant, and equipment when measured at fair value. If not, please provide your reasons, stating clearly which IPSAS require more or fewer measurement disclosures, and why. | SMC 14: Do you agree with the proposal disclosure requirements for items remeasured under the current value model at each reporting date should be more detailed as compared to disclosure requirements for items measured using the current value model at acquisition as proposed in Appendix E: Amendments to Other IPSAS. |
| SMC 15: Do you agree fair value disclosure requirements should include requirements to disclose inputs to the fair value hierarchy? If not, please provide your reasons, stating clearly why disclosure requirements for inputs in the fair value hierarchy are unnecessary. | |
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| SMCs of ED key characteristics | |
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| SMC 1: Do you agree that this document provides useful background information on the key characteristics of the public sector and identifies some potential implications of those key characteristics for financial reporting? If not, please indicate how you would modify the document. |
SMC 2: Do you agree that this document should be included as part of the IPSASB’s literature? If you agree, where do you think the material in this document should be located:
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Supplementary Material
This article contains supplementary material (https://doi.org/10.1515/ael-2024-0101).
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