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September 18, 2012

“IPSAS Explained” – Second Edition [1]

Posted by Delphine Moretti

The recent publication of the second edition of “IPSAS Explained” is good news for readers who do not have time to plough through the two volumes and daunting 1,500 pages of the International Public Sector Accounting Standards (IPSAS) Board’s Handbook. The book is written by Thomas Mueller-Marques Berger who is himself a member of the IPSAS Board.

The main asset of the book is its very clear and concise presentation of the standards, which, as the author notes in his foreword, are “sometimes complex and inapprehensible”, especially to non-accountants. As was the case with the first edition, the new book fully succeeds in providing the reader with essential information – compressed into 5-10 pages - about each of the 32 standards. For this we are indebted to the author’s comprehensive knowledge and understanding of the field. For each standard, a brief chapter describes factually the objective of the standard, the international financial reporting standard (IFRS) on which it is based, together with an assessment of its scope and content, definitions used, relevant accounting rules and principles, and application date. The coverage of existing and recently published standards and exposure drafts includes a section on the much awaited IPSAS 32 “Service concession arrangements: grantor” together with a discussion of the exposure draft on reporting the long-term sustainability of finances of public sector entities. A third edition of the volume is to be expected as the on-going process of aligning the IPSAS with their IFRS counterparts should bring further changes to the IPSAS framework very soon, and some major additions to the framework are scheduled in the years ahead.

Readers will be interested in the detailed presentation of the organization, activities and procedures of the IPSAS Board provided by Mr. Mueller-Marques Berger, together with his discussion of the Board’s strategy and the developments of the framework which are already underway or planned. The book includes some interesting new features, notably presentations of the continuing discussions concerning the oversight role of the Board and the conceptual framework project.

These new sections are of great interest. Nevertheless, at a time when issues of fiscal transparency, together with financial reporting standards and the role of the IPSAS Board itself, are under increased public scrutiny, some readers might have wished for a more in-depth and nuanced discussion of some topics. For example, an important issue still unresolved is the arrangements for overseeing the work of the IPSAS Board, in order to enhance its status as a credible standard setter. While such an oversight mechanism is common practice for standard-setting bodies, and has been widely accepted in the case of IPSAS, opinions about how the oversight might be implemented have been much more mixed. Various models have been proposed both by the IPSAS Board itself and its parent body, the International Federation of Accountants (IFAC). The different views expressed by governments and other organizations on this issue – and, more broadly, on the legitimacy and relevance of the standard-setting process - could have been captured more fully in the book.

Some readers might also regret that the very clear summary of the strategy adopted by the Board over the past ten years (which consisted broadly of adopting, first, a core set of standards based on IFRS, and dealing subsequently with public sector specific issues, some of which are still under consideration) is not accompanied by a more detailed discussion of the difficulties that countries – both advanced and developing - might experience in applying the standards, and options for managing the current “gaps” in the framework. There are a few surprising statements in the book – for example, France is incorrectly included in the list of countries that have decided to adopt IPSAS (or equivalent) standards[2]

Another section of the book analyses the impact of the global financial crisis – and the sovereign debt crisis - on public sector accounting. It recalls some of the main events of the financial crisis and explains how the IPSAS standards address the accounting issues relating to the different types of governmental interventions implemented during this period, e.g., to support failing or failed financial institutions. The discussion of the European Union’s assessment of the suitability of the IPSAS standards for its member states is interesting; but as the European statistical agency (Eurostat) has been commissioned to conduct this assessment, and is expected to communicate its report to the European Commission by the end of 2012, the story is still largely to be written.

In conclusion, “IPSAS Explained” is definitely a book worth reading for its excellent summary of the existing standards and its clear overview of the role and work of the IPSAS Board.



[1] IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition, 2012, Wiley.

[2] Public entities in France apply standards based on the French Generally Accepted Accounting Practices (GAAP) for the private sector, which take account of the specific characteristics of the public sector activities concerned.

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