Chartered Institute of Public Finance and Accountancy

Invitation to Comment

Proposed UK response to IPSASB Consultation on an international public sector conceptual framework

IPSASB’s first consultation paper in this project is available from the IPSASB website. The paper identifies the Board's preliminary views on:

- the objectives of financial reporting
- the scope of financial reporting
- the qualitative characteristics of information included in general purpose financial reports; and
- the characteristics of public sector reporting entities

CIPFA and other UK stakeholders are seeking to develop a considered UK response to this consultation, and to help focus stakeholder views, a draft UK response is published here. This includes an Annex which briefly summarises each chapter of the IPSASB consultation, and provides suggested UK comments on nine IPSASB Preliminary Views. The draft response does not represent the final view of CIPFA or other UK stakeholders.

The Consultation Paper covers areas on which a diversity of views were expressed in the 2005 consultation on the ASB Statement of Principles ‘Interpretation for Public Benefit Entities’. Some of the proposals differ from recent IASB proposals, while others reflect IASB proposals which have been challenged by UK commentators. Respondents may wish to consider whether alternative views should be supported relating to

- Users of public sector financial reporting: while the draft response supports the IPSASB proposal, alternative approaches would be a narrower ‘funders and financial supporters’ (the approach in the ASB ‘Interpretation’) or a wider grouping such as the ‘electorate’ or ‘citizenry’.

- Objectives of financial reporting: the draft response supports the IPSASB proposal that financial reporting should support both accountability and decision-usefulness, which is similar to the existing IASB framework (which refers to ‘stewardship’ and decision usefulness). Some stakeholders consider accountability to be the only relevant objective, while others might support recent IASB proposals to focus on decision usefulness.

- Qualitative characteristics: the IPSASB Paper echoes recent IASB proposals to replace ‘Reliability’ with ‘Faithful Representation’. Many UK commentators have disagreed with the IASB proposals, so there is a question as to whether ‘reliability may be helpful to maintain alignment.

- Reporting Entity: the IPSASB propose to allow flexibility in the designation of public sector reporting entities. However, the Consultation Paper suggests that a control based approach can be used for group reporting, and in particular Whole of Government Accounts. This is not an area on which there has been much discussion or debate, and we would welcome views.

Based on the results of UK consultation, the draft response will incorporate additional material, and key items will be highlighted in the covering letter. We would be pleased to receive views on any aspect of the draft, or the IPSASB Consultation Paper. Comments on the key issues to be highlighted would also be welcomed.

Responses are requested by 27 February 2009, to be sent by email to ukipsasbcomments@cipfa.org