ICGFM Compilation Guide To Financial Reporting by Governments

INTERNATIONAL PUBLIC SECTOR
ACCOUNTING STANDARDS:
Compilation Guide for
Implementing the IPSAS
APRIL, 2014
FOREWORD
The International Consortium on Governmental Financial Management (ICGFM) has a
strategic focus to improve Public Financial Management (PFM) in developing and emerging
countries. PFM improvements include the support of International Public Sector Accounting
Standards which have set a direction for the evolution of public accounting and reporting.
ICGFM accomplishes this mission as a consortium of international organizations and
practitioners with global government experience.
Governments across the world have been challenged to adopt all elements of the Cash Basis
IPSAS issued in 2003. This Compilation Guide is designed to assist in efforts to implement
IPSAS requirements in an orderly manner. Separate stages are identified in the Guide so that
a government can implement the Cash Basis IPSAS and then, if it so decides, implement the
accrual IPSAS later in the future.
This Compilation Guide builds on the efforts of many practitioners and consultants who have
attempted to implement the Cash Basis IPSAS. This Guide internationalises this global
experience, builds on the IPSAS pronouncements and was field tested by the following
countries with appropriate changes made as a result of these pilot tests:
Nigeria
Ghana
Malawi.
This Guide will be updated as needed. If you have any questions or comments about any
issues in the Guide, please send an email to icgfm@icgfm.org. The efforts of the following
members of the ICGFM Accounting Standards Committee in the development of this Guide
are especially appreciated: Jesse Hughes, Chair; Anthony Bennett; Michael Parry; and Andy
Wynne.
Manuel Pietra, President

International Consortium on Governmental Financial Management
INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS:

COMPILATION GUIDE FOR IMPLEMENTING THE IPSAS
Contents
INTRODUCTION..................................................................................1
ACCOUNTING STANDARDS FOR IMPLEMENTING THE IPSAS..............................................1
PUBLIC SECTOR ACCOUNTABILITY AND THE ROLE OF FINANCIAL STATEMENTS.....................2
CURRENT GOOD PRACTICES...................................................................................... 2
QUALITATIVE CHARACTERISTICS OF FINANCIAL REPORTING..............................................3
BENEFITS.............................................................................................................. 3
DEVELOPING THE ACCOUNTING SYSTEM......................................................................3
GOVERNMENT FINANCE STATISTICS............................................................................. 4
THE ACCOUNTING SYSTEM....................................................................................... 5
1. OVERVIEW......................................................................................7
OBJECTIVE OF THE GUIDE......................................................................................... 7
SCOPE OF THE GUIDE.............................................................................................. 8
DEFINITIONS.......................................................................................................... 9
2. GENERAL CONSIDERATIONS...........................................................11
REPORTING PERIOD............................................................................................... 11
TIMELINESS.......................................................................................................... 11
AUTHORIZATION DATE........................................................................................... 12
INFORMATION ABOUT THE ENTITY.............................................................................. 12
CONSOLIDATED FINANCIAL STATEMENTS....................................................................12
CONSISTENCY OF PRESENTATION.............................................................................. 13
COMPARATIVE INFORMATION.................................................................................... 13
IDENTIFICATION OF FINANCIAL STATEMENTS................................................................14
CLASSIFICATION.................................................................................................... 14
LINE ITEMS, HEADINGS AND SUB-TOTALS...................................................................15
REPORTING ON A NET BASIS.................................................................................... 15
FINANCIAL STATEMENT DISCUSSION AND ANALYSIS......................................................16
OPINION OF THE SUPREME AUDIT INSTITUTION...........................................................16
3. STAGE ONECURRENT FINANCIAL INFORMATION COLLECTED BY
SELECT ENTITIES WITHIN CENTRAL GOVERNMENT..............................17
STRUCTURE OF FINANCIAL REPORTS.........................................................................17
FINANCIAL STATEMENTS......................................................................................... 17
4. STAGE TWOCASH BASIS FINANCIAL STATEMENTS FOR CENTRAL
GOVERNMENT..................................................................................18
STATEMENT OF CASH RECEIPTS AND PAYMENTS..........................................................19
COMPARATIVE STATEMENT OF BUDGET AND ACTUAL AMOUNTS......................................20
NOTES TO THE FINANCIAL STATEMENTS.....................................................................20
Selection and Disclosure of Accounting Policies............................................20
Restrictions on Cash Balances and Access to Borrowings.............................21
Details on the Payments and Receipts of Primary Service Delivery Units...........................21
Secret Payments................................................................................................. 21
Correction of Errors............................................................................................ 22
Treatment of Foreign Currency Cash Receipts, Payments and Balances.............................22
5. STAGE THREEMODIFIED ACCRUAL FINANCIAL STATEMENTS FOR

CENTRAL GOVERNMENT....................................................................22
INTERMEDIATE STATEMENT OF FINANCIAL POSITION.....................................................24
INTERMEDIATE STATEMENT OF FINANCIAL PERFORMANCE..............................................24
INTERMEDIATE STATEMENT OF CHANGES IN NET ASSETS..............................................25
ADDITIONAL NOTES TO THE FINANCIAL STATEMENTS....................................................25
Details of Contingent Liabilities and Provisions..........................................................25
Details of Public Debt.......................................................................................... 26
Arrears............................................................................................................. 26
Losses............................................................................................................. 26
Proceeds from Privatisation...................................................................................26
Accounting for Capital Projects..............................................................................26
Salaries and Benefits of Senior Politicians and Public Officials.......................................27
6. STAGE FOURFULL ACCRUAL FINANCIAL STATEMENTS FOR GBES....27
7. STAGE FIVEFULL ACCRUAL FINANCIAL STATEMENTS FOR GENERAL
GOVERNMENT..................................................................................28
8. STAGE SIXFULL ACCRUAL FINANCIAL STATEMENTS FOR THE WHOLE OF
GOVERNMENT....................................................................................29
STRUCTURE OF FINANCIAL REPORTS...........................................................................29
FINANCIAL STATEMENTS.......................................................................................... 29
APPENDIX 1. CURRENT FINANCIAL INFORMATION COLLECTED BY
CENTRAL GOVERNMENT....................................................................30
COMPARATIVE STATEMENT OF BUDGET TO ACTUAL AMOUNTS........................30
STATEMENT OF CASH POSITION.......................................................................31
APPENDIX 2. CASH BASIS FINANCIAL STATEMENTS FOR CENTRAL
GOVERNMENT..................................................................................32
STATEMENT OF CASH RECEIPTS AND PAYMENTS..............................................33
APPENDIX 3. MODIFIED ACCRUAL FINANCIAL STATEMENTS FOR CENTRAL
GOVERNMENT..................................................................................34
STATEMENT OF CASH RECEIPTS AND PAYMENTS..............................................35
INTERMEDIATE STATEMENT OF FINANCIAL POSITION.......................................36
INTERMEDIATE STATEMENT OF FINANCIAL PERFORMANCE..............................37
INTERMEDIATE STATEMENT OF CHANGES IN NET ASSETS................................38
APPENDIX 4. FULL ACCRUAL FINANCIAL STATEMENTS FOR GOVERNMENT
BUSINESS ENTERPRISES....................................................................39
STATEMENT OF CASH FLOWS........................................................................... 39
STATEMENT OF FINANCIAL POSITION................................................................40
STATEMENT OF COMPREHENSIVE INCOME.......................................................41
STATEMENT OF CHANGES IN EQUITY................................................................42
APPENDIX 5. FULL ACCRUAL FINANCIAL STATEMENTS FOR GENERAL

GOVERNMENT..................................................................................43
STATEMENT OF FINANCIAL PERFORMANCE.......................................................46
STATEMENT OF CHANGES IN NET ASSETS........................................................47
APPENDIX 6. FULL ACCRUAL FINANCIAL STATEMENTS FOR THE WHOLE
OF GOVERNMENT.............................................................................48
STATEMENT OF FINANCIAL PERFORMANCE.......................................................51
STATEMENT OF CHANGES IN EQUITY/NET ASSETS...........................................52
INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS:

COMPILATION GUIDE FOR IMPLEMENTING THE IPSAS
This Compilation Guide supplements the International Public Sector Accounting Standards (IPSAS) to assist
governments in their implementation of IPSAS. Consequently, some IPSAS requirements (e.g. reporting fixed
assets) are not included in the earlier stages of implementation. On the other hand, some financial information
(e.g. attaching the auditors opinion to the financial statements) is recommended even though an IPSAS has not
yet been issued to address the area of concern.
This Guide acknowledges that different jurisdictions may have different starting points and each countrys
program should be tailored to jurisdictional circumstances. In some cases the General Government Sector and
some controlled entities that are included in the Sector are already adopting a modified accrual basis (albeit
modifications may vary from jurisdiction to jurisdiction). Some Government Business Enterprises and certain
statutory authorities are already adopting an accrual basis. While a series of steps with particular time frames
are presented, this is a generalised, first principles model that identifies key components. The application of the
program needs to be assessed by reference to (and may need to be amended to respond to) the circumstances of
each jurisdiction. Such matters as the entry point to the program and sequence of some items may vary
depending on those jurisdictional circumstances.
The key aspects of this Guide, which have been written in bold italic font, should be read in the context of the
commentary paragraphs in this Guide, which are in plain font. In the notes to the financial statements, an entity
whose financial statements comply with the key aspects of this Guide should disclose which of the stages is
being or has been implemented. The financial statements should indicate any key aspects which have not been
complied with and explain the reasons for any such non-compliance. Other requirements of this Guide are
indicated by the word should. Aspects of good practice, which are encouraged to lay the foundation for good
public financial management, are indicated by the word may.
Introduction
Accounting Standards for Implementing the IPSAS
IN1. Timely, clear and open annual financial statements play a significant role in the accountability of
governments to their citizens and their elected representatives. These financial statements are prepared on a
cash basis or some variation of an accrual basis of accounting. However, most of these financial statements are
not prepared on a consistent or comparable basis between countries. The benefits of achieving consistent and
comparable financial information across jurisdictions are very important and a set of International Public Sector
Accounting Standards (IPSAS)1 have been established by the IPSAS Board to assist in that endeavour. The
IPSAS Board has also provided Study 14 to assist in the transition to the accrual basis of accounting. 2 Yet many
governments have had difficulties in fully realizing these benefits due to lack of capacity, inadequate accounting
procedures, or weak accounting systems. Many articles have been published in the International Journal on
Government Financial Management3 to assist these countries as they attempt to implement the IPSAS. It is
hoped that this Guide will serve as another avenue to enable these benefits to be realized.
IN2. The adoption of this Guide by governments should improve both the quality and comparability of financial
information reported by their government entities for external users.
. This should improve the accountability of governments, primarily to their electorate and so facilitate
1 In addition to the accrual IPSASs, a Cash Basis IPSAS has been issued to
assist those countries not yet ready to implement the accrual IPSASs. The
IPSASs can be downloaded free at www.ipsas.org.
2 Study 14, Transition to the Accrual Basis of Accounting: Guide for
Governments and Government Entities, International Federation of
Accountants (New York).
3 In particular, note articles by Hughes, Ouda, Parry, Sutcliffe and Wynne in the
International Journal of Government Financial Management (or the Public Fund Digest that
preceded the IJGFM) at www.icgfm.org .
1
improvements to the quality of public financial management.

IN3. This Guide is based on the move toward good practices in public financial management among
governments around the world. The Guide builds on the structure of the current Cash Basis IPSAS 4 that was
initially published in 2003. It is hoped that this Guide will be used to influence the adoption of accepted good
practices across the globe. Thus, adoption of this Guide will be an important step forward to improve the
consistency and comparability of financial reporting by governments throughout the world.
Public Sector Accountability and the Role of Financial Statements

IN4. Along with the auditors report, a governments annual financial statements provide the essential financial
data necessary for accountability purposes and enable citizens and their representatives to make informed
decisions about their government. In a parliamentary democracy, the legislative body sets the annual budget and
so authorises the government to set tax rates, to borrow, and to spend money as indicated. For governments, a
budget takes on a special legal significance. Governmental budgets are expressions of public policy priorities
and legally authorise the purposes for which public resources may be raised and spent. The publication of
government budgets and then the reporting of actual results in annual financial statements and other formats are
the primary method by which citizens and their elected representatives hold governments to account for their
financial management. The annual financial statements are the key way in which the government accounts to
the legislative body and its citizens for the taxes raised, loans contracted, grants received and the money spent
on the provision of public services.
IN5. A governments financial statements (and associated report of the Supreme Audit Institution) indicate how
its management of financial resources complied with the annual budget authorised by the legislative body and
with relevant laws and financial regulations. Citizens and their elected representatives have the right to know
whether the government actually used funds and resources in accordance with the approved budget and relevant
financial regulations. Demonstrating accountability for compliance with budgetary authority is a distinguishing
objective of governmental financial reporting. The aim is to facilitate control by the legislative body to ensure
that all public expenditure is within the limits set by the legislative body.
IN6. For governments that are dependent on donors for a significant proportion of their revenue, their annual
financial statements may also be key documents to enable the donor community to monitor adherence to agreed
policies. These policies may include, for example, poverty reduction strategies, the proportion of government
expenditure to be allocated and actually spent on defined pro-poor expenditure (for example, primary healthcare
and education spending).
IN7. Because revenues raised through governments power to tax are expected to be used to advance the public
interest, the public is entitled to hold governments to a standard of financial accountability that is wider in scope
than for private sector companies. Accountability to the legislative body is the cornerstone of all financial
reporting in a representative democracy. Government accountability is based on the belief that citizens and their
legislative body have a right to know, a right to openly receive financial information that may lead to public
debate by the citizens and their elected representatives.
IN8. Many of the key users of government financial statements (citizens and their political representatives) do
not have a strong foundation in reading financial statements and so extra effort is needed to make sure that
public sector financial statements are accessible, clear and understandable.
Approaches to financial reporting in the public sector

IN9. The IMF in its Government Financial Statistics Manual analyses the public sector as follows:
4 Financial Reporting Under the Cash Basis of Accounting, International Federation of Accountants (IFAC),
New York, 2008.
IN 10. The IMF defines public corporations as institutional entities owned or controlled by governments
that are created for the purpose of producing goods or services for the market. They may be a source of
profit or other financial gain to their owners.5 IPSAS define government business enterprises (public
corporations or parastatal organisations) as follows:
Government Business Enterprise means an entity that has all the following characteristics:
(a) is an entity with the power to contract in its own name;
(b) has been assigned the financial and operational authority to carry on a business;
(c) sells goods and services, in the normal course of its business, to other entities at a profit or full cost
recovery;
(d) is not reliant on continuing government funding to be a going concern (other than purchases of outputs
at arms length); and
(e) is controlled by a public sector entity.
IN 11. The IPSAS have been developed for the general government sector including budgetary and extrabudgetary entities. In contrast public corporations are expected to adopt the International Financial Reporting
Standards (IFRS).
Current Good Practices

IN12. A variety of approaches to financial reporting are currently used by governments and these approaches
have yet to be comprehensively documented with the good practices identified. In 2006, the East and Southern
African Association of Accountants General (ESAAG) supported a study resulting in a Financial Reporting
Survey and Database.6 This was based on broad assessments against the following indicative criteria:
stakeholder support
legislative framework underpinning financial reporting
financial reporting
credibility of financial statements.
IN13. This Guide complements the above ESAAG study and builds on the seminal work performed by Andy
Wynne.7 It also builds on a research report by the African Capacity Building Foundation. This research
included a review of the annual financial statements of a dozen sub-Saharan African governments and collated
existing good practice. These countries included eight ESAAG member countries (Botswana, Kenya, Mauritius,
5 IMF (2001) Government Finance Statistics Manual, page 8

6 Anthony M Hegarty. A Review of Existing Government Accounting Standards and Practices in the East and
Southern African Region for the East and Southern African Association of Accountants General (ESAAG): Final
Report. (Botswana, December 1996).
7 Andy Wynne, Guide on Government Annual Financial Reporting on the Modified accrual
Basis for Countries of sub-Saharan Africa - www.scribd.com/doc/94001463
3
Namibia, Rwanda, South Africa, Tanzania and Uganda) and four other sub-Saharan African countries (Burkina
Faso, Ghana, Nigeria and Sierra Leone).8
Qualitative Characteristics of Financial Reporting9

IN14. The following key qualitative characteristics of public sector financial reporting have been identified by
the IPSAS Board:
understandability are the financial statements clear and are the key aspects and terms explained?
relevance can the information be used to assist in evaluating past, present or current events? In order
to be relevant, information must also be timely.
reliability is the information free from material error and bias?
comparability can the information be used to identify similarities and differences between that
information and information in other reports?
IN15. This Guide identifies good practices in terms of achieving each of these four qualitative characteristics of
public sector financial reporting.
Benefits
IN16. This Guide should improve the capacity of governments to provide the legislative bodies, citizens, media
and other stakeholders with understandable, relevant, reliable, and comparable financial statements. This will
improve the quality of financial accountability and governance in the countries adopting this Guide. As a result,
public spending should be more effective and focused on key areas of poverty reduction, democracy and
development.
IN17. This Guide outlines the form and content of comprehensive and clear financial statements. It incorporates
the cash information provided by the Treasury Single Account. This is based on good practices being developed
in some countries especially in the areas of cash and debt management; it is to be practical and attainable. In
addition, this approach should encourage peer review, learning and co-operation as the relevant professionals
mutually learn, share and build on each others good practice.
IN18. This Guide, when adopted by governments, will increase the level of accountability of these governments
to their citizens. It will also increase the level of comparability of financial statements between governments and
so facilitate international comparisons.
Developing the Accounting System

IN19. The government's accounting system lies at the foundation of a financial management information system
and should meet certain recognized standards. While it is important that the system should be able to record
more than just cash transactions, this does not imply a move to a full accrual basis of accounting which involves
considerable costs in its introduction and maintenance. Rather, the output of the accounting system should
match the information requirements demanded by the public financial management system's stage of
development. Accordingly, a development path for the accounting system can be described as a progressive
movement to full accruals: first getting cash accounting to work well; progressively integrating operating
accounts and financial asset and liability accounts (to move to modified cash); introducing elements of accrual
recording, and finally recognizing nonfinancial assets (final stage for accrual accounting). A further stage of
development, to move to full accrual accounting and budgeting, (currently attempted by only a very few
countries), is perhaps best pursued after operating full accrual accounting for a period of time. The IPSAS cash
and Government Finance Statistics Manual 2001 standards, met at least at by entities of the central government,
are the most relevant international standards. The production of financial reports broadly compliant with these
standards should be considered a benchmark output for a successfully functioning financial management
information system and a requirement for moving to further reforms beyond the "core". 10
8 Stephen Emau, Mercy Nyangulu and Andy Wynne, Annual Financial Reporting by
Governments existing and practices in sub-Saharan Africa, African Capacity Building
Foundation. (Harare, 2012) - www.scribd.com/doc/11189407
9 Appendix B, IPSAS 1, Presentation of Financial Statements, International Public Sector
Accounting Standards Board (New York, December 2006).
4
Government Finance Statistics

IN17. In order to collect comparable government finance statistics, the International Monetary Fund (IMF)
issued the Government Finance Statistics Manual (GFSM 2001) to implement the System of National Accounts
promulgated by the United Nations in 1993 (a revised edition of the Manual is being developed). Although the
GFS system is described in standard accounting terms, it is important to remember that it is a statistical
reporting system that might differ in important ways from the underlying financial accounting system from
which most of the GFS will be derived.11 The Government Finance Statistics Manual requires the data to be
collected on the accrual basis of accounting and to be reported in the following financial statements:
Balance Sheet
Statement of Government Operations
Statement of Sources and Uses of Cash
Statement of Other Economic Flows
IN18. Since many countries were not on the accrual basis of accounting, IMF issued a compilation guide for
developing countries to assist these countries in transitioning from the prior requirement for cash reporting12 to
the current requirement to report on the accrual basis of accounting.13 This Guide recommended that the GFSM
2001 methodology be implemented in the following four main stages (the time estimated to complete each stage
is shown in parenthesis):14
1. Introducing the presentation (summary statements and detail tables) and classifications of the GFSM
2001 only for existing budget execution data, commonly referred to as adoption of the GFSM 2001
format (about one year);
2. Expanding the institutional and transactional coverage of GFS to include all general government
(public) units, on a cash basis (2-4 years);
3. Expanding the coverage of GFS to include selected noncash items, commonly referred to as compiling
GFS on a modified accrual basis (3-5 years); and,
4. Expanding the coverage of GFS to cover all flows and stocks associated with general government
(public) units, i.e., compilation of GFS on both a cash basis and an accrual basis for the whole general
government (public) sector and its sub-sectors (10 years or more).
IN19. In Chapter 2 of the Guide referenced above, the IMF further recommends 15 that consolidated financial
statements for each of the following controlled entities be included in the financial statements of the controlling
entity, as appropriate:
1. General Government Sector encompasses the central operations of government and typically
includes all those resident non-market, non-profit entities that have their operations funded primarily
by the government and government entities. Includes the following:
a) Central Governmentthe political authority of a countrys central government extends over the
entire territory of the country. The central government can impose taxes on all resident
institutional units and on non-resident units engaged in economic activities within the country. It
also includes those expenses incurred on the provision of services primarily for the benefit of
individual households (e.g. education and health).
b)State Government
10Jack Diamond, Good Practice Note on Sequencing PFM Reforms, page 20 (January
2013).
11 Footnote 5, Government Finance Statistics Manual 2001 (p. 5). This GFSM is being
updated and is due to be released in 2013.
12 Government Finance Statistics Manual (1986).
13 Government Finance Statistics Manual: Compilation Guide for Developing Countries,
September 2011.
14 Ibid., pp. 186-188.
15 Ibid., Chapter 2, Coverage of the GFS System, pp. 5-14. This Chapter provides an
excellent guide on the appropriate classification for each controlled entity.
5
c) Local Government
d)Social Security
(b) Public Financial Corporation Sector comprises resident government controlled financial
corporations, quasi-corporations and non-profit institutions which primarily engage in financial
intermediation and the provision of financial services for the market. Includes the following:
a) Monetary (e.g. Central Bank)
b) Non-monetary
(c) Public Non-Financial Corporation Sector comprises resident government controlled non-financial
corporations, quasi-corporations and non-profit institutions that produce goods or non-financial
services for the market. Included within this sector are entities such as publicly owned utilities and
other government owned entities that trade in goods and services.
IN20. The public sector is defined further by the IMF in Chapter 2 of their Compilation Guide. This Chapter
also includes guidance in assigning each controlled entity to each sector identified above.
The Accounting System

IN20. The IPSAS identify the accounting elements to be recognized and how these elements will be measured.
The chart of accounts used in the accounting system will need to be robust enough to meet the needs of
management as well as provide the data required for government finance statistics identified above. It is not
necessary for the chart of accounts to use the same coding as identified in the Government Finance Statistics
Manual 2001 since the data for those codes can be derived electronically from the accounting system through
the use of bridging tables. However, in those instances where there are differences in the way that the
accounting elements are measured (i.e., historical cost in the IPSAS and current market prices in the
Government Finance Statistics Manual), the data extracted from the accounting system will need to be adjusted
for reporting in the statistical reporting system.16 The financial statements required to be prepared for general
government entities are as follows:
Cash IPSAS
Statement of Cash Receipts and Payments (with a separate column for budgetary comparisons
or a separate Statement of Comparison of Budget and Actual Amounts)
Accrual IPSASs
Statement of Financial Performance (with a separate column for budgetary comparisons or a
separate Statement of Comparison of Budget and Actual Amounts)
Statement of Cash Flows
Statement of Financial Position
Statement of Changes in Equity/Net Assets
IN21. Many countries have actually reported on a modified cash basis for many decades. This has included
producing a financial balance sheet (or an Intermediate Statement of Financial Position) including the financial
debts and investments of the government. Additional disclosures are also commonly provided on the
governments debt, loans (for example, to state owned enterprises), loan guarantees (contingent liabilities) and
receipts of financial assistance from development partners. These disclosures are often beyond those required
by the Cash Basis IPSAS. However, other requirements of the Cash Basis IPSAS, for example, producing
consolidated financial statements and disclosing payments by third parties have not been commonly adopted.
IN22. Governments may go through a series of stages as they implement the Cash Basis IPSAS en route to
possibly implementing the accrual IPSASs. This Guide is not intended to replace or supplant the IPSAS. The
purpose of the Guide is to provide practical guidance on the implementation of IPSAS.
16 For a matrix identifying the differences, see research report IPSASs and
Statistical Basis of Financial Reporting: An Analysis of Differences and
Recommendations for Convergence (January 2005). A consultative paper
IPSASs and Government Finance Statistics Reporting Guidelines (October
17, 2012) has been issued to converge these differences as much as
possible. These documents are available in the Public Sector section of
the IFAC website.
6
a.
This Guide has the objective of providing good practice guidance consistent with existing IPSAS
requirements for countries applying a more sophisticated version of cash basis reporting.
b.
This Guide incorporates appropriate elements of the accrual IPSAS, e.g. incorporating financial
assets and liabilities in a set of financial statements, reporting contingent liabilities, rules for
converting foreign currency, etc.
c.
The Guide is linked to IPSAS requirements (cash and accrual) and allows progressive adoption.
d.
The Guide indicates elements of the Cash Basis IPSAS not feasible for early implementation and
which could be deferred, e.g. Government Business Enterprise consolidation. Instead, it
introduces the idea of consolidation by sector.
e.
This Guide incorporates some ideas which are not IPSAS requirements (e.g. remuneration of
public officials) but these are indicated as existing good practices already found in some countries.
f.
This Guide could form the basis for National Public Sector Accounting Standards to be adopted by
individual countries.
IN23. Individual countries could issue public sector financial statements in compliance with the national
standards. Separately, countries could indicate and report the extent to which their national standards followed
this Guide and IPSAS.
IN24. The accrual IPSASs are based on the International Accounting Standards/International Financial
Reporting Standards (IAS/IFRS) published by the International Accounting Standards Board and generally
applicable to the private sector. The IAS/IFRS have been modified by the IPSAS Board, where appropriate, to
adapt them to the general government sub-sector of the public sector. If there are no applicable IAS/IFRS,
separate IPSASs have been developed. However, the government business enterprises should adhere to the
IAS/IFRS in a manner similar to that applied in the private sector. These entities are referred to as Public
Corporations (financial and non-financial) in the Government Finance Statistics Manual.
IN25. Since most countries around the world currently report on the cash or modified cash basis, governments
intending to migrate to the accrual basis of accounting will generally accomplish this in stages for each of the
government controlled entities identified in the Government Finance Statistics Manual 2001. Sequences are
only indicative and some countries or some elements within the country may follow a different sequence. We
have provided two sets of stages, one for the general government sector (including central, state, and local
government) and extra-budgetary entities (for example, universities or government agencies); and the other set
for government business enterprises (public corporations, state owned enterprises or parastatal organisations).
IN26. For purposes of this Guide, six main stages are identified for entities that are either within the general
government sector. These stages are summarised below and are detailed in Part A of this Guide:
1.
2.
3.
4.
Cash Basis (most requirements of Part 1, Cash Basis IPSAS) - preparing a Statement of Cash Receipts
and Payments, including (or as a separate statement) a Comparison of Budget and Actual Amounts for
individual entities. Transactions are only recognised if the receipts or payments are made within the
relevant financial year.
Modified Cash Basis (selected options in Part 2, Cash Basis IPSAS) as for the Cash Basis with the
addition of the provision of an Intermediate Statement of Financial Position (financial balance sheet)
and other additional disclosures for individual entities. Transactions recognised as for stage on.
Modified Accrual Basis (selected parts of the accrual IPSASs) - the coverage of the Statement of
Financial Position is expanded to include inventory (stores) and tangible fixed assets (except for
infrastructure or heritage assets). Transactions are recognised if the receipts occur within the relevant
financial year and the cost of goods and services are recognised in the year they are used (generally if
the invoice is received for recurrent assets) and depreciation is recognised for capital assets rather than
the actual cost of the relevant assets.
Full Accrual Basis (full compliance with the accrual IPSASs for individual entities). Full recognition
of all tangible and intangible assets in the Statement of Financial Position. Income is recognised in the
year the taxable event occurred and expenditure is recognised in the year the related service is
provided.
5.
Full Consolidated Accrual Basis (full compliance with the accrual IPSASs for entities within a
particular sector) as for the Full Accrual Basis with the addition of separate consolidated financial
statements for the following two sectors:
a) Budgetary entities (including central, state, and local government entities
with their full gross budgets included in the governments annual budget)
b) Extra-budgetary sector all entities that are not government business enterprises,
but who have a significant subsidy that is included within the governments
annual budget (for example, universities, etc).
IN27. This Guide also recognises the following three stages for government business enterprises. These stages
are summarised below and are detailed in Part B of this Guide:
1.
2.
3.
Simple Accrual Basis (selected parts of the IAS/IFRS17 for individual entities) recognition of the
undepreciated balance of the cost of only tangible capital assets in the Statement of Financial Position.
Full Accrual Basis (full compliance with the IAS/IFRS for individual entities). Full recognition of
both tangible and intangible assets in the Statement of Financial Position.
Full Consolidated Accrual Basis (full compliance with the IAS/IFRS for entities within a particular
sector) as for the Full Accrual Basis with the addition of consolidated financial statements for all
government business enterprises owned or controlled by the government.
IN28. The final stage may be the production of Whole of Government Accounts or a full consolidation of all
entities at national and local level which are controlled by the government. However, no government has yet
been able to achieve this stage and it is not clear that the benefits in terms of additional useful information
would be worth the costs involved in producing such financial statements.
IN29. It is recognized that the above trajectory is indicative, and the sequence may vary for individual countries.
For example, many countries will have different starting point. Also the stage at which accrual accounting is
implemented for Government Business Enterprises may depend on factors outside the above sequence, and can
be treated as an independent decision. This Guide is not a universal prescription; every country is different and
the national authorities will consider their key priorities, in conjunction with existing and planned reforms, and
lead the reform process itself.
IN 30. An entity whose financial statements comply with the key aspects of one of the stages described in this
Guide should disclose the stage with which they have complied.
IN 31. The key aspects of this Guide are set in bold italic font. Entities whose financial statements comply with
all the key aspects of a stage should disclose their compliance with the relevant stage of this Guide. Where an
entity is not able to comply with any particular key aspect of the relevant stage of this Guide, this should be
disclosed in the notes to their financial statements with a brief explanation of the reasons for this noncompliance and, where appropriate, future plans to ensure compliance. In addition, the financial statements
should indicate any key aspects of the relevant IPSAS (whether cash or accrual) or IAS/IFRS with which they
have not complied and explain the reason(s) for any such non-compliance. Certification is available from the
ICGFM for any public sector entity which has complied with the requirements of any of the stages described
below which are relevant for their sector.
IN 32. This Guide does not preclude an entity from including in its general purpose financial statements, other
financial statements in addition to ones indicated in this Guide. Consequently, general purpose financial
statements may also include additional financial statements which, for example:
(a) Report receipts, payments and balances for major fund categories such as the Capital Fund; or
(b) Provide additional information about the sources and deployment of borrowings and the nature and
type of cash payments.
17 International Financial Reporting Standards, International Accounting

Standards Board (London).
8
Part A - GENERAL GOVERNMENT SECTOR

Introduction
1.1 Central government is the political authority of a country and extends over its entire territory. The central
government can impose taxes on all resident institutional units and on non-resident units engaged in economic
activities within the country. These resources are then used for the provision of services for the general safely of
the country (e.g. national defence, public order and safety). It also includes those expenses incurred on the
provision of services primarily for the benefit of individual households (e.g. education and health).
1.2 The purpose of this part of the Guide is to describe the manner in which the annual general purpose financial
statements for general government entities should be presented to the legislative bodies and citizens.
1.3 Some governments, especially those operating in the Westminster tradition, have a common fund
(sometimes called the Consolidated Revenue Fund or General Fund) into which all government income is paid.
In these countries, transfers are made from this common fund, with the authority of the annual budget approved
by the legislative body and warrants from the Minister of Finance to ministries, departments and agencies which
enable them to provide the agreed public services. Such governments should be accountable to the legislative
body for the funds raised and the payments made directly from the common fund. They are also accountable for
the financial management and accounts of individual ministries, departments and agencies that are funded from
the governments annual budget.
1.5 Designated officials (called Accounting Officers in this Guide) are assigned the above responsibilities. Such
officials are personally responsible to the legislative body and may be called to account for the financial
management of their entity to a legislative committee. The responsible officials present annual financial
statements to their legislative body. The Supreme Audit Institution provides independent assurance to the
legislative body that the resources utilised by each entity have been mobilised and utilised in line with the
annual budget and the relevant laws and financial regulations. Where necessary the annual report of the
Supreme Audit Institution will also highlight irregularities that have been identified and make recommendations
for their prevention and correction.
1.6 Compliance with the requirements of this Guide will enhance comprehensive and transparent financial
reporting by government entities. It will also enhance comparability with the entitys own financial statements
of previous periods and with the financial statements of other entities which adopt this Guide.
1.4 Government entities which prepare and present annual financial statements to account for the monies
raised or spent under the authority of its governments annual budget agreed by the legislative body, should
apply the requirements of this Guide in the adoption of IPSAS and presentation of their general purpose
annual financial statements.
1.5 In most countries, general purpose financial statements and the associated reports of the Supreme Audit
Institution are the core ways in which budget funded ministries, departments and agencies account to the
legislative body for the money they have raised and spent during the relevant financial year. General purpose
financial statements include those financial statements that are presented separately or within another public
document such as an annual report.
1.6 This Guide applies to both the financial statements of an individual budget funded entity (ministry,
department or agency) and to the financial statements of the common fund from which transfers are made to the
individual ministries, departments and agencies.
1.7 In many franco-phone countries, all payments and receipts are controlled by public accountants (les
comptable public) who are staff of the Ministry of Finance. The accounts of individual public accountants and
their summary accounts should be audited by the Court of Accounts and reports sent to parliament. In addition,
summary accounts are produced for the authorising officers (les ordonnateurs) and the Court of Accounts has to
audit a reconciliation between these summary accounts and those of the public accountants.
1.8 Accountability is achieved by the appointment of an accounting officer (or public accountant in many
franco-phone countries) who is personally responsible to the legislative body for the budget (or votes) for their
organisation. The Accountant General is the accounting officer for the common fund and so is responsible for
providing the legislative body with the financial statements for this Fund. Accounting officers are similarly
responsible for providing the legislative body with annual financial statements for the ministry, department or
agency for which they are responsible.
1.9 Other funds may be established under the legislative authority (i.e., a Capital, Development, or Road Fund).
In each case, arrangements should be made to appoint an accounting officer for each of the funds who will be
personally responsible to the legislative body for the financial management of the fund and for presenting
annual financial statements for the fund to the legislative body. This Guide also applies to the financial
statements of such funds.
Definitions
1.10 The following terms are used in this Guide with the meaning specified. The definitions are mainly as
identified in the Glossary to the IPSASs:
Accountability the obligation to demonstrate that work has been conducted in compliance with agreed rules
and standards or to report fairly and accurately on performance results against mandated roles and plans.
Accounting Officer public official with ultimate responsibility and personal accountability to the legislative
body for the control of a vote (section of the annual budget) and the financial management of the related
government entity. May be appointed by the Treasury/Permanent Secretary in the Ministry of Finance (most
senior public official) or the President of the country.
Accounting policies are the specific principles, bases, conventions, rules and practices adopted in preparing
and presenting the financial statements of an entity.
Cash comprises cash on hand and demand deposits, net of any overdrafts.
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of changes in value.
Cash flows are inflows and outflows of cash and cash equivalents.
Materiality: information is material if its omission or misstatement could influence the assessments of users
made on the basis of the financial statements. Materiality depends on the nature or size of the item or error
judged in the particular circumstances of omission or misstatement.
Notes to the financial statements are explanations or additional disclosures which are not directly part of the
main financial statements. Notes provide narrative descriptions or disaggregations of items disclosed in
those statements and information about items that do not qualify for recognition in those statements.
Reporting date means the date of the last day of the reporting period to which financial statements relate.
1.11 Financial statements result from processing large quantities of transactions that are aggregated into groups
according to their nature or function. The final stage in the process of aggregation and classification is the
presentation of condensed and classified data that form line items either on the face of the financial statements
or in the notes. If a line item is not individually material, it is aggregated with other items either on the face of
the financial statements or in the notes. An item that is not sufficiently material to warrant separate presentation
on the face of the financial statements may nevertheless be sufficiently material that it should be presented
separately in the notes.
1.12 The principle of materiality provides that the disclosure requirements need not be met if the resulting
information is not material. Materiality covers both the financial significance of transactions and the level of
political interest in the subject.
1.13 Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for
investment or other purposes. For an investment to qualify as a cash equivalent, it must be readily convertible to
a known amount of cash and be subject to an insignificant risk of changes in value. Therefore, an investment
normally qualifies as a cash equivalent only when it has a short maturity date of, for example, three months or
less from the date of acquisition. Equity investments, for example, shares in public or private companies, are
excluded from cash equivalents.
10
1.14 Bank borrowings are generally considered to give rise to cash inflows. However, in some jurisdictions,
bank overdrafts which are repayable on demand form an integral part of an entitys cash management. In these
circumstances, bank overdrafts are included as a component of cash. A characteristic of such banking
arrangements is that the bank balance often fluctuates from being positive to overdrawn. In such cases, any
bank overdrafts are netted off against other bank balances and cash holdings. Thus, a liability is not reflected in
the financial statements.
1.15 Cash flows exclude movements between items that constitute cash because these components are part of
the cash management of an entity rather than increases or decreases in the cash it controls. Cash management
includes the investment of excess cash on hand in cash equivalents.
Stage OneCash Basis

1.16 Stage One of this Compilation Guide provides the foundation for the efficient and effective production of
annual financial statements. It is in line with good practices adopted by governments in countries across the
world.
Structure of Financial Reports

1.17 The annual general purpose financial statements for each entity should include:
(a) Supreme Audit Institutions Opinion on Fair Presentation
(b) Financial Statement Discussion and Analysis
(c) Financial Statements
(i) Statement of Cash Receipts and Payments
(ii) Comparison of Budget and Actual Amounts (which may be combined with the first statement)
(d) Notes to the Financial Statements
[Cash Basis IPSAS, paragraph 1.3.4 & 1.9 except attaching the auditors opinion and the narrative discussion
and analysis are not currently an IPSAS requirement but included as an indicator of good practice.]
1.18 In order to more efficiently manage centralised operations, select entities within central governments
collect cash and budget information. Typically, a comparison will be made between actual funds
collected/expended and the funds budgeted. For transparency and to provide accountability, the comparative
budget information is provided to the legislative body. In addition, the cash position will be identified for
internal management purposes but might not be published.
1.19 A Statement of Comparison of Budget and Actual Amounts is prepared to show the degree by which fiscal
discipline has been maintained over the funds approved by the legislative body. This may be a separate
statement or may be combined with the Statement of Cash Receipts and Payments. An opinion on the fair
presentation of the financial information contained in the financial statement(s) should be provided by the
Supreme Audit Institution prior to their submission to the legislative body.
1.20 Each Government has specific rules about the budget year in which a transaction should be recorded and
these are specified in the relevant financial regulations. This is usually the year in which the funds are received
or payments made and recorded in the appropriate financial records. Cash or cheques received after the end of
the financial year will be recorded as income of the following year. Cash payments and cheque issues usually
have to be completed before the end of the final day of the financial year to be accounted for in that year.
However, payments may be recorded in the financial year if the goods and services have been officially ordered
and received during the financial year, but the payments are made within a specified period (for example, one
month) of the beginning of the following financial year.
Opinion of the Supreme Audit Institution

1.21 The opinion of the Supreme Audit Institution should be provided in the same document and alongside
the financial statements.
[Not an IPSAS requirement but included as an indicator of good practice.]
11
1.22 The annual report of the Supreme Audit Institution is a key document complementing the financial
statements to ensure adequate accountability of the government and individual Accounting Officers (or public
accountants) to the legislative body for their financial management.18 The opinion of the Supreme Audit
Institution on the financial statements should be provided alongside the financial statements. The Supreme
Audit Institutions opinion will be one of the following:
(a) UnqualifiedFinancial Statements fairly present the financial information for the entity.
(b) QualifiedSome deficiencies were found that would prevent an unqualified opinion from being
expressed.
(c) DisclaimerSignificant audit tests could not be performed and an audit opinion could not be
expressed.
(d) AdverseSignificant deficiencies were found and the financial statements do not fairly present the
financial information for the entity.
1.23 The financial statements are undermined if the associated report of the Supreme Audit Institution indicates
significant irregularities or weaknesses in internal financial control. Steps should be taken to reduce the number
of irregularities and mitigate the risks reported by the Supreme Audit Institution. In addition, details should be
provided on how the full annual report of the Supreme Audit Institution may be accessed.
Financial Statement Discussion and Analysis

1.24 The Accountant General should provide a commentary with the financial statements to explain the
context for any significant developments and set the financial results for the year within the context of trends
over the last few years.
[Not currently an IPSAS requirement but an Exposure Draft has been issued.]
1.25 The Accountant General should provide an introduction and commentary on the financial statements, the
level of budget outturns, and recent public financial management reforms. This may be in the form of a
management discussion and analysis or similar reports. This may be complemented by the introduction to the
annual report of the Supreme Audit Institution.
1.26 The provision of graphs will assist in the assessment and understanding of the financial statements
especially where trends over five years or more are provided. The longer-term view of government operations is
consistent with focusing on financial trends, rather than on short-term fluctuations.
1.27 Commentaries should, as far as possible, be written in non-technical language and provide an explanation
of the key terms used in the financial statements. Explanations can be important as many users of public sector
financial statements are not technical experts or accountants and public sector accounting terms may have
specific meaning in different contexts or countries.
1.28 Covering letters from the Minister of Finance and the Treasury/Permanent Secretary (most senior civil
servant in the Ministry of Finance) demonstrate that the document is an official report from the government and
may detail their respective responsibilities. Such covering letters may also provide background and explanations
of the financial statements in terms of the achievement of the governments financial policies and programmes.
1.29 A summary of the main financial statements and other key aspects should be produced as a short popular
document of 25 pages or less with supporting details available on the Internet for those that require them. The
full financial statements as presented to the legislative body should also be provided for public download from
the main site of the Ministry of Finance. The summary financial statements should be produced in a wellpresented and printed colour publication.
1.30 Where appropriate, the financial statements, or at least a summary, should be produced in the main local
languages in addition to the official language(s). Alternative presentations may be considered that will increase
the openness and understandability of the financial statements by citizens and their elected representatives; this
may include presentations for television or radio.
18 Handbook of International Auditing, Assurance, and Ethics

Pronouncements, International Federation of Accountants (New York).
12
1.31 The financial statements should be signed by the relevant Accounting Officer.
1.32 For the financial statements of the common fund, the relevant Accounting Officer may be the Secretary to
the Treasury or the Accountant General. The financial statements for individual ministries, departments and
agencies should be signed by the relevant Accounting Officer of the entity. In franco-phone countries,
individual public accountants should sign their own financial statements and summary accounts should be
signed by the relevant principal public accountant or senior official in the Ministry of Finance.
Statement of Cash Receipts and Payments

1.33 The Statement of Cash Receipts and Payments should provide a clear comparison of actual cash
receipts and payments with the budget agreed by the legislative body and comparative figures for the previous
reporting period, it should also present the following amounts for the reporting period:
(a) Total cash receipts of the entity compared to the annual budget agreed by the legislative body,
showing separately a sub-classification of total cash receipts using a classification basis appropriate
to the entitys operations;
(b) Total cash payments of the entity compared to the annual budget agreed by the legislative body,
showing separately a sub-classification of total cash payments using a classification basis
appropriate to the entitys operations;
(c) Beginning and closing cash and bank balances of the entity.
1.34 Total cash receipts and total cash payments, and cash receipts and cash payments for each subclassification of cash receipt and payment, should be reported on a gross basis, except that cash receipts and
payments may be reported on a net basis when:
(a) They arise from transactions which the entity administers on behalf of other parties and which are
recognized in the Statement of Cash Receipts and Payments; or
(b) They are for items in which the turnover is quick, the amounts are large, and the maturities are
short.
1.35 Line items, headings and sub-totals should be presented in the Statement of Cash Receipts and
Payments when such presentation is necessary to present fairly the entitys cash receipts, cash payments and
cash balances.
[Cash Basis IPSAS paragraph 1.3.4]
1.36 This Guide requires all entities to present a Statement of Cash Receipts and Payments which discloses
beginning and closing cash balances of the entity, total cash receipts and total cash payments over the reporting
period, and major sub-classifications thereof. This will ensure that the financial statements provide
comprehensive information about cash received and collected by the entity and how these monies have been
used over the period in comparison with the annual budget agreed by the legislative body.
1.37 Disclosure of information about such matters as whether cash is generated from taxes, fines, fees, and/or
borrowings and whether it was expended to meet operating costs, for the acquisition of capital assets or for the
retirement of debt will enhance transparency and accountability of financial reporting.
1.38 The Statement of Cash Receipts and Payments should include both recurrent and capital transactions
which may be disclosed in separate sections of the Statement. Where a separate Capital Fund or other funds
have been created the financial results of these funds should be disclosed separately in the notes to the financial
statements.
Comparative Statement of Budget and Actual Amounts

1.39 The budgetary information in the financial statements should be presented in the same format as the
annual budget agreed by the legislative body.
[See section 1.9 of the Cash Basis IPSAS for further details.]
1.40 The core purpose of public sector financial statements is to provide a comparison of budget and actual
amounts as a key component of accountability of the relevant Accounting Officer to the legislative body. For
13
this reason, the presentation, format and classification of the financial statements should be consistent with the
annual budget to ensure that this comparison can be provided simply and clearly. The key requirement is for the
financial statements to provide a clear comparison of the payments and receipts actually undertaken to the
comparable amounts in the annual budget agreed by Parliament. Where there are material differences between
the actual and budgeted amounts, these variances should be clearly explained in the notes to the financial
statements. This should enable citizens and their elected representatives to understand the reasons for any
divergences between the budgeted and actual figures. This is especially important where payments have been
made in excess of the budgeted figures agreed by Parliament. =The financial statements for the Consolidated
Revenue Fund may provide explanations for material differences between the actual and budget amounts at the
level of each entity and perhaps major budgetary classifications with each entity. Further explanations of
material variances at the sub-classification may then be provided in the financial statements for the individual
entities.
1.41 When the budget is prepared on the cash or modified cash bases, a separate column can be included in the
Statement of Cash Receipts and Payments in lieu of preparing a separate Comparative Statement of Budget and
Actual Amounts. Details may also be provided of the amount of expenditure which has been warranted or
released compared to the actual and budgeted amounts. The financial statements may also highlight key
differences between the budgeted amounts intended to benefit directly the countrys most impoverished
populations and the actual outcome (for example, primary health care, primary education and provision of safe
water). Suitable explanations should be provided in the notes to the accounts for any material variances.
Notes to the Financial Statements

1.42 The notes to the financial statements of an entity should:
(a) Present information about the basis of preparation of the financial statements and the specific
accounting policies selected and applied for significant transactions and other events; and
(b) Provide additional information which is not presented on the face of the financial statements but is
necessary for a fair presentation of the entitys cash receipts, cash payments and cash balances and
adequately account to the legislative body for the funds received and disbursed.
1.43 Notes to the financial statements should be presented in a systematic manner. Each item on the face of
the Statement of Cash Receipts and Payments and other financial statements should be cross referenced to
any related information in the notes.
[Cash Basis IPSAS, paragraph 1.3.30 & 1.3.31]
1.44 Notes to the financial statements include narrative descriptions and more detailed schedules or analyses of
amounts shown on the face of the financial statements, as well as additional information. The narrative
descriptions should explain major variations between the approved budget and outturns for major votes, budget
heads and sub-heads. They should also include information required and encouraged to be disclosed by this
Guidance, and can include other disclosures considered necessary to achieve a clear and understandable
presentation and enhance accountability.
Selection and Disclosure of Accounting Policies

1.45 General purpose financial statements should present information that is
(a) timely the audited financial statements are made public promptly after the end of the financial
year to which they refer;
(b) understandable the financial statements are clear and the key aspects and terms are explained;
(c) open the key financial information of interest citizens and their elected representatives is made
publicly available; and
(d) consistent the information is consistent from one year to the next, between accounts within the
same financial statements and between related financial statements as well as reliable and free from
material error.
[Cash Basis IPSAS, paragraph 1.3.32]
1.46 The quality of information provided in general purpose financial statements determines the usefulness of
those statements to users. Paragraph 1.45 requires the development of accounting policies to ensure that the
financial statements provide information that meets a number of qualitative characteristics.
14
1.47 The accounting policies section of the notes to the financial statements should describe each specific
accounting policy that is necessary for a proper understanding of the financial statements.
1.48 Inappropriate accounting treatments are not rectified either by disclosure of the accounting policies
used, or by notes or explanatory material.
[Cash Basis IPSAS, para. 1.3.34 & 35]
1.49 In deciding whether a specific accounting policy should be disclosed, Accounting Officers should consider
whether disclosure would assist users in understanding the way in which transactions and events are reflected in
the reported financial statements. An accounting policy may be significant even if amounts shown for current
and prior periods are not material. A comprehensive explanation should be provided for all significant
accounting policies sufficient to make these policies understandable to non-technical readers of the financial
statements.
Reporting Period
1.50 The general purpose financial statements should be presented to the legislative body annually. When, in
exceptional circumstances, an entitys reporting date changes and the annual financial statements are
presented for a period longer or shorter than one year, an entity should disclose in addition to the period
covered by the financial statements:
(a) The reason(s) for a period other than one year being used; and
(b) The fact that comparative amounts may not be comparable.
[Cash Basis IPSAS, paragraph 1.4.1; IPSAS 1, paragraph 66]
1.51 The reporting date is the date of the last day of the reporting period to which the financial statements relate.
In exceptional circumstances an entity may be required to, or decide to, change its reporting date to, for
example, align the reporting cycle more closely with the budgeting cycle. When this is the case, it is important
that the reason for the change in reporting date is disclosed and that users are aware that the amounts shown for
the current period and the comparative amounts are not comparable.
1.52 Normally, the financial statements are consistently prepared covering a one-year period. However, some
entities prefer to report, for example, for a 52 week period for practical reasons. This Guide does not preclude
this practice, as the resulting financial statements are unlikely to be materially different from those presented for
one year.
Timeliness
1.53 The financial statements should be presented for audit within six months of the end of period to which
they refer so that audited financial statements can be presented to the legislative body within nine months.
[Not an IPSAS requirement but included as an indicator of good practice that would achieve a score of A with
the relevant PEFA performance indicators.]
1.54 The usefulness of the financial statements are impaired if they are not made available to users within a
reasonable period after the reporting date. An entity should be in a position to issue its financial statements
within six months of the reporting date. This should enable the audited financial statements for the previous
year to be presented to the legislative body before debate on the following years budget.
1.55 The timeliness of information may impact upon both the relevance and reliability of the financial
information. The maintenance of complete and accurate accounting records during the reporting period is
essential for timely production of annual financial statements. Where governments do not submit their audited
financial statements to the legislative body within nine months of the reporting date, then timeliness will be the
key priority in terms of improvements to the financial statements.
1.56 Timeliness has to be balanced with other factors such as cost, degree of consolidation and the detailed
information provided. If the provision of additional information means that the financial statements are not
provided in a timely manner, then the value of such information should be critically evaluated. One of the major
benefits of the basis of accounting other than the accrual basis is that the financial statements can be produced
relatively quickly and cheaply. This benefit may be lost if fully consolidated financial statements are produced,
15
for example, for all central government ministries, departments and agencies.
1.57 The audited annual financial statements should be made available to the public as soon as possible after
they have been presented to the legislative body. The audited financial statements should be made available to
the media, on the website of the Ministry of Finance, in university and other libraries and for purchase from the
government printers/bookshop. If a charge is made for these financial statements, it should be modest and
affordable by general citizens.
Authorization Date
1.58 An entity should disclose the date when the financial statements were authorized for issue and who gave
that authorization.
1.59 The authorization date is the date on which the financial statements were approved by the individual or
body with the authority to finalize those statements for issue. It is important for users to know when the
financial statements were authorized for issue, because the financial statements do not reflect events after this
date.
Information about the Entity

1.60 An entity should disclose the following, as notes to the financial statements, if not disclosed elsewhere in
information published with the financial statements:
(a) The domicile and legal form of the entity, and the jurisdiction within which it operates;
(b) A description of the nature of the entitys operations and principal activities;
(c) A reference to the relevant legislation governing the entitys financial operations; and
(d) The name of any controlling entity and the ultimate controlling entity of the economic entity (if
relevant).
1.61 The disclosure of this information should enable users to identify the nature of the entitys operations and
gain an understanding of the legislative and institutional environment within which it operates.
Consistency of Presentation
1.62 The format, presentation and classification of items in the financial statements should be retained from
one period to the next unless:
(a) A significant change in the nature of the operations of the entity or a review of its financial
statement presentations demonstrate that the change will result in a more appropriate presentation
of events or transactions
(b) The relevant laws or regulations require such changes; or
(c) A change in presentation is required by a future amendment to this Guide or an IPSAS.
1.63 A major restructuring of service delivery arrangements; the creation of a new government entity, or
termination of a major existing government entity; a significant acquisition or disposal; or a review of the
overall presentation of the entitys general purpose financial statements might suggest that the Statement of
Cash Receipts and Payments or other individual financial statements should be presented differently.
1.64 Only if the revised structure is likely to continue or if the benefit of an alternative presentation is clear,
should an entity change the presentation of its financial statements. When such changes in presentation are
made, an entity reclassifies its comparative information in accordance with paragraph 2.19.
1.65 Technical terms and the quantitative figures should be consistent between the different financial statements
and the notes to the accounts. Quantitative figures should also be consistent between, for example, the financial
statements for the common fund and the financial statements for individual ministries, departments and
agencies. This should include, for example, a consistent value and definition of cash and cash equivalents and
surplus/deficit. Where there are differences in the values of transactions or balances between financial
16
statements, these should be clearly explained and reconciled. The common fund should disclose the funds
released or transferred to each ministry, department and agency. These same figures should appear in the
financial statements of the ministries, departments and agencies as receipts or transfer from the common fund.
Comparative Information
1.66 Comparative information should be disclosed in respect of the previous period for all numerical
information required by this Guide to be disclosed in the financial statements. Comparative information
should be included in narrative and descriptive information when it is relevant to an understanding of the
current periods financial statements.
1.67 This Guide requires the presentation of specific financial statements depending upon the stage of
implementation. It also specifies certain disclosures that are required to be made in these statements and the
associated notes. In each of these cases, comparative information in respect of the previous period or financial
year should be provided.
1.68 This Guide does not preclude the preparation of additional financial statements. Where such financial
statements are prepared, the disclosure of comparative information is encouraged.
1.69 In some cases, narrative information provided in the financial statements for the previous period(s)
continues to be relevant in the current period. For example, details of a legal dispute, the outcome of which was
uncertain at the last reporting date and is yet to be resolved, should be disclosed in the current period. Users
benefit from knowing that the uncertainty existed at the last reporting date, and the steps that have been taken
during the period to resolve the uncertainty.
1.70 In many cases the disclosure of longer term trends (of five years or more) are helpful in understanding the
financial position of government entities. Comparative information on the main trends for the key aspects of the
entities payments, receipts and financial position should be disclosed to provide a deeper understanding of the
medium term trends and to put the current results in perspective.
1.71 When the presentation or classification of items required to be disclosed in the financial statements is
amended, comparative amounts should be reclassified, unless it is impracticable to do so, to ensure
comparability with the current period, and the nature, amount of, and reason for any reclassification should
be disclosed. When it is impracticable to reclassify comparative amounts, an entity should disclose the reason
for not reclassifying and the nature of the changes that would have been made if amounts were reclassified.
[Cash Basis IPSAS, paragraph 1.4.19; IPSAS 1, paragraphs 55 & 56]
1.72 Circumstances may exist when it is impracticable to reclassify comparative information to achieve
comparability with the current period. For example, data may not have been collected in the previous period(s)
in a way which allows reclassification, and it may not be practicable to recreate the information. In such
circumstances, the nature of the adjustments to comparative amounts that would have been made is disclosed.
Identification of Financial Statements

1.73 The financial statements should be clearly identified and distinguished from other information in the
same published document.
1.74 This Guide applies only to the financial statements, and not to other information presented in an annual
report or other document. Therefore, it is important that users are able to distinguish information that is prepared
using this Guide from other information that may be useful to users but that is not the subject of this Guide.
1.75 Each component of the financial statements should be clearly identified. In addition, the following
information should be prominently displayed and repeated when it is necessary for a proper understanding of
the information presented:
(a) The name of the reporting entity or other means of identification;
(b) Whether the financial statements cover an individual entity or a group of entities;
17
(c) The reporting date or the period covered by each financial statement;
(d) The reporting currency; and
(e) The level of precision used in the presentation of figures in the financial statements.
1.76 The requirements in paragraph 2.32 are normally met by presenting page headings and abbreviated column
headings on each page of the financial statements. Judgment is required in determining the best way of
presenting such information.
1.77 Financial statements are often made clearer and more understandable by presenting information in
thousands or millions of units of the reporting currency (rounded to the nearest whole number). This is
acceptable as long as the level of precision in presentation is disclosed and relevant information is not lost.
1.78 Details should be provided of the entities whose results are included within the financial statements.
Details should also be provided of any significant entities which are excluded.
Classification
1.79 The classifications used in the financial statements should be the same as those used in the
governments annual budget. A detailed comparison of sub-classifications of the budget may be provided in
the notes to the financial statements or in separate reports which are publicly available from the website of the
Ministry of Finance.
1.80 The sub-classifications (or classes) are a matter of professional judgment. That judgment will be applied in
the context of the objective and qualitative characteristics of financial reporting. Alternative presentations are
possible, for example total cash receipts may be classified by reference to their source and cash payments may
be sub-classified by reference to either the nature of the payments or their function or program within the entity,
as appropriate.
(a) Total cash receipts may be classified to, for example, separately identify cash receipts from: taxation or
appropriation; grants and donations; borrowings; proceeds from the disposal of property, plant and
equipment; and other ongoing service delivery and trading activities.
(b) Total cash payments may be classified to, for example, separately identify cash payments in respect of:
salaries; goods and services; ongoing service delivery activities; transfers to other governments or
entities; debt reduction programs; acquisitions of property, plant and equipment; and any trading
activities.
1.81 A summary of total expenditure analysed by the standard ten Classification of Functions of Government
(COFOG) outlined in the Government Financial Statistics Manual19 may assist in the understanding of the
relative level of government spending in different areas. This is especially useful for international comparisons
as the structure of ministries, departments and agencies is different in each country. A further benefit of
COFOG is that it is stable even when ministries or departments are reorganised, assisting inter-temporal
comparison. See PEFA20, PI-5 on classification of the budget.
Line items, headings and sub-totals

1.82 Factors to be taken into consideration in determining which line items, headings and sub-totals should be
presented within each sub-classification include: the requirements of other sections of this Guide (for example,
paragraph 4.12 requires that total external assistance received in cash during the period be disclosed separately
on the face of the Statement of Cash Receipts and Payments); assessments of the likely materiality of the
disclosures to users; and the extent to which necessary explanations and disclosures are made in the notes to the
financial statements. The external assistance received in cash shall be reflected as Payments by Third Parties
as shown in Appendix 2. Payments by third parties would, for example, be project aid from donors where the
19 Manual on Fiscal Transparency, International Monetary Fund (2007): Washington DC (Page 76).
20 Public Financial Management Performance Measurement Framework, Public Expenditure and Financial
Accountability (PEFA 2007) Secretariat: Washington DC.
18
cash is not managed directly by the government (e.g. a contractor is paid directly by the donor agency for
building a school).
Reporting on a net basis

1.83 This Guide requires the reporting of cash receipts, payments and balances on a gross basis except in the
circumstances explained below.
1.84 Ministries, departments and agencies may administer transactions and otherwise act as agents on behalf of
other entities. These administered and agency transactions may include the collection of revenues on behalf of
another entity, the transfer of funds to eligible beneficiaries or the safekeeping of monies on behalf of
constituents. Examples of such activities are:
(a) The collection of taxes by one level of government for another level of government, not including taxes
collected by a government for its own use as part of a tax sharing arrangement;
(b) The acceptance and repayment of demand deposits of a financial institution;
(c) Funds held for customers by an investment or trust entity;
(d) Rents collected on behalf of, and paid over to, the owners of properties;
(e) Transfers by a government department to third parties consistent with legislation or other government
authority; and
(f) Funds administered by a central entity under the single account basis for management of government
expenditure.
1.85 In many cases, the cash an entity receives in respect of transactions it administers as an agent for others
will be deposited in trust accounts for, or directly in the bank account of, the ultimate recipients of the cash. In
these cases, the entity will not be responsible to the legislative body for the cash it receives in respect of the
transactions it administers and these cash flows will not form part of the cash receipts, cash payments or cash
balances of the entity. However, in other cases the cash received will be deposited in bank accounts of the entity
acting as an agent and the receipt and transfer of that cash will be reported in the Statement of Cash Receipts
and Payments of the entity.
1.86 In some cases, the amounts of the cash flows arising from administered transactions which pass-through
the bank account of the reporting entity may be large relative to the entitys own transactions, and responsibility
may occur for only a short time before the amounts are transferred to the ultimate recipients. This may also be
true for other cash flows including for example, advances made for, and the repayment of:
(a) The purchase and sale of investments; and
(b) Other short-term borrowings, for example, those which have a maturity period of three months or less.
1.87 The recognition of these transactions on a gross basis may undermine the ability of the financial statements
of some governments and government entities to communicate information about cash receipts and cash
payments resulting from the entitys own activities. Accordingly, this Guide permits cash receipts and cash
payments to be offset and reported on a net basis in the Statement of Cash Receipts and Payments in the
circumstances identified in this Guide.
1.88 See illustrative financial statements in Appendix 1.
STAGE TWO MODIFIED CASH BASIS

2.1 Stage Two requires compliance with most requirements of Part 1 of the Cash Basis IPSAS21 and selected
options in Part 2, Cash Basis IPSAS. However, it does not require the preparation of a consolidated financial
statements, neither does it require the disclosure of third party payments, for example, projects paid for directly
by external assistance. The financial statements are as for the Cash Basis (Stage 1) with the addition of the
provision of an Intermediate Statement of Financial Position (financial balance sheet) and other additional
disclosures for individual entities.
21 Op. Cit., Cash Basis IPSAS, Part 1: Requirements.

19
2.2 The modified cash basis of accounting recognizes transactions and events only when cash (including cash
equivalents) is received or paid by the entity. Financial statements prepared under the modified cash basis
provide readers with information about the sources of cash raised during the period, the purposes for which cash
was used and the cash balances at the reporting date. The measurement focus in the financial statements is
balances of cash and changes therein compared with the annual budget approved by Parliament. Notes to the
financial statements should provide additional information about all material financial assets and financial
liabilities, such as government debt and borrowings and some non-cash assets, such as investments.
Definitions
1.10 The following terms are used in this Guide with the meaning specified. The definitions are mainly as
identified in the Glossary to the IPSASs:
A Financial asset is any asset that is:
(a) Cash;
(b) A contractual right to receive cash or another financial asset from another entity;
(c) A contractual right to exchange financial instruments with another entity under conditions that are
potentially favourable; or
(d) An equity instrument of another entity.
Financial liability is any liability that is a contractual obligation:
(a) To deliver cash or another financial asset to another entity; or
(b) To exchange financial instrument with another entity under conditions that are potentially
unfavourable.
Structure of Financial Reports22

4.2 The structure for the financial reports prepared on the cash basis of accounting is as follows:
(ii) Comparative Statement of Budget and Actual Amounts (may be include as a column in the first
statement)
(iii) Modified Statement of Financial Position
[Cash Basis IPSAS, para. 1.3.4 & 1.9 except attaching the auditors opinion and the narrative discussion and
analysis are not currently an IPSAS requirement but included as an indicator of good practice.]
4.3 Supreme Audit Institutions Opinion on Fair Presentation An opinion expressed by the external
auditor on the fair presentation of financial information in the financial statements as for Stage One.
4.4 Financial Statement Discussion and AnalysisA plain language discussion of the financial information
presented in the financial statements should be provided as for Stage One.
4.5 Statement of Cash Receipts & Payments and a Comparative Statement of Budget and Actual Amounts
should be presented as for Stage One.
Modified Statement of Financial Position

5.1 The Modified Statement of Financial Position should provide a clear comparison of actual financial
assets and financial liabilities at the end of the reporting period with those of the previous period. Changes
from one period to the other should be clearly explained by the Statement of Receipts and Payments. The
Statement of Financial Position should also present the following amounts for the reporting period:
22 Adapted from IPSAS 22, Disclosure of Financial Information About the

General Government Sector (December 2006).
20
(a) total financial assets of the entity showing separately the following balances and a sub-classification
using a classification basis appropriate to the entitys operations:
(i)
cash, including cash equivalents and bank balances of the entity
(ii)
advances, loans and investments.
(b) total financial liabilities of the entity showing separately the following balances and a sub-classification
using a classification basis appropriate to the entitys operations:
(i)
public debt and loans received analysed to show total domestic debt and total debt
denominated in foreign currencies.
(c) net assets and the funds by which these are represented including the Consolidated Revenue Fund and
other funds as appropriate.
5.2 Cash and cash equivalents comprise cash on hand, bank balances and deposits held,
other short-term highly liquid investments and bank overdrafts.
5.3 Receivables arise from cash payments made that are recoverable from
another party, for example, taxes collected by the Revenue Agency but not paid
into the Consolidated Revenue Fund.
5.4 Advances are imprest and other advances made to public officials which had
yet to be retired at the end of the reporting period. Loans outstanding are those
made to public officials, politicians and others. Investments in Government
Business Enterprise (parastatal organisations) or private companies are shown at
the cost of acquisition.
5.5 Public debt and loans received are presented at the historic cost of the debt
or loan. Debt and loans denominated in foreign currency are converted at the
closing exchange rate at the end of the period (see paragraph 7.49 below).
Notes to the financial statements

4.25 The notes to the financial statements should provide details of cash and cash equivalents on hand and
the balances held at the Central Bank as well as the total balances of accounts held at other banks.
4.26 Details of cash balances held by each ministry, department and agency should be provided. Balances of the
various accounts in the Central Bank and totals for the accounts with individual public and commercial banks
should be provided. Summary details should be provided in the financial statements of the common fund with
more details of balances in individual bank accounts provided in the financial statements of the individual
ministries, departments and agencies.
5.18 The notes to the financial statements should provide details of investments, outstanding loans, advances,
imprests and other monies which may be owed to the government. Details should also be provided of any
suspense accounts which have not been cleared.
5.19 Details should be provided of public investments in individual public agencies, Government Business
Enterprises, and private companies. This should include any subsidies provided for the current and previous
years, the percentage of the governments holding and its value at historic cost for the current and previous
years.
5.20 Details should be provided of any loans issued to individual public agencies, Government Business
Enterprises, or private companies.
5.21 Summaries should be provided of outstanding advances, loans or unretired imprests provided to officials
and politicians by each ministry, department and agency. An analysis should be provided to show the main
types and the amount written off during the year if any. The financial statements of individual ministries,
21
departments and agencies should include details of loans to each individual person or entity, the amount loaned
and repaid, and the amount yet to be paid.
Details of Public Debt

5.27 The notes to the financial statements should provide details of the total of domestic debt and the total
debt denominated in each significant foreign currency. Details should also be provided of each individually
material debt or loan agreement indicating the provider, original value, the amount outstanding at the end of
the period, the interest rate and the remaining term of the debt.
5.28 A listing should be provided of all material individual debts (including debt incurred
by the public institutes and state-owned enterprises) showing the provider of the debt,
the amount outstanding and the current rates of interest. A summary of total
government debt analysed into domestic and foreign debt should be provided covering
at least the last five years.
5.29 Details may be provided of all issues of Treasury Bills and Bonds including interest
rates. Alternatively such details may be reported by the Central Bank, if these are the
case, the financial statements should provide details of where such information is
publicly reported. Where appropriate, such details may be aggregated to show average
interest rates and dates of redemption.
5.30 An entity should disclose in the notes to the financial statements the amount of any debt cancelled
during the period.
5.31 An entity experiencing difficulty in servicing its external assistance debt may seek renegotiation of the
terms and conditions of the debt or cancellation of the debt. The amount of any debt cancelled during the period
should be disclosed in the notes to the financial statements to explain material reductions in the level of
government debt.
Arrears
5.32 A summary should be provided of any arrears of revenues; further details should be provided for the main
types of taxes and non-tax revenue, with the latter detailed by ministry, department and agency. Comparable
figures should be provided for the last financial year.
5.33 The total value of payment arrears (e.g. payments not made within 30 days of the receipt of the goods or
services or not made within the agreed timescale) should be provided with total value for each ministry,
department and agency analysed into salary arrears (including pension arrears) and supplies (goods, services and
construction works). Comparable figures should be provided for the last financial year.
5.34 Payment arrears are those short-term liabilities that have not been paid by their due date. Payment arrears
are an area of interest for the donor community and are covered in PI-4 of the PEFA framework.
Losses
5.35 The financial statements of the common fund should include, as notes to the accounts, summaries of
reported losses and those written off or abandoned, with details by ministry, department and agency. The
financial statements of individual ministries, departments and agencies should provide further details of losses
of public money with dates, explanations of particulars and nature of each loss and the value of the loss
recovered or written off.
5.36 Losses may include thefts, write-offs of debts or loans, exchange losses, compensation payments, gifts and
22
fruitless or wasteful expenditure (inconsequential payments). The laws and regulations of each country
determine what constitutes a loss.
Proceeds from Privatisation

5.37 The proceeds received from the privatisation of individual agencies or public enterprises should be
disclosed. Any amounts outstanding, the name of the company, the investor, year of privatisation, cost and
amounts paid with the balance outstanding at start and end of the year with brief remarks should be
disclosed.
Accounting for Capital Projects

5.38 Details of development expenditures to date should be provided by project and should be compared to Total
Estimated Cost. The previous years expenditure on each material project should also be disclosed. This will
show the total costs to date of individual development or capital projects compared with the overall budget for
the project which may cover several years, rather than just the results for the particular reporting period. These
details may be provided in the individual financial statements of ministries, departments and agencies rather
than in the financial statements of the common fund.
Salaries and Benefits of Senior Politicians and Public Officials

5.39 An entity should disclose in the notes to the financial statements the salaries and benefits of senior
politicians and senior public officials
5.40 The annual salaries and other significant benefits of senior politicians and public officials should be
disclosed in the notes to the financial statements of each entity. This should include, for example, government
ministers, permanent secretaries, directors and other heads of ministries, departments and agencies.
5.41 The assets of senior politicians and senior public officials (and their spouses and children) are often
published when they enter office, annually (for as long as they are in office) and when they leave office. Details
of how these asset registers may be accessed and reviewed by the public (if this is legally permissible) should be
included in the notes to the financial statements.
Details of Contingent Liabilities and Provisions

5.22 The notes to the financial statements should provide details of contingent liabilities.
5.23 Details should be provided of contingent liabilities outstanding showing the nature (loan guarantees, export
credit guarantees, commitments etc) maximum liability and possible current outstanding value. The amounts of
any contingent liabilities should be analysed to show the agency, parastatal organisation or private company
involved. Details should be provided of any foreign currency implications.
5.25 The notes to the financial statements should provide details of provisions.
5.26 Details should be provided of any significant court cases outstanding against government entities; these
should include the name of the entity, brief details of the cases and the possible value of the liabilities.
Restrictions on Cash Balances and Access to Borrowings

4.27 An entity should disclose in the notes to the financial statements, together with a commentary, the
nature and amount of:
23
(a) Significant cash balances that are not available for use by the entity;
(b) Significant cash balances that are subject to external restrictions; and
(c) Undrawn borrowing facilities that may be available for future operating activities and to settle
capital commitments, indicating any restrictions on the use of these facilities.
4.28 Cash balances held by an entity would not be available for use by the entity when, for example, an entity
operates in a country where exchange controls or other legal restrictions apply and the balances are not available
for general use by the controlling entity or other controlled entities. Cash balances may be subject to restrictions
which limit the purpose or timing of their use. This situation often exists when an entity receives a grant or
donation which must be used for a specific purpose. It may also exist where, at reporting date, an entity holds in
its own bank accounts cash it has collected for other parties in its capacity as an agent but not yet transferred to
those parties.
Secret Payments
4.32 Details of secret payments may not be provided in full in the financial statements or not in the level of
detail provided for other payments. Where this is the case, summary details should be provided with a brief
explanation of why such information is not being provided.
4.33 Secret payments may relate to, for instance, national security and military intelligence. The total payments
made for such services should be provided in the financial statements but the same level of sub-categories of
payments may not be provided as for other public services. The financial statements should indicate where such
summarised financial information is being provided and the services or entities which are involved.
Correction of Errors
4.34 When an error arises in relation to a cash balance reported in the financial statements, the amount of
the error that relates to prior periods should be reported by adjusting the cash at the beginning of the period.
Comparative information should be restated, unless it is impracticable to do so.
4.35 An entity should disclose in the notes to the financial statements the following:
(a) The nature of the error;
(b) The amount of the correction; and
(c) The fact that comparative information has been restated or that it is impracticable to do so.
[Cash Basis IPSAS, para. 1.5.1 & 2]
4.36 Errors in the preparation of the financial statements of one or more prior periods may be discovered in the
current period. Errors may occur as a result of mathematical mistakes, mistakes in applying accounting policies,
misinterpretation of facts, fraud or oversights. When an error is identified in respect of a previous period, the
opening balance of cash is adjusted to correct the error and the financial statements, including the comparative
information for prior periods, is presented as if the error had been corrected in the period in which it was made.
An explanation of the error and its adjustment is included in the notes.
4.37 The restatement of comparative information does not necessarily give rise to the amendment of financial
statements which have been approved by the governing body or registered or filed with regulatory authorities.
However, national laws may require the amendment of such financial statements.
Treatment of Foreign Currency Cash Receipts, Payments and

Balances
4.38 Cash receipts and payments arising from transactions in a foreign currency should be recorded in an
entitys reporting currency by applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of each receipt and payment.
4.39 Cash balances held in a foreign currency should be reported using the closing rate at the end of the
reporting period.
24
4.40 An entity should disclose the amount of exchange differences included as reconciling items between
opening and closing cash balances for the period.
4.41 When the reporting currency is different from the currency of the country in which the entity is
domiciled, the reason for using a different currency should be disclosed. The reason for any change in the
reporting currency should also be disclosed.
[Cash Basis IPSAS, paragraph 1.7.2-1.7.6]
4.42 Governments and government entities may have transactions in foreign currencies such as borrowing an
amount of foreign currency or purchasing goods and services where the purchase price is designated as a foreign
currency amount. They may also have foreign operations and transfer cash to and receive cash from those
foreign operations. In order to include foreign currency transactions and foreign operations in financial
statements, the entity must express cash receipts, payments and balances in reporting currency terms.
4.43 Unrealized gains and losses arising from changes in foreign currency exchange rates are not cash receipts
and payments. However, the effect of exchange rate changes on cash held in a foreign currency is reported in the
Statement of Cash Receipts and Payments in order to reconcile cash at the beginning and the end of the
period. This amount is presented separately from cash receipts and payments and includes the differences, if
any, had those cash receipts or payments and balances been reported at end-of-period exchange rates.
External Assistance
4.12 The entity should disclose separately on the face of the Statement of Cash Receipts and Payments,
total external assistance received in cash during the period compared to the budget for such funds.
(a) Where external assistance is received from more than one provider, or for more than one project,
the significant individual providers of assistance and the amounts for each project should be
disclosed separately, either on the face of the Statement of Cash Receipts and Payments or in the
notes to the financial statements. The currency in which the assistance was provided should be
reported and the exchange rate used if appropriate.
(b) Where external assistance is received in the form of loans and grants, the total amount received
during the period as loans and the total amount received as grants should be shown separately,
either on the face of the Statement of Cash Receipts and Payments or in the notes to the financial
statements.
[See paragraph 1.10 of the Cash Basis IPSAS for further details.]
4.13 External assistance may be provided directly to the reporting entity in the form of cash. Disclosure of the
amount of external assistance received in the form of cash from each significant provider will allow the
reporting entity to account for all the external assistance it has received in this form and for providers of external
assistance to confirm the receipt of this assistance by the reporting entity. Notes to the financial statements
should provide details of the amounts of external assistance provided in the form of cash and also indicate the
amounts in the currency in which it was provided.
9.13 Details should be provided of the external assistance provided in cash to each public sector entity and this
assistance should be analysed to show general budget support, sector budget support and other.
9.19 Details of external assistance received in kind may be provided if the details and values of such external
assistance are formally reported in writing to the relevant ministry, department or agency. A summary may be
provided of all aid agreements showing the provider and the amounts in the currency of origin and local
currency. The Notes to the financial statements should indicate the amount of such external assistance received
in kind (project aid) which is disclosed in the financial statements.
STAGE THREEMODIFIED ACCRUAL BASIS

5.1 Stage Three expands upon the coverage in Stage Two by adding financial assets and liabilities to the
financial statements for the Central Government. The cash basis of accounting recognizes transactions and
25
events only when cash (including cash equivalents) is received or paid by the entity. On the other hand, financial
statements prepared under the modified accrual basis provide readers with additional information about all
material financial assets and financial liabilities, such as government debt, payables and borrowings, and
some non-cash assets, such as receivables and investments. For ease in implementation, it is recommended that
the central government transition to the modified accrual basis prior to the rest of general government.
However, it is not recommended that the non-financial assets and liabilities are recognized for the Central
Government until Stage Five.
5.2 Accounts payable are recognized in the period when the liability is incurred not in the period when cash is
paid. From an accounting standpoint, outstanding commitments at the end of the fiscal year are recognized as
contingent liabilities and are reflected in the notes to the financial statements but not on the face of the financial
statements. When the outstanding item is received or the service is performed, it would then be recognized as
accounts payable and reflected on the face of an Intermediate Statement of Financial Position. This
nomenclature is preferred to differentiate these statements from the Statement of Financial Position since the
latter statement (by definition)23 includes non-financial assets and liabilities.
Structure of Financial Reports24

5.3 The structure for the financial reports prepared on the modified accrual basis of accounting is as follows:
(ii) Statement of Financial Position
5.4 The structure of the financial statements in Stage Three will be the same as those in Stage Two except that
tangible assets and liabilities will be recognized in addition to financial assets and liabilities.
5.5 See Appendix 3 for illustrative financial statements.
5.7 Government entities reporting under the modified accrual basis of accounting frequently provide
information on items that would not be recognized under pure cash accounting. Examples of the type of
information that may be provided include details of:
(a) Receivables, payables, non-cash assets and accruing revenues and expenses; and
(c) Commitments and contingent liabilities.
5.8 Entities preparing general purpose financial statements in accordance with this Guide may disclose such
information in the notes to the financial statements. Where such disclosures are made, they should be clearly
described and be readily understandable.
Statement of Financial Performance

5.14 The Intermediate Statement of Financial Performance should provide a clear comparison of actual
financial results (surplus or deficit) at the end of the reporting period with those of the previous period. The
Intermediate Statement of Financial Performance should also present the following amounts for the
reporting period:
(a) Total financial income of the entity showing separately the following balances and a subclassification using a classification basis appropriate to the entitys operations:
(i)
Taxes;
(ii)
Social contributions
(iii)
Grants; and
(iv)
Other income.
23 Op. Cit. IPSAS 1Presentation of Financial Statements.

24 Adapted from IPSAS 22, Disclosure of Financial Information About the
General Government Sector (December 2006).
26
(b) Total financial expenses of the entity by economic classification showing separately the following
balances and a sub-classification using a classification basis appropriate to the entitys operations:
(i) Compensation of employees;
(ii) Purchase of goods and services;
(iii) Interest;
(iv) Subsidies;
(v) Grants;
(vi) Social benefits; and
(vii) Other expenses.
(c) Surplus or deficit by which these are represented including the common fund and other funds as
appropriate.
5.15 The economic classifications for financial expenses above are those prescribed by the Government Finance
Statistics Manual and adapted for intermediate statements. It is also permissible to use the following ten
functional classifications: general public service; defence; public order and safety; economic affairs;
environment protection; housing and community amenities; health; recreation, culture, and religion; education;
and social protection.
Statement of Financial Position

5.9 The Intermediate Statement of Financial Position should provide a clear comparison of actual
financial assets and financial liabilities at the end of the reporting period with those of the previous period.
The Intermediate Statement of Financial Position should also present the following amounts for the
reporting period:
(a) Total financial assets of the entity showing separately the following balances and a subclassification using a classification basis appropriate to the entitys operations:
(i) Cash, including cash equivalents and bank balances of the entity;
(ii) Receivables; and
(iii) Advances, loans and investments.
(b) Public debt and loans received analysed to show total domestic debt and total debt denominated in
foreign currencies.
(c) Net assets and the funds by which these are represented including the common fund and other
funds as appropriate.
5.10 Cash and cash equivalents comprise cash on hand, bank balances and deposits
held, other short-term highly liquid investments and bank overdrafts.
5.11 Receivables arise from cash payments made that are recoverable from another party, for example, taxes
collected by the Revenue Agency but not paid into the common fund.
5.12 Advances are imprest funds and other advances made to public officials which had yet to be retired at the
end of the reporting period. Loans outstanding are those made to public officials, politicians and others.
Investments in Government Business Enterprises or private companies are shown at the cost of acquisition .
5.13 Public debt and loans received are presented at the historic cost of the debt or loan. Debt and loans
denominated in foreign currency are converted at the closing exchange rate at the end of the period.
Stage FourAccrual Basis

7.1 Stage Five expands upon the coverage in Stage Three by adding non-financial assets and liabilities to the
financial statements for the General Government. While Stage Three applies only to Central Government, this
stage applies to all levels of government (national, sub-national, and local). Financial statements prepared under
27
the full accrual basis provide readers with additional information about all material financial assets and financial
liabilities as well as all non-financial assets (e.g. buildings, plant, and equipment) and liabilities (e.g. employee
pensions and other post-employment benefits). After completion of this stage, each government controlled
entity will be able to identify the full cost of services provided so that each taxpayer can pay for the services
received and not pass those costs onto their children or grandchildren (known as the generational equity
concept). The intent in Stage Five is to be in full compliance with the accrual IPSAS except for the following:
(a) An Auditors Opinion is required to be included with the financial statements.
(b) A Financial Statement Discussion and Analysis is required.
(c) A Consolidated Whole-of-Government Statement is not required until Stage Six.

7.2 The structure for the financial reports prepared on the full accrual basis of accounting is as follows:
(i) Statement of Financial Position;
(ii) Statement of Financial Performance;
(iii) Statement of Changes in Net Assets;
(iv) Comparative Statement of Budget and Actual Amounts; and
(v) Statement of Cash Flows
7.4 Each of the above financial statements has been explained in prior sections and will not be repeated here.
The format of the Statement of Cash Receipts and Payments (permitted under the cash and modified accrual
system using the Cash Basis IPAS) has been changed to the format of the Statement of Cash Flows prescribed
by IPSAS 2 for systems using the full accrual basis of accounting. 25 For the Statement of Cash Flows, the full
accrual accounting system breaks out the cash inflows and outflows by the following three activities: operating,
investing, and financing. See Appendix 5 for illustrative financial statements.
Statement of Changes in Net Assets

5.16 The Statement of Changes in Net Assets should provide a clear comparison of the changes in net
assets (including accumulated surplus or deficit) at the end of the reporting period with those of the previous
period. The Intermediate Statement of Changes in Net Assets should also present the following amounts
for the reporting period:
(a) Reserves for foreign exchange rate differences due to foreign operations as well as any other equity
reserves;
(b) Unrealized gain or loss on revaluation of property or investments; and
(c) Changes in net assets by which these are represented including the common fund and other funds
as appropriate.
5.17 All changes in net assets from one fiscal period to the prior fiscal period will need to be explained. These
changes are generally due to the surplus or deficit during the period as well as any unrealized gain or loss due to
revaluation of property or investments. In addition, foreign exchange rates are seldom static and fluctuations in
these rates will need to be recognized as a direct charge against a specified reserve. This section differs
significantly between the presentation by entities in the private sector from those in the public sector and often
represents one of the most challenging implementation areas.
Stage 5 Full Consolidated Accrual Basis

Full Consolidated Accrual Basis (full compliance with the accrual IPSASs for entities within a particular
sector) as for the Full Accrual Basis with the addition of separate consolidated financial statements for the
following two sectors:
a) general government sector (including central, state, and local government entities with their full
gross budgets included in the governments annual budget)
25 Op. Cit., IPSAS 2, Cash Flow Statements.

28
b) Extra-budgetary sector all entities that are not government business enterprises, but who have a
significant subsidy that is included with in the governments annual budget (for example,
universities, etc).
Consolidated Financial Statements

2.13 Where combined or consolidated financial statements are provided covering more than one entity, the
nature of the consolidation and the entities which are combined or consolidated should be clearly disclosed.
2.14 Combined financial statements refer to those statements that add the financial results of two or more
government entities together to present a combined total. No attempt is made to eliminate intra-governmental
transfers between entities. On the other hand, consolidated financial statements refer to those statements that
eliminate transactions between two entities to present a consolidated total. For example, if $100,000 is
transferred from Entity A to Entity B, the transaction is eliminated to prevent counting the transferred funds as
revenue to Entity B and as expense to Entity A. Thus, subsidies paid by the government to public institutes (e.g.
universities) or contributions to the capital of the state-owned enterprises would be considered intragovernmental transfers and would be eliminated on consolidation.
2.15 Some countries provide combined or consolidated financial statements. Where such statements are
provided, there should be clarity about what is meant by consolidation and which entities are included within the
consolidation. Financial statements covering more than one entity should list clearly the types of entities which
are included, list the individual entities which are covered by the financial statements, and explain clearly the
nature of the consolidation.
2.16 The annual general purpose financial statements are key documents for the accountability of governments
and specifically Accounting Officers to the legislative body. They may also facilitate greater financial control.
The common fund and each of the ministries, departments and agencies should have an Accounting Officer who
is personally accountable to the legislative body for the financial management of these entities. Thus a set of
financial statements is presented to the legislative body by each of the Accounting Officers. If consolidated
financial statements are produced for a range of such entities then the accountabilities of the relevant
Accounting Officers for each individual entity have to be clearly retained and explained.
2.17 Agencies and other entities may be established which are related to or are overseen by a ministry, but have
a degree of autonomy. The financial results of all such agencies or other public bodies should be reported to the
legislative body. This may be achieved by providing a separate set of financial statements for the agency or by
consolidating the financial results of the agency within the financial statements of the related ministry or
department.
2.18 The benefits and usefulness of consolidating the accounts of Government Business Enterprises or subnational government with those of national government ministries, departments and agencies is controversial
and may adversely affect the timeliness of the submission of the financial statements.
PART B - GOVERNMENT BUSINESS ENTERPRISES

Full Accrual Financial Statements for Government
Business Enterprises
1.13 As identified in the Glossary to the IPSASs, the following terms are used in this Guide with the meaning
specified:
Government Business Enterprise means an entity that has all the following characteristics (it may also be
termed a parastatal organisation or a state owned enterprise):
(a) Is an entity with the power to contract in its own name;
(b) Has been assigned the financial and operational authority to carry on a business;
(c) Sells goods and services, in the normal course of its business, to the public or private sector entities
29
at a profit or full cost recovery;

(d) Is not reliant on continuing government funding to be a going concern (other than purchases of
outputs at arms length); and
(e) Is controlled by a public sector entity.
6.1 This part applies only to Government Business Enterprises (referred to as Public Corporations in the
Government Finance Statistics Manual and may also be known as state own enterprises or parastatal
organisations). Government Business Enterprises are required to prepare their financial statements in
accordance with the same standards using full accrual accounting as applied to the private sector and published
by the IASB in their IAS/IFRS. Government Business Enterprises are outside General Government as defined
by the Government Finance Statistics Manual. However, consolidation of the financial statements of all
Government Business Enterprises may be encouraged as a parallel exercise in the transition to full accrual
statements.
1.12 The Preface to International Financial Reporting Standards issued by the International Accounting
Standards Board explains that International Financial Reporting Standards (IFRSs) and International Accounting
Standards (IASs) are designed to apply to the general purpose financial statements of all profit-oriented entities,
which would include Government Business Enterprises (referred to as public corporations by the IMF in the
Government Finance Statistics Manual).

6.2 The structure for the financial reports prepared on the full accrual basis of accounting is as follows:
(i) Statement of Financial Position;
(ii) Statement of Comprehensive Income;
(iii) Statement of Changes in Equity; and
(iv) Statement of Cash Flow.
6.3 A Comparative Statement of Budget to Actual Amounts is not needed since Government Business
Enterprises apply a flexible budget in lieu of a fixed budget as required by the legislative body for the other
controlled entities. A flexible budget is often prepared by Government Business Enterprises for operational
purposes but it is not binding by the legislative body since supply is driven by demand and will change during
the fiscal period.
Financial Statements
6.4 An entity should prepare and present to the legislative body general purpose financial statements for
Government Business Enterprises which include the following components:
(a) A Statement of Financial Position showing all assets and liabilities with comparative figures for the
previous financial year;
(b) A Statement of Comprehensive Income showing the results of financial operations during the fiscal
period with comparative figures for the previous financial year;
(c) A Statement of Changes in Equity reflecting the differences in Equity from the prior financial year;
(d) A Statement of Cash Flows showing the cash inflows and outflows for the fiscal period with
comparative figures for the previous financial year; and
6.5 The content of the above financial statements are well identified in accounting texts and will not be repeated
here. See Appendix 4 for illustrative financial statements.
30
Appendix 1. Current Financial Information Collected by

Central Government
GOVERNMENT A
COMPARATIVE STATEMENT OF BUDGET TO ACTUAL
AMOUNTS26
SELECTED GOVERNMENT CONTROLLED ENTITIES*
Budget Approved on the Cash Basis
(Classification of Payments by Function)**
(Stage 1 on the cash basis of accounting)
FOR YEAR ENDED DECEMBER 31, 20XX
(in thousands of currency units)
Actual
Amounts
Final
Budget
Original
Budget
Differences
CASH INFLOWS
Taxation
Aid agreements
International agencies
Other grants and aid
Proceeds from borrowings
Proceeds from disposal of fixed assets
Trading activities
Other receipts
Total Receipts
CASH OUTFLOWS
Health
Education
Public order/safety
Social protection
Defence
Housing and community amenities
Recreational, cultural and religion
Economic affairs
Other
Total Payments
NET CASH FLOWS
*Separate Comparative Statements would be prepared for each controlled entity, when appropriate.
**A separate statement on classification of payments by economic class could be prepared, if desired.
NOTES: Actual amounts are presented on the budgetary basis. The Difference column is not required.
However, a comparison between actual amounts and the original or the final budget, clearly identified as
appropriate, may be included.
26 Op. Cit., Cash Basis IPSAS.

31
GOVERNMENT A
STATEMENT OF CASH POSITION

SELECTED GOVERNMENT CONTROLLED ENTITY*
RECEIPTS
Taxation
Income tax
Value-added tax
Property tax
Other tax
External Assistance
Multilateral Agencies
Bilateral Agencies
Other Grants and Aid
Other Borrowings
Capital Receipts
Trading Activities
Other Activities
Total Receipts
Education
Health
All Others
PAYMENTS
Operations
Wages, salaries, and employee benefits
Supplies and consumables
Transfers
Grants
Other transfer payments
Capital Expenditures
Purchase/construction of fixed assets
Purchase of financial instruments
Loan and Interest Repayments
Repayment of borrowings
Interest payments
Other payments
Total Payments
Increase/(Decrease) in Cash
Cash at beginning of year
CASH AT END OF YEAR
*Separate financial statements for each controlled entity may be prepared. In addition, an optional consolidated
column may be added to reflect the total cash receipts and payments in the Central Government.
32
Appendix 2. Cash Basis Financial Statements for Central

Government
GOVERNMENT A
AMOUNTS27
CENTRAL GOVERNMENT SUB-SECTOR
(Classification of Payments by Function)*
Actual
Amounts
Final
Budget
Original
Budget
Differences
CASH INFLOWS
Taxation
Aid agreements
Trading activities
Other receipts
Total Receipts
CASH OUTFLOWS
Health
Education
Public order/safety
Social protection
Defence
Economic affairs
Other
Total Payments
NET CASH FLOWS
*A separate statement on classification of payments by economic class could be prepared, if desired.
NOTES: Actual amounts are presented on the budgetary basis. Actual amounts paid encompass both cash and
third party settlements. The Difference column is not required. However, a comparison between actual
amounts and the original or the final budget, clearly identified as appropriate, may be included.
27 Op. Cit., Cash Basis IPSAS, Appendix 2A.

33
GOVERNMENT A
STATEMENT OF CASH RECEIPTS AND PAYMENTS28

RECEIPTS
Taxation
Income tax
Value-added tax
Property tax
Other tax
External Assistance
Bilateral Agencies
Other Borrowings
Capital Receipts
Trading Activities
Other Activities
Total Receipts
PAYMENTS
Operations
Transfers
Grants
Interest payments
Other payments
Total Payments
CASH AT END OF YEAR
Health
Entity
3rd Party
Education
Entity
3rd Party
All Others*
Entity 3rd Party
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA**
NA
NA
NA
NA
NA
NA
NA
NA
*An optional consolidated column may be added to reflect the total cash receipts and payments in the Central
Government.
**NA=Not Applicable.

34
Appendix 3. Modified accrual Financial Statements for

Central Government
GOVERNMENT A

AMOUNTS29
CENTRAL GOVERNMENT SUB-SECTOR*
(Stage 3 on the modified accrual basis of accounting)
Actual
Amounts
Final
Budget
Original
Budget
Differences
CASH INFLOWS
Taxation
Aid agreements
Trading activities
Other receipts
Total Receipts
CASH OUTFLOWS
Health
Education
Public order/safety
Social protection
Defence
Economic affairs
Other
Total Payments
NET CASH FLOWS
*Separate Comparative Statements would be prepared for the state and local levels, when appropriate.

35
GOVERNMENT A
STATEMENT OF CASH RECEIPTS AND PAYMENTS30
(Stage 3 on the modified accrual basis of accounting*)
RECEIPTS
Taxation
Income tax
Value-added tax
Property tax
Other tax
External Assistance
Bilateral Agencies
Other Borrowings
Capital Receipts
Trading Activities
Other Activities
Total Receipts
PAYMENTS
Operations
Transfers
Grants
Interest payments
Other payments
Total Payments
CASH AT END OF YEAR
Health
Entity
3rd Party
Education
Entity
3rd Party
All Others**
Entity 3rd Party
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA***
NA
NA
NA
NA
NA
NA
NA
NA
*Excludes non-financial assets and liabilities.

**An optional consolidated column may be added to reflect the total cash receipts and payments in the Central
Government.
***NA=Not Applicable.

36
GOVERNMENT A
INTERMEDIATE STATEMENT OF FINANCIAL POSITION31
CENTRAL GOVERNMENT GENERAL SUB-SECTOR
(Stage 3 on the modified accrual basis of accounting*)
AS OF DECEMBER 31, 20XX
Health
20x2
20x1
Education
20x2
20x1
All Others**
20x2
20x1
FINANCIAL ASSETS***
Cash and Cash Equivalents
Receivables
Prepayments
Investments
Other Financial Assets
TOTAL FINANCIAL ASSETS
FINANCIAL LIABILITIES****
Payables
Borrowings
Employee Benefits
Other Financial Liabilities
TOTAL FINANCIAL LIABILITIES
NET FINANCIAL ASSETS/EQUITY
Reserves
Accumulated surpluses/(deficits)
TOTAL NET FINANCIAL ASSETS/EQUITY
Government.
***Any asset that is cash; a contractual right to receive cash or another financial asset from another entity; a
contractual right to exchange financial instruments with another entity under conditions that are potentially
favourable; or an equity instrument of another entity.32
****Any liability that is a contractual obligation to deliver cash or another financial asset to another entity or to
exchange financial instruments with another entity under conditions that are potentially unfavourable. 33
31 Ibid., Illustrative Appendix.

32 Op.Cit., Glossary, IPSAS Handbook .
33 Op.Cit., Glossary, IPSAS Handbook .
37
GOVERNMENT A
INTERMEDIATE STATEMENT OF FINANCIAL
PERFORMANCE34
(Stage 3 on the modified accrual basis of accounting*
Health
20x2
20x1
Education
20x2
20x1
All Others**
20x2
20x1
Revenue
Taxes
Income, profits, and capital gains
Payroll and workforce
Goods and services
Excises
Other
Total Revenue
Expenses***
General public services
Defence
Public order and safety
Economic affairs
Environmental protection
Health
Recreation, culture, and religion
Education
Social protection
Total Expenses
Surplus/(deficit) for the period
Government.
***A separate statement on classification of payments by economic class could be prepared, if desired.
34 Ibid., IPSAS 1, Appendix 2A.

38
GOVERNMENT A
INTERMEDIATE STATEMENT OF CHANGES IN NET
ASSETS35
CENTRAL GOVERNMENT SECTOR
(Stage 3 on the modified accrual basis of accounting)
AS OF DECEMBER 31, 20X2
Contribute
d
Capital
Translation
Reserve
Other
Reserves
Accum.
Surplus/
(Deficit)
Total
Balance at Dec. 31, 20X0

Gain/Loss on property revaluations
Gain/Loss on investment revaluations
Translation exchange differences
Net revenue recognized directly in net
assets
Surplus/(Deficit) for the period
Total recognized revenue and expenses
for the period
Gain/Loss of property evaluations
assets
for the period
35 Ibid., IPSAS 1, Appendix 2A.

39
Appendix 4. Full Accrual Financial Statements for

Government Business Enterprises
GOVERNMENT A
STATEMENT OF CASH FLOWS36
PUBLIC CORPORATION SECTOR
(Stage 4 on the full accrual basis of accounting)
GBE #1
20x2
20x1
GBE #2
20x2
20x1
All Others*
20x2
20x1
CASH FLOWS FROM OPERATING ACTIVITIES

Receipts
Taxation
Sales of goods and services
Grants
Interest received
Dividends from other sectors to government
Other receipts
Payments
Employee costs
Retirement benefits
Suppliers
Interest paid
Dividend to other sectors
Other payments
Net Cash Flows from Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
Proceeds from sale of plant and equipment
Proceeds from sale of investments
Purchase of foreign currency securities
Net Cash Flows from Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Equity (contributions and distributions)
Net Cash Flows from Financing Activities
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
*An optional consolidated column may be added to reflect the operating, investing, and financing activities of
the GBEs as well as sub-totals for PNFCs and PFCs.
36 Op. Cit., IAS/IFRS.

40
GOVERNMENT A
STATEMENT OF FINANCIAL POSITION37
GBE #1
20x2
20x1
GBE #2
20x2
20x1
All Others*
20x2
20x1
ASSETS
Current Assets
Receivables
Inventories
Prepayments
Other Current Assets
Total Current Assets
Non-Current Assets
Investments
Infrastructure, plant, and equipment
Land and buildings
Intangible Assets
Other Non-Financial Assets
Total Non-Current Assets
Total Assets
LIABILITIES
Current Liabilities
Payables
Borrowings
Provisions
Employee Benefits
Other Current Liabilities
Total Current Liabilities
Non-Current Liabilities
Payables
Long-Term Borrowings
Long-Term Provisions
Employee Benefits
Superannuation
Other Non-Current Liabilities
Total Non-Current Liabilities
Total Liabilities
NET ASSETS
NET ASSETS/EQUITY
Reserves
TOTAL NET ASSETS/EQUITY
*An optional consolidated column may be added to reflect the total profit or loss from the GBEs.
37 Op. Cit. IAS/IFRS.

41
GOVERNMENT A
STATEMENT OF COMPREHENSIVE INCOME38
GBE #1
20x2
20x1
GBE #2
20x2
20x1
All Others*
20x2
20x1
Revenue
Taxes
Goods and services
Excises
Other
Total Revenue
Expenses**
Defence
Economic affairs
Health
Education
Social protection
Total Expenses
Profit/(loss) for the period
*An optional consolidated column may be added to reflect the total profit or loss from the GBEs.

42
GOVERNMENT A
STATEMENT OF CHANGES IN EQUITY39
GBE #1
20x2
20x1
GBE #2
20x2
20x1
All Others*
20x2
20x1

Gain/Loss of property evaluations
Net revenue recognized directly in net assets
Total recognized revenue and expenses for the
period
Net revenue recognized directly in net assets
Total recognized revenue and expenses for the
period

43
Appendix 5. Full Accrual Financial Statements for

General Government
GOVERNMENT A
AMOUNTS40
GENERAL GOVERNMENT SECTOR*
Actual
Amounts
Final
Budget
Original
Budget
Differences
CASH INFLOWS
Taxation
Aid agreements
Trading activities
Other receipts
Total Receipts
CASH OUTFLOWS
Health
Education
Public order/safety
Social protection
Defence
Economic affairs
Other
Total Payments
NET CASH FLOWS
*Separate Comparative Statements would be prepared for the state and local levels, when appropriate.
40 Op. Cit., IPSAS 24Presentation of Budget Information in Financial

Statements.
44
GOVERNMENT A
GENERAL GOVERNMENT SECTOR
(Stage 5 on the full accrual basis of accounting*)
Central
State
Entity
3rd Party
Entity
3rd Party
CASH FLOWS FROM OPERATING
ACTIVITIES
Receipts
Taxation
Grants
Interest received
Dividends from other sectors to
government
Other receipts
Payments
Employee costs
Retirement benefits
Suppliers
Interest paid
Other payments
Net Cash Flows from Operating
Activities
NA
NA
Local
Entity 3rd Party
NA
CASH FLOWS FROM INVESTING

ACTIVITIES
Proceeds from sale of plant and
equipment
CASH FLOWS FROM FINANCING
ACTIVITIES
Equity (contributions and distributions)
Net Cash Flows from Financing
Activities
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT
END OF PERIOD
CASH AT BEGINNING OF YEAR
41 Op. Cit., IPSAS 2Cash Flow Statements.

45
GOVERNMENT A
Federal
20x2
20x1
State
20x2
20x1
Local*
20x2
20x1
ASSETS
Current Assets
Receivables
Inventories
Prepayments
Non-Current Assets
Investments
Land and buildings
Intangible Assets
Total Assets
LIABILITIES
Current Liabilities
Payables
Borrowings
Provisions
Employee Benefits
Payables
Employee Benefits
Superannuation
Total Liabilities
NET ASSETS
NET ASSETS/EQUITY
Reserves
*An optional consolidated column may be added to reflect the total assets and liabilities from each level of
government.
42 Ibid., IPSAS 1Presentation of Financial Statements.

46
GOVERNMENT A
STATEMENT OF FINANCIAL PERFORMANCE43
Federal
20x2
20x1
State
20x2
20x1
Local*
20x2
20x1
Revenue
Taxes
Goods and services
Excises
Other
Grants
Total Revenue
Expenses**
Defence
Economic affairs
Health
Education
Social protection
Total Expenses
*An optional consolidated column may be added to reflect the total surplus or deficit from the different levels of
government.
43 Ibid., IPSAS 1.
47
GOVERNMENT A
STATEMENT OF CHANGES IN NET ASSETS44
AS OF DECEMBER 31, 20X2
Contribute
d
Capital
Translation
Reserve
Other
Reserves
Accum.
Surplus/
(Deficit)
Total

assets
for the period
assets
for the period
44 Ibid., IPSAS 1.
48
Appendix 6. Full Accrual Financial Statements for the

Whole of Government
GOVERNMENT A
AMOUNTS45
WHOLE OF GOVERNMENT SECTOR*
Actual
Amounts
Final
Budget
Original
Budget
Differences
CASH INFLOWS
Taxation
Aid agreements
Trading activities
Other receipts
Total Receipts
CASH OUTFLOWS
Health
Education
Public order/safety
Social protection
Defence
Economic affairs
Other
Total Payments
NET CASH FLOWS
*Separate Comparative Statements would be prepared for the PFC and PNFC, when appropriate.
45 Op. Cit., IPSAS 24.

49
GOVERNMENT A
WHOLE OF GOVERNMENT SECTOR
GGS
20x2
20x1
PFC
20x2
20x1
PNFC
20x2
20x1
CASH FLOWS FROM OPERATING ACTIVITIES

Receipts
Taxation
Grants
Interest received
Dividends from other sectors to government
Other receipts
Payments
Employee costs
Retirement benefits
Suppliers
Interest paid
Other payments
Net Cash Flows from Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of plant and equipment
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash Flows from Financing Activities
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
46 Op. Cit., IPSAS 2.

50
GOVERNMENT A
GGS
PFC
20x2
20x1
20x2
20x1
ASSETS
Current Assets
Receivables
Inventories
Prepayments
Non-Current Assets
Investments
Land and buildings
Intangible Assets
Total Assets
PNFC*
20x2
20x1
LIABILITIES
Current Liabilities
Payables
Borrowings
Provisions
Employee Benefits
Payables
Employee Benefits
Superannuation
Total Liabilities
NET ASSETS
NET ASSETS/EQUITY
Reserves
*An optional consolidated column may be added to reflect the total net assets from all government controlled
entities.
47 Ibid., IPSAS 1.
51
GOVERNMENT A
STATEMENT OF FINANCIAL PERFORMANCE48
20x2
GGS
20x1
PFC
20x2
20x1
PNFC*
20x2
20x1
Revenue
Taxes
Goods and services
Excises
Other
Grants
Total Revenue
Expenses**
Defence
Economic affairs
Health
Education
Social protection
Total Expenses
*An optional consolidated column may be added to reflect the total surplus or deficit for the whole of
government.
48 Ibid., IPSAS 1.
52
GOVERNMENT A
STATEMENT OF CHANGES IN EQUITY/NET ASSETS49
Contribute
d
Capital
Translation
Reserve
Other
Reserves
Accum.
Surplus/
(Deficit)
Total

assets
for the period
assets
for the period
49 Ibid., IPSAS 1.
53

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INTERNATIONAL PUBLIC SECTOR

Manuel Pietra, President

INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS:

5. STAGE THREEMODIFIED ACCRUAL FINANCIAL STATEMENTS FOR

APPENDIX 5. FULL ACCRUAL FINANCIAL STATEMENTS FOR GENERAL

INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS:

improvements to the quality of public financial management.

Public Sector Accountability and the Role of Financial Statements

Approaches to financial reporting in the public sector

Current Good Practices

5 IMF (2001) Government Finance Statistics Manual, page 8

Qualitative Characteristics of Financial Reporting9

Developing the Accounting System

Government Finance Statistics

The Accounting System

17 International Financial Reporting Standards, International Accounting

Part A - GENERAL GOVERNMENT SECTOR

Stage OneCash Basis

Structure of Financial Reports

Opinion of the Supreme Audit Institution

Financial Statement Discussion and Analysis

18 Handbook of International Auditing, Assurance, and Ethics

Statement of Cash Receipts and Payments

Comparative Statement of Budget and Actual Amounts

Notes to the Financial Statements

Selection and Disclosure of Accounting Policies

Information about the Entity

Identification of Financial Statements

Line items, headings and sub-totals

Reporting on a net basis

STAGE TWO MODIFIED CASH BASIS

21 Op. Cit., Cash Basis IPSAS, Part 1: Requirements.

Structure of Financial Reports22

Modified Statement of Financial Position

22 Adapted from IPSAS 22, Disclosure of Financial Information About the

Notes to the financial statements

Details of Public Debt

Proceeds from Privatisation

Accounting for Capital Projects

Salaries and Benefits of Senior Politicians and Public Officials

Details of Contingent Liabilities and Provisions

Restrictions on Cash Balances and Access to Borrowings

Treatment of Foreign Currency Cash Receipts, Payments and

STAGE THREEMODIFIED ACCRUAL BASIS

Structure of Financial Reports24

Statement of Financial Performance

23 Op. Cit. IPSAS 1Presentation of Financial Statements.

Statement of Financial Position

Stage FourAccrual Basis

Structure of Financial Reports

Statement of Changes in Net Assets

Stage 5 Full Consolidated Accrual Basis

25 Op. Cit., IPSAS 2, Cash Flow Statements.

Consolidated Financial Statements

PART B - GOVERNMENT BUSINESS ENTERPRISES

at a profit or full cost recovery;

Structure of Financial Reports

Appendix 1. Current Financial Information Collected by

26 Op. Cit., Cash Basis IPSAS.

STATEMENT OF CASH POSITION

Appendix 2. Cash Basis Financial Statements for Central

27 Op. Cit., Cash Basis IPSAS, Appendix 2A.

STATEMENT OF CASH RECEIPTS AND PAYMENTS28