22nd January 2012

Prepared by the Financial Reporting Council (FRC) 2012

Brief history

APS brief history

 Costing of services

  • It reported government employee costs (eg pensions) when incurred rather than when paid
Benefits from accrual accounting
Asset management
  • It encouraged better asset management, eg:
    • it removed incentive to defer asset maintenance (by reporting depreciation)
    • it removed cash accounting's bias against capital expenditure
Comprehensive information
  • It consolidated all controlled entities into the financial reports

Transaction neutrality

  • Irrespective of whether an entity is for-profit or not-for-profit
  • And whether it is in the private or public sector
  • Similar transactions should be accounted for in the same way
  • Unless there is a good reason to account for them differently


  • Entities in different sectors can be compared
  • Provides a rigour for the AASB's decisions, based on high-quality global Standards
  • Accountants are mobile between sectors
  • Users can understand government accounts without specialist public sector knowledge


  • IFRSs are written for for-profit entities
  • IFRSs do not deal well with
    • Non-exchange transactions (eg grants, donations, taxes)
    • Non-cash generating activities (eg heritage assets, infrastructure assets)
  • Consolidating GBEs into the Government's financial statements might entail aligning accounting policies

Backing for adoption of AASB Standards

  • Legal requirements
    • Commonwealth Government
  • Finance Minister's Orders
    • States and Territories
  • issue orders/regulations requiring compliance
    • Local governments
  • are subject to State and Territory requirements to comply
  • Professional requirements

AASB's approach

AASB's approach
IFRS Topics
  • Adopt IFRSs word-for-word
  • Add 'Aus' paragraphs for the public/NFP sector where necessary
Other topics
  • Issue Australian standards for public sector topics
  • eg administered items; budgetary reporting
IPSASB topics
  • Consider as basis for 'Aus' paragraphs or separate standards
  • eg service concession arrangements
IPSASB topics
  • Sometimes not suitable for Australia, if too different from IFRS
  • eg control; revenue recognition

AASB's relationship with IPSASB

  • An AASB staff member is Technical Advisor to Australia's representative
  • An AASB staff member attends all IPSASB meetings
  • AASB invites constituent comments on IPSASB proposals
  • AASB comments on all IPSASB Consultative Documents
  • Participant in Conceptual Framework Standard Setters Advisory Panel

Some current public sector issues

  • Control (adding public sector guidance to AASB 10, which incorporates IFRS 10)
  • Revenue recognition  (adding public sector guidance to IASB draft Standard)
  • Service concession arrangements – Grantor (adapting IPSAS 32 to Australian circumstances)
  • Related party disclosures (adding public sector guidance to AASB 124, which incorporates IAS 24)
  • Emission trading schemes – Government perspective (consider need for public sector guidance)
  • Disaggregated disclosures (consider nature of government departments relative to whole of government)
  • Service performance reporting (consider users' need for non-financial information)