IPSAS 41 released to improve financial instruments reporting

Aug 17, 2018
The International Public Sector Accounting Standards Board (IPSASB) has released IPSAS 41, Financial Instruments.

IPSAS 41 substantially improves the relevance of information for financial assets and financial liabilities. It will replace IPSAS 29, Financial Instruments: Recognition and Measurement, and improves that Standard’s requirements by introducing:
 
  • Simplified classification and measurement requirements for financial assets;
  • A forward-looking impairment model; and
  • A flexible hedge accounting model.
"The significance of government debt to global capital markets can often be ignored," said IPSASB Chair, Ian Carruthers. "IPSAS 41 is a major step forward in accounting for financial instruments, and responds to the problems with IPSAS 29 that were exposed by the global financial crisis. It provides principles that appropriately reflect the economics of transactions involving financial instruments, replacing the more rules-based approach of its predecessor."

IPSAS 41 is based on International Financial Reporting Standard (IFRS) 9, Financial Instruments, developed by the International Accounting Standards Board (IASB), but it also includes public sector-specific guidance and illustrative examples on:
 
  • Financial guarantees issued through non-exchange transactions;
  • Concessionary loans;
  • Equity instruments arising from non-exchange transactions; and
  • Fair value measurement.
Source: IPSASB.