This two-day course provides an in-depth review of the current IPSAS accounting and reporting requirements for financial instruments. IPSAS 28-30 on financial instruments provide a coherent set of requirements that enhance accountability for financial instruments in the public sector.

The International Public Sector Accounting Standards Board (IPSASB) has published three International Public Sector Accounting Standards that cover most aspects of the accounting for and disclosure of financial instruments by public sector entities: IPSAS 28, Financial Instruments: Presentation; IPSAS 29, Financial Instruments: Recognition and Measurement; and IPSAS 30, Financial Instruments: Disclosures.

The three IPSASs are primarily drawn from the International Accounting Standards Board’s (IASB) standards, but address a number of public sector-specific issues, including financial guarantee contracts provided for nil or nominal consideration and concessionary loans. This course provides an explanation of the requirements for accounting, reporting and disclosures for financial instruments in clear, simple language, illustrated with financial statements and other real-world examples.

The course considers both requirements that will be applicable to most public entities; such as identifying which assets and liabilities and off balance sheet items are in scope of the standards and their recognition and measurement, as well as considering more advanced issues; such as the use of derivatives and hedge accounting. It also examines the extensive disclosure requirements and how these can be practically implemented considering the scale and complexity of different reporting entities.

Some transactions which are unique to the public sector are not dealt with in IPSAS 28-30, such as currency in circulation, monetary gold and IMF quota subscriptions and special drawing rights (SDRs). IPSASB has a separate project to provide guidance to fill this gap. In July 2016 it published a Consultation Paper, Public Sector Specific Financial Instruments.

The IASB replaced IAS 39, its equivalent standard to IPSAS 39, with IFRS 9 for 2018. In line with its practice, where appropriate, of maintaining consistency with IFRSs, the IPSASB published IPSAS 41 in August 2018. This standard will replace IPSAS 29 from 1 January 2022. It is closely based on IFRS 9 but also includes public sector-specific guidance and illustrative examples.

This program answers questions such as:

  • What are financial instruments?
  • How should financial instruments in the public sector be classified and measured?
  • How to measure the fair value of financial instruments?
  • How to account for and disclose concessionary loans?
  • What are the requirements for hedge accounting?
  • What are the hedge accounting documentation requirements?
  • What are the principal similarities and differences between IPSAS and IFRS in the area of financial instruments?
  • What aspects of financial instruments held by public sector entities are not currently covered by the Standards?
  • What will be the impact of IPSAS 41 and other possible changes in IPSAS?

Learning Objectives:

  • Apply the principles for presenting financial instruments as liabilities or equity
  • Comply with the principles for offsetting financial assets and financial liabilities
  • Determine how to recognize and measure financial assets and financial liabilities
  • Analyze the principles of accounting for the buying or selling non-financial items
  • Evaluate the significance of the financial instruments in the entity's financial position and performance
  • Understand the uses of derivatives to manage risk
  • Determine whether to use hedge accounting
  • Understand the nature and extent of risks arising from financial instruments to which the entity is exposed and how those risks are managed
  • Learn the changes to accounting for financial instruments required by IPSAS 41 and how to implement them

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Skill Level: Beginner