Australian Government
Australian Accounting Standards Board
AASB ITC 45 invites comments on the IPSASB Exposure Drafts ED 76 and ED 77 on public sector measurement by 3 August 2021.
ED 76 and ED 77
ED 76 Conceptual Framework Update: Chapter 7, Measurement of Assets and Liabilities in Financial Statements proposes to revise the measurement bases in the IPSASB’s Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities. Amongst other proposals, ED 76 introduces two new bases for measuring an asset’s current value (fair value and current operational value) as well as removing some measurement bases.
ED 77 Measurement, which is a proposed new Standard, proposes definitions and initial and subsequent measurement requirements for a number of measurement bases, including fair value and current operational value.
Fair value vs current operational value
ED 76 and ED 77 propose that the fair value measurement basis (the same as in AASB 13/IFRS 13 Fair Value Measurement) would be inappropriate for measuring the current value of operational assets (i.e. non-financial assets held primarily for their service potential). Instead, the IPSASB is proposing a different measurement basis – current operational value – for measuring the current value of operational assets held by not-for-profit public sector entities.
In contrast, most stakeholders who responded to AASB outreach about AASB 13/IFRS 13 noted their view that fair value is appropriate for measuring the current value of operational assets held by Australian public sector entities, but guidance is needed to clarify some fair value application issues.
AASB Specific Matters for Comment (SMCs)
Therefore, ITC 45 includes AASB Specific Matters for Comment to obtain views of Australian stakeholders about the IPSASB’s proposed current operational value measurement basis for the current value measurement of operational assets.
ITC 45 also includes a specific question about the costs and benefits for Australian not-for-profit entities of adopting the IPSASB’s proposed current operational value measurement basis, compared with the costs and benefits of either:
• continuing current practice in applying AASB 13; or
• possibly changing practice if – through due process – the AASB’s tentative decisions to date in its Fair Value Measurement for Not-for-Profit Entities project (where different from current practice) were to come into effect.
The AASB will consider comments on this ITC and the effect of cross-cutting projects of the AASB and international standard-setters, including the IPSASB’s Measurement project, before proposing any amendments to AASB 13.