Interpretation and Application of IPSAS

4 The IPSASB Conceptual Framework and Key Accrual Accounting Concepts

This chapter focuses on explaining the key accrual accounting concepts embedded within the IPSASB Conceptual Framework. Principles-based accrual accounting standards, such as IPSAS, are underpinned by a conceptual framework that provides the broad principles on which the accounting standards can be built. An understanding of the Conceptual Framework is essential for anyone who wants to understand the basis of the requirements in IPSAS. In addition, when developing IPSAS-compliant accounting policies, an understanding of the Framework is necessary.

Chapter 4 is the first of the 15 chapters (Chapter 4 to Chapter 18) that consider the essential requirements of the accrual-based IPSAS. It should be noted that these chapters are supported by question and answer boxes, IPSAS financial reporting in practice highlights, and explanations as well as mini-cases, where relevant throughout the chapters. However, not all chapters will include all types of illustrations.

Principles-based Accrual Accounting

Accrual-based IPSAS embeds what is referred to as the principles-based approach. The principles-based approach is set out within the IPSASB Conceptual Framework.

Concept highlight: Principles- vs. rules-based accounting

Principles-based accounting is often discussed in comparison with rules-based accounting standards. To make the contrast US accounting standards are described as rules based. In the US the Federal ...