Interpretation and Application of IPSAS

11 Revenues and Expenses

This chapter will consider revenue and expense recognition under IPSAS. Public sector entities can derive revenue from exchange and non-exchange transactions (see Figure 11.1). IPSAS 9 Revenue from Exchange Transactions is the current standard to be applied when determining how and when revenue should be recognized for exchange transactions. IPSAS 9 sets the principles for the recognition of revenue arising from the sale of goods and the rendering of services. IPSAS 23 Revenue from Non-Exchange Transactions (taxes and transfers) prescribes the requirements for accounting and reporting for revenue arising from non-exchange transactions. Common sources of non-exchange revenue in the public sector include taxes and transfers. The difference between exchange and non-exchange transactions is the substance rather than the form of the transaction. It should also be noted that within the public sector, revenue transactions can include both exchange and non-exchange components. IPSAS 11 on Construction Contracts sets out the principles for the recognition of revenue arising from long-term construction contracts. In order to cover the accounting for revenue-generating transactions, this chapter will include IPSAS 23, IPSAS 9, and IPSAS 11. The IPSASB Conceptual Framework and IPSAS 1 provide the definition of revenue¹ (see Figure 11.1) and expenses.

Figure 11.1 ...