IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition

2 Accounting Issues Relating to Public Sector Interventions

The global financial crisis has raised a number of issues that had to be considered thoroughly in the analysis and development of accounting standards. In the light of the IPSASB's strategic aim to provide a complete set of accounting standards, a discussion started on how the existing and future IPSASB's pronouncements might address relevant accounting issues relating to the different kinds of governmental interventions.

The recurrent use of the term “transparency” in the context of the discussion underlines that it represents one of the key values in financial reporting by governments. Transparency raises the issue whether general purpose financial statements or general purpose financial reports must include all information necessary for accountability purposes. This leads to the question whether the current IPSASB's pronouncements give sufficient guidance on financial reporting of governmental interventions in order to achieve accountability. Besides the Recommended Practice Guideline, Reporting on the Long-Term Sustainability of a Public Sector Entity's Finances the current focus of the IPSASB's pronouncements is on General Purpose Financial Statements.

2.1 Accounting for recapitalization or investments

As a result of the financial crisis, public sector entities became shareholders in financial institutions and other corporate entities. In some cases, financial institutions and other corporate entities had even been ...