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IPSAS Explained: A Summary of International Public Sector Accounting Standards, 2nd Edition by Thomas Muller-Marques Berger

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IPSAS ED 46: Recommended Practice Guideline: Reporting on the Long-Term Sustainability of a Public Sector Entity's Finances

Preliminary remarks

The development of guidance about reporting on the long-term sustainability of governments arises primarily from the IPSASB's project on accounting for social policy obligations which originally started in 2002. The IPSASB issued two major pronouncements as part of this project: ED 34, Social Benefits: Disclosure of Cash Transfers to Individuals or Households as well as a Consultation Paper, Social Benefits: Issues in Recognition and Measurement in March 2008. Respondents to these two pronouncements were of the view that financial statements cannot convey to users sufficient information about the long-term financial implications of governmental programs providing social benefits. Based on these results the IPSASB decided to initiate a project on long-term fiscal sustainability of governments.

During this project the Board decided not to issue a standard on reporting on the long-term sustainability of a public sector entity's finances but to develop non-mandatory guidelines. This decision was the rationale for the IPSASB to come up with the term “Recommended Practice Guideline” (RPG). The issuance of authoritative guidance is seen as premature as reporting on long-term fiscal sustainability in the GPFRs is an area where practice is developing and the IPSASB wants to encourage innovative and flexible approaches (see ED 46.BC6).

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