Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p89
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 89/91)
Character Range: 251492–254354

(Taxes and Transfers).

BC178        The Board observed IPSAS 9 and IPSAS 11 are based on the principles of superseded IAS 18 Revenue (incorporated into AASB 118 Revenue) and IAS 11 Construction Contracts (incorporated into AASB 111 Construction Contracts), rather than those of IFRS 15 Revenue from Contracts with Customers (incorporated into AASB 15).  In addition, it noted that IPSAS 23 was issued prior to the issue of IFRS 15.  The requirements of IPSAS 23 were therefore not necessarily developed with reference to similar principles of IFRS 15.  The Board concluded these IPSASB Standards do not provide an appropriate basis for financial reporting in the Australian environment, particularly because they require different income recognition depending on whether the transaction is an exchange transaction or a non-exchange transaction, and IPSAS 9 and IPSAS 11 adopt a 'risks and rewards' approach that is not consistent with the performance obligation approach in IFRS 15.

BC179        The Board further noted the IPSASB is currently developing proposals for the accounting of non-exchange expenses.  The IPSASB is also developing a related project on revenue, which uses IFRS 15 as a starting point and looks at the type of modifications that would be required for IFRS 15 to be suitable for application to a wide range of revenue transactions in the public sector.  This may result in revisions to, or a replacement of, the existing revenue recognition requirements.  The Board noted that the issues to be considered under the IPSASB revenue project could result in outcomes that are similar to what the Board had achieved in finalising AASB 1058.  The IPSASB expects to complete these projects in 2019.  The Board noted that it would consider undertaking a project to review the accounting specified by AASB 1058 following the completion of these projects.

BC180        The Board noted the following differences between AASB 1058 and IPSAS 9, IPSAS 11 and IPSAS 23 arise as a result of its decisions in finalising AASB 1058:

(a)                    recognition criteria – the Board decided not to specify asset recognition criteria in AASB 1058, but to require an entity to recognise assets as specified by other Australian Accounting Standards (other than in respect of volunteer services).  In contrast, IPSAS 23 specifies that an asset is recognised where it is probable that future economic benefits or service potential will flow to the entity and its fair value can be measured reliably;

(b)                   fair value of an asset – the consequential amendments arising from AASB 1058 require various assets acquired for consideration that is significantly less than the fair value of the asset principally to enable the entity to further its objectives, to be initially measured at fair value in accordance with AASB 13.  AASB 1058 also