IPSASB Proposals for Financial Instruments

Not-for-profit Public Sector

These proposals are relevant for Tier 1 and Tier 2 public benefit entities (PBEs)—both not-for-profit and public sector entities.

The International Public Sector Accounting Standards Board (IPSASB) has published for comment ED 62 Financial Instruments (ED 62). The ED is based on IFRS 9 Financial Instruments,with public sector-specific modifications and guidance.


In January 2017, the New Zealand Accounting Standards Board (NZASB) issued PBE IFRS 9 Financial Instruments with an effective date of annual periods beginning on or after 1 January 2021.

PBE IFRS 9 is based on IFRS 9 and includes the public sector-specific requirements from PBE IPSAS 29 Financial Instruments: Recognition and Measurement, for example, accounting for concessionary loans. 

PBE IFRS 9 was developed and issued by the NZASB as an interim standard in advance of the IPSASB developing an IPSAS based on IFRS 9. The NZASB issued PBE IFRS 9 to address concerns that an international public sector standard (IPSAS) based on IFRS 9 would not be issued before NZ IFRS 9 Financial Instruments became effective, which would result in groups with both for-profit entities and public benefit entities having different accounting requirements for financial instruments.

Once the IPSASB issues a standard based on IFRS 9, the NZASB would apply its Policy Approach to Developing the Suite of PBE Standards. This has a rebuttable presumption that the NZASB will adopt a new or amended IPSAS. In this case PBE IFRS 9 would be superseded.

ED 62 Financial Instruments

This will replace IPSAS 29 Financial Instruments: Recognition and Measurement.

The IPSASB considers that it will improve the requirements in IPSAS 29 by introducing:

  • simplified classification and measurement requirements for financial assets;
  • a forward-looking impairment model; and
  • a flexible hedge accounting model.

In addition, ED 62 includes public sector-specific guidance on financial guarantees issued through non‑exchange transactions and concessionary loans and examples illustrating how to apply those principles in ED 62 to transactions that are unique to the public sector.

We encourage you to read the ED 62 and provide your comments on the proposals.

If you apply PBE Standards, here is your opportunity to comment on the proposals in this Exposure Draft.

Prior to adopting a PBE Standard based on ED 62, the NZASB would also consult further via a domestic Exposure Draft that includes any proposed changes to the forthcoming IPSAS, including any reduced disclosure regime proposals.

Commenting on the proposal(s)

If you are aware of New Zealand-specific matters you want the NZASB to consider, send your comments—both formal or informal—by 13 November 2017 to the NZASB as follows:

Either by post to the:

Chief Executive
External Reporting Board
PO Box 11250
Manners Street Central

OR by email to submissions@xrb.govt.nz.

We also encourage you to send comments directly to the IPSASB by 31 December 2017, with a copy to the NZASB. These can either be the same as or independent of your comments sent to the NZASB. Your comments can be made electronically to the IPSASB website (www.ifac.org) using the “Submit a Comment” link.  First-time users must register with IFAC to submit electronically.

Please also note:

  • We would appreciate receiving a copy of your comments in electronic form (preferably Microsoft Word format).  This helps us more efficiently collate and analyse comments. Please also specify the exposure draft number and title in your electronic file. 
  • Tell us on whose behalf you are making the comments (for example on behalf a group or an entity).
  • We intend publishing all comments on the XRB website, unless they may be defamatory. If you have any objection to this, we will not publish them. However, they will remain subject to the Official Information Act 1982 and, therefore, may be released in part or in full. The Privacy Act 1993 also applies.
  • If you have an objection to the release of any information contained in your comments, we would appreciate you identifying the parts of your comments to be withheld, and the grounds under the Official Information Act 1982 for doing so (e.g. that it would be likely to unfairly prejudice the commercial position of the person providing the information).