IPSASB Measurement EDs Summary

ED 76

Conceptual Framework Update: Chapter 7, Measurement of Assets and Liabilities in Financial Statements

ED 76 proposes to update the measurement bases described in Chapter 7 of the IPSASB Conceptual Framework. Measurement bases are the approaches to measuring assets and liabilities.

ED 76 proposes to:

• • replace ‘market value’ with ‘fair value’ and ‘current operational value’ (COV). COV is a new concept; and
  • remove the descriptions of some measurement bases, such as ‘assumption price’, described in Chapter 7, because they are not commonly used in IPSAS.

Who should read ED 76?

In most cases entities can apply standards without having to read the Conceptual Framework.

Read ED 76 if you:

• use Chapter 7 of the PBE Conceptual Framework; or
• want to know why the IPSASB is proposing to change the measurement bases in the Conceptual Framework and standards.

ED 77

Measurement

ED 77 proposes to create a new IPSAS which explains how to apply the measurement bases required by standards to assets and liabilities. ED 77 describes four measurement bases:

• • historical cost;
  • fair value (aligned with IFRS 13 Fair Value Measurement),
  • current operational value (a new approach for assets); and
  • cost of fulfilment.

ED 77 reflects the changes to the Conceptual Framework set out in ED 76.

Who should read ED 77?

Read ED 77 (and ED 78) if you:

• • think there should be an IPSAS equivalent to IFRS 13 Fair Value Measurement;
  • revalue property, plant and equipment;
  • revalue property, plant and equipment held with the primary objective of service delivery (particularly if you use depreciated replacement cost); and
  • hold assets with restrictions over use or sale.

ED 78

Property, Plant and Equipment

ED 78 proposes to update IPSAS 17 Property, Plant and Equipment and bring in new requirements for revalued assets. Currently entities revaluing property, plant and equipment are required to use fair value. The ED would require entities revaluing such assets to choose either fair value or current operational value (COV), based on the entity’s primary purpose for holding the assets.

Fair value would be defined the same way as fair value in IFRS 13 Fair Value Measurement. Fair value would have an explicit exit price and market participant focus.

COV is a new approach for revaluing assets held with the primary objective of service delivery. Unlike fair value, COV would have an entity-specific focus. The detailed guidance about how to apply COV is set out in ED 77.

ED 78 also proposes some additional guidance on heritage and infrastructure assets.

Who should read ED 78?

Read ED 78 (and ED 77) if:

• revalue property, plant and equipment;
• revalue property, plant and equipment held with the primary objective of service delivery (particularly if you use depreciated replacement cost);
• think some more guidance on heritage and infrastructure assets would be useful; and
• want to check out the proposed new disclosure requirements for revalued assets.

ED 79

Non-current Assets Held for Sale and Discontinued Operations

ED 79 proposes a new IPSAS based on IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Although this would fill a gap in IPSAS, we already have a PBE Standard based on IFRS 5 . 

Who should read ED 79?

Read ED 79 if you have applied PBE IFRS 5 Non-current Assets Held for Sale and Discontinued Operations and would like to comment on its requirements.