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TRANSCRIPT
October 2017
Institute of Certified Public Accountants in RwandaEnhancing Public Sector
Performance and
Compliance:
New developments
under IPSAS - Accrual
based approach in Public
sector
2
Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
Agenda IPSAS Overview
New Developments under IPSAS
The Need for Accruals accounting in public sector and benefits
The journey to IPSAS Accrual
Where are we in Rwanda and the region?
3
Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
IPSAS Overview1. Accrual IPSAS
Issued by IPSASB and based on IFRS and applicable to public
sector entities
Accruals accounting guided by IPSAS 1- IPSAS 40
IPSAS 33 guides First time adoption- effective 1 January 2017
IPSAS 33 provides exemptions for 3 years after adopting IPSAS
3. Cash accounting is is allowed under IPSAS Cash basis
4
Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
New Developments under IPSAS Accrual1. New standards
The Applicability of IPSAS- definition of public sector entities
covered by IPSAS clarified and wording on GBEs removed.
IPSAS are for a public sector entities which meet the following:
1.Responsible for delivery of services to benefit public/redistribute income
or wealth
2.Mainly finances activities by means of taxes and/or transfers from other
levels of government, social contributions, fees or debt
3.Do not have primary objective to make profit.
IPSAS 40- Public sector combinations- New standard effective 1
Jan 2019. Based on IFRS 3. Classifies public sector combinations as
either amalgamations or acquisitions
IPSAS 39- Employee benefits-Standard was revised to reflect
December 2015 amendments to IAS 19. Effective 1 Jan 2018
(replacing IPSAS 25)
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Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
IPSAS 40-Public Sector combinationsAccounting for amalgamation- Modified pooling of interests method
Identify the resulting entity. It is resulting entity that accounts for amalgamation
Determine the amalgamation date
Recognise and measure the identifiable assets received and liabilities
assumed and any non-controlling interests in the combining operations,
consistent with other IPSAS (carrying amounts in financial statements)
Recognise and measure components of net assets/equity and any
amalgamation adjustments, either as a single opening balance or separate
components of net assets/equity.
No goodwill arises for amalgamation
Accounting for acquisitions- Acquisition method of accounting
Acquirer accounts for the acquisition using Acquisition method of accounting
Identify the acquirer and acquisition date
Recognise and measure identifiable assets acquired and liabilities assumed
and non-controlling interests in the acquired operation (at fair value)
Recognise and measure goodwill (gain or loss from the acquisition)
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Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
IPSAS 39-Employee benefits In January 2016, IPSASB issued ED 59 to make amendments to IPSAS
25 to align it with amendments made on IAS 19 in the 2011-2015 period
IPSAS 39 adopted the guidance of IAS 19, except as follows:
1. IPSAS 39 provides additional guidance on public sector bonus plans
2. Flexibility on discount rate in IPSAS 39 (IAS 19 requires high yield
bonds/ IPSAS 39 generally considers value for money and discount
rate to be disclosed)
3. IPSAS 39 recognises re-measurements of net defined liability (asset)
in net assets/equity. IAS 19 recognises them in other comprehensive
income.
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Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
Other Developments under IPSAS1. Exposure drafts
ED 62: Financial instruments- Issued on 24 August 2017. Will address Public
Sector specific financial instruments and convergence with IFRS 9. Comments
due by 31 December 2017
ED 61- Amendments to financial reporting under cash accounting
Consultative papers issued by IPSASB
2. Consultative paper on Revenue and non exchange expenses- This
Consultation Paper discusses two potential approaches for recognition of
revenue for transactions that have performance obligations. Comments due by
15 Jan 2018
3. Consultative paper on Financial reporting for heritage in public sector-
seeks to provide clarity. IPSAS 17 includes guidance on accounting for heritage
assets but does not require entities to apply IPSAS 17 measurement
requirements. Issued 11/4/2017. Comments due 30 Sep 2017.
4. Consultative paper on Recognition and measurement of social benefits-
IPSAS Board to produce an ED. Comments due on 31 Jan 2016.
IPSASB Projects
5. Emissions trading schemes: To develop a standard(s) that provides
requirements applicable to both administrators and participants in Emissions
Trading Schemes (ETS)
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Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
The need for IPSAS accruals and benefits
9
Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
The journey to IPSAS Accrual IPSAS 39 effective 1 January 2018
IPSAS 40 effective 1 January 2019
10
Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
The journey to IPSAS Accrual-CTD
Accounting and regulatory changes
Resources & Time to transition to Accrual
People and change
System and Processes
Application of standards
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Document Classification: KPMG Public
© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative ("KPMG International"), a Swiss entity. All rights reserved.
Where are we in Rwanda and the region?1. Rwanda: Started off with modified cash basis in 2006. Now
developing a detailed blue print for migration to full IPSAS accruals
by 2022.
2. Tanzania- successfully moved to fully accruals since 2014. Only
PPE pending incorporation in financial statements by 30 June
2016. Compiling fixed assets register was ongoing then.
3. Uganda: Using modified cash basis but intends to adopt full
IPSAS accrual by 2020 (Accountant General presentation in May
2017)
4. Kenya: Using cash basis of accounting with detailed disclosures of
non- cash information since 2014. Set up Public Sector Accounting
Standards Board in 2014 to oversee public sector accounting.
(Presentation by head of PSASB secretariat Kenya-April 2017).
Planning for full transition to accrual (timeline not yet known)
5. Burundi: Information on adoption of IPSAS not published.
6. South Sudan: Adopted IPSAS cash basis of accounting.
Transition plan to full IPSAS Accruals not published.
Thank you!
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© 2017 KPMG Rwanda, a Rwandan Limited Liability Company is a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss
entity. All rights reserved.