IPSASB IPSAS 33 First Time Adoption of Accrual Basis IPSASs

Final Pronouncement
Exposure Draft
January 2015 October 2011
Comments due: February 29, 2012 IPSAS 33
International Public Sector Accounting Standard™
First-time Adoption of Accrual

Basis International Public
Sector Accounting Standards
(IPSASs)
This document was developed and approved by the International Public Sector Accounting Standards
Board® (IPSASB®).
The objective of the IPSASB is to serve the public interest by setting high-quality public sector accounting
standards and by facilitating the adoption and implementation of these, thereby enhancing the quality and
consistency of practice throughout the world and strengthening the transparency and accountability of
public sector finances.
In meeting this objective the IPSASB sets International Public Sector Accounting Standards™ (IPSAS™)
and Recommended Practice Guidelines (RPGs) for use by public sector entities, including national,
regional, and local governments, and related governmental agencies.
IPSAS relate to the general purpose financial statements (financial statements) and are authoritative.
RPGs are pronouncements that provide guidance on good practice in preparing general purpose financial
reports (GPFRs) that are not financial statements. Unlike IPSAS RPGs do not establish requirements.
Currently all pronouncements relating to GPFRs that are not financial statements are RPGs. RPGs do not
provide guidance on the level of assurance (if any) to which information should be subjected.
The structures and processes that support the operations of the IPSASB® are facilitated by the
International Federation of Accountants® (IFAC®).
Copyright © January 2015 by the International Federation of Accountants® (IFAC®). For copyright,
trademark, and permissions information, please see page 113.
IPSAS 33 —FIRST-TIME ADOPTION OF ACCRUAL BASIS
INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS
(IPSASs)
CONTENTS
Paragraph
Objective ............................................................................................................................... 1
Scope .................................................................................................................................... 2–8
Definitions.............................................................................................................................. 9–14
Date of Adoption of IPSASs ......................................................................................... 10

First IPSAS Financial Statements ................................................................................ 11
Previous Basis of Accounting ....................................................................................... 12
Transitional IPSAS Financial Statements .................................................................... 13–14
Recognition and Measurement ............................................................................................. 15–22
Accounting Policies ...................................................................................................... 15
Exceptions to the Retrospective Application of IPSASs ....................................................... 16–22
Fair Presentation and Compliance with IPSASs ................................................................... 23–26
Exemptions that Affect Fair Presentation and Compliance with Accrual Basis IPSASs
During the Period of Transition ............................................................................................. 33–62
Three Year Transitional Relief Period for the Recognition and/or Measurement of
Assets and/or Liabilities ................................................................................................ 36–62
Exemptions that Do Not Affect Fair Presentation and Compliance with Accrual Basis
IPSASs During the Period of Adoption ................................................................................. 63–134
Using Deemed Cost to Measure Assets and/or Liabilities ........................................... 64–70
Using Deemed Cost to Measure Assets Acquired Through a Non-Exchange Transaction 71

Using Deemed Cost for Investments in Controlled Entities, Joint Ventures and
Associates (IPSAS 34) ................................................................................................ 72–73
Date at which Deemed Cost can be Determined ......................................................... 74–76
IPSAS 1, Presentation of Financial Statements ........................................................... 77–84
IPSAS 4, The Effects of Changes in Foreign Exchange Rates ................................... 85–87
IPSAS 5, Borrowing Costs ........................................................................................... 88–90

IPSAS 10, Financial Reporting in Hyperinflationary Economies .................................. 91–94
IPSAS 13, Leases ........................................................................................................ 95–96
IPSAS 18, Segment Reporting ..................................................................................... 97

IPSAS 21, Impairment of Non-Cash-Generating Assets ............................................. 98–100
FIRST-TIME ADOPTION OF ACCRUAL BASIS IPSASS
IPSAS 25, Employee Benefits ...................................................................................... 101–107
IPSAS 26, Impairment of Cash-Generating Assets ..................................................... 108–110
IPSAS 28, Financial Instruments: Presentation ........................................................... 111–112
IPSAS 29, Financial Instruments: Recognition and Measurement .............................. 113–122
IPSAS 30, Financial Instruments: Disclosures ............................................................. 123–124
IPSAS 31, Intangible Assets ........................................................................................ 125–126
IPSAS 32, Service Concession Arrangements ............................................................ 127–128
IPSAS 34, Separate Financial Statements, IPSAS 35, Consolidated Financial

Statements and IPSAS 36, Investments in Associates and Joint Ventures ................. 129–130
IPSAS 35, Consolidated Financial Statements ............................................................ 131
IPSAS 37, Joint Arrangements ..................................................................................... 132–134
Disclosures ............................................................................................................................ 135-152
Explanation of Transition to IPSASs............................................................................. 141
Reconciliations ............................................................................................................. 142-147
Disclosures where Deemed Cost is Used for Inventory, Investment Property,

Property, Plant and Equipment, Intangible Assets, Financial Instruments or Service
Concession Assets ....................................................................................................... 148
Disclosures Where Deemed Cost is Used for Investments in Controlled Entities,

Joint Ventures or Associates ........................................................................................ 149–150
Exemptions from Disclosure Requirements in IPSASs During the Period of Transition 151–152
Transitional Provisions .......................................................................................................... 153

Effective Date ........................................................................................................................ 154
Appendix A
Basis for Conclusions
Implementation Guidance
International Public Sector Accounting Standard 33, First-time Adoption of Accrual Basis
International Public Sector Accounting Standards (IPSASs) is set out in paragraphs 1–154. All the
paragraphs have equal authority. IPSAS 33 should be read in the context of its objective, the Basis
for Conclusions, and the Preface to International Public Sector Accounting Standards. IPSAS 3,
Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting
and applying accounting policies in the absence of explicit guidance.
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Objective
1. The objective of this Standard is to provide guidance to a first-time adopter that prepares and
presents financial statements following the adoption of accrual basis IPSASs, in order to present
high quality information:
(a) That provides transparent reporting about a first-time adopter’s transition to accrual basis
IPSASs;
(b) That provides a suitable starting point for accounting in accordance with accrual basis
IPSASs irrespective of the basis of accounting the first-time adopter has used prior to the
date of adoption; and
(c) Where the benefits are expected to exceed the costs.
Scope
2. An entity shall apply this IPSAS when it prepares and presents its annual financial
statements on the adoption of, and during the transition to, accrual basis IPSASs.
3. This IPSAS applies when an entity first adopts accrual basis IPSASs and during the transitional
period allowed in this IPSAS. It does not apply when, for example, a first-time adopter:
(a) Stops presenting financial statements in accordance with prescribed requirements, having
previously presented them as well as another set of financial statements that contained an
explicit and unreserved statement of compliance with accrual basis IPSASs;
(b) Presented financial statements in the previous reporting period in accordance with prescribed
requirements and those financial statements contained an explicit and unreserved statement
of compliance with accrual basis IPSASs; or
(c) Presented financial statements in the previous reporting period that contained an explicit and
unreserved statement of compliance with accrual basis IPSASs, even if the auditors modified
their audit report on those financial statements.
4. This Standard shall be applied from the date on which a first-time adopter adopts accrual basis
IPSASs and during the period of transition. This Standard permits a first-time adopter to apply
transitional exemptions and provisions that may impact fair presentation. Where these transitional
exemptions and provisions are applied, a first-time adopter is required to disclose information about
the transitional exemptions and provisions adopted, and progress towards fair presentation and
compliance with accrual basis IPSASs.
5. At the end of the transitional period a first-time adopter must comply with the recognition,
measurement, presentation and disclosure requirements in the other accrual basis IPSAS in order
to assert compliance with accrual basis IPSASs as required in IPSAS 1, Presentation of Financial
Statements.
6. This IPSAS does not apply to changes in accounting policies made by an entity that already applies
IPSASs. Such changes are the subject of:
(a) Requirements on changes in accounting policies in IPSAS 3, Accounting Policies, Changes

in Accounting Estimates and Errors; and
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(b) Specific transitional requirements in other IPSASs. The transitional provisions in other
IPSASs apply only to changes in accounting policies made by an entity that already applies
accrual basis IPSASs; they do not apply to a first-time adopter’s transition to IPSASs, except
as specified in this IPSAS.
7. This Standard applies to all public sector entities other than Government Business
Enterprises.
8. The Preface to International Public Sector Accounting Standards issued by the IPSASB explains
that Government Business Enterprises (GBEs) apply IFRSs issued by the IASB. GBEs are defined
in IPSAS 1, Presentation of Financial Statements.
Definitions
9. The following terms are used in this Standard with the meanings specified:
Date of adoption of IPSASs is the date an entity adopts accrual basis IPSASs for the first
time, and is the start of the reporting period in which the first-time adopter adopts accrual
basis IPSASs and for which the entity presents its first transitional IPSAS financial
statements or its first IPSAS financial statements.
Deemed cost is an amount used as a surrogate for acquisition cost or depreciated cost at a
given date.
First IPSAS financial statements are the first annual financial statements in which an entity
complies with the accrual basis IPSASs and can make an explicit and unreserved statement
of compliance with those IPSASs because it adopted one or more of the transitional
exemptions in this IPSAS that do not affect the fair presentation of the financial statements
and its ability to assert compliance with accrual basis IPSASs.
First-time adopter is an entity that adopts accrual basis IPSASs for the first time and
presents its first transitional IPSAS financial statements or its first IPSAS financial
statements.
Opening statement of financial position is a first-time adopter’s statement of financial

position at the date of adoption of IPSASs.
Period of transition is the period during which a first-time adopter applies one or more of the
exemptions in this IPSAS before it complies with the accrual basis IPSASs, and before it is
able to make an explicit and unreserved statement of such compliance with IPSASs.
Previous basis of accounting is the basis of accounting that a first-time adopter used
immediately before adopting accrual basis IPSASs.
Transitional IPSAS financial statements are the financial statements prepared in accordance
with this IPSAS where a first-time adopter cannot make an explicit and unreserved
statement of compliance with other IPSASs because it adopted one or more of the
transitional exemptions in this IPSAS that affect the fair presentation of the financial
statements and its ability to assert compliance with accrual basis IPSASs.
Terms defined in other IPSASs are used in this Standard with the same meaning as in those
Standards, and are reproduced in the Glossary of Defined Terms published separately.
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Date of Adoption of IPSASs
10. The date of adoption of IPSASs is the date that an entity adopts accrual basis IPSASs for the first
time. It is the start of the reporting period in which the first-time adopter adopts accrual basis
IPSASs and for which it presents its first transitional IPSAS financial statements or its first IPSAS
financial statements. If a first-time adopter takes advantage of the exemptions in this IPSASs that
affect fair presentation and compliance with accrual basis IPSASs (see paragraphs 36–62) in
producing its first transitional IPSAS financial statements, it can only make an explicit and
unreserved statement of compliance with accrual basis IPSASs when the exemptions that provided
the relief have expired, and/or when the relevant items are recognized, measured and/or the
relevant information is presented and/or disclosed in the financial statements in accordance with
the applicable IPSASs (whichever is earlier). Financial statements shall not be described as
complying with IPSASs unless they comply with all the requirements of all the applicable IPSASs.
First IPSAS Financial Statements
11. An entity’s first IPSAS financial statements are the first annual financial statements in which the
first-time adopter can make an explicit and unreserved statement in those financial statements of
compliance with accrual basis IPSASs. If a first-time adopter does not adopt the exemptions in this
IPSAS that affect fair presentation and compliance with accrual basis IPSASs (see paragraphs 36–
62), its first financial statements following the adoption of accrual basis IPSASs will also be its first
IPSAS financial statements.
Previous Basis of Accounting
12. The previous basis of accounting is the basis of accounting that a first-time adopter used
immediately before adopting accrual basis IPSASs. This might be a cash basis of accounting, an
accrual basis of accounting, a modified version of either a cash basis or an accrual basis of
accounting, or another prescribed basis.
Transitional IPSAS Financial Statements
13. An entity’s transitional IPSAS financial statements are the annual financial statements in which an
entity transitions to accrual basis IPSASs and adopts certain exemptions in this IPSAS that affect
the fair presentation of the financial statements and its ability to assert compliance with accrual
basis IPSASs. If a first-time adopter adopts the exemptions in this IPSASs that affect fair
presentation and compliance with accrual basis IPSASs (see paragraphs 36–62), it will not be able
to make an explicit and unreserved statement of compliance with other accrual basis IPSASs until
the exemptions that provided the relief in this IPSAS have expired and/or when the relevant items
are recognized, measured and/or the relevant information has been presented and/or disclosed in
accordance with the applicable IPSASs (whichever is earlier). Financial statements shall not be
described as complying with IPSASs unless they comply with all the requirements of all the
applicable IPSASs.
14. An entity’s transitional IPSAS financial statements are those financial statements, where the entity
transitions from another accounting basis such as when it:
(a) Prepared its most recent previous financial statements in accordance with the IPSAS,
Financial Reporting Under the Cash Basis of Accounting;
(b) Presented its most recent previous financial statements:
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(i) In accordance with prescribed requirements that are not consistent with IPSASs in all
respects;
(ii) In conformity with IPSASs in all respects, except that the financial statements did not
contain an explicit and unreserved statement that they complied with IPSASs;
(iii) Containing an explicit statement of compliance with some, but not all, IPSASs,
including the adoption of the exemptions provided in this IPSAS that affect fair
presentation and compliance with accrual basis IPSASs (see paragraphs 36–62);
(iv) In accordance with prescribed requirements inconsistent with IPSASs, using some
individual IPSASs to account for items for which prescribed requirements did not exist;
or
(v) In accordance with prescribed requirements, with a reconciliation of some amounts to
the amounts determined in accordance with IPSASs;
(c) Prepared financial statements in accordance with IPSASs for internal use only, without
making them available to external users;
(d) Prepared a reporting package in accordance with IPSASs for consolidation purposes without
preparing a complete set of financial statements as defined in IPSAS 1; or
(e) Did not present financial statements for previous periods.
Recognition and Measurement

Opening Statement of Financial Position on Adoption of IPSASs
15. A first-time adopter shall prepare and present an opening statement of financial position at
the date of adoption of IPSASs. This is the starting point for its accounting in accordance
with accrual basis IPSASs.
Accounting Policies
16. On the date of adoption of accrual basis IPSASs, a first-time adopter shall apply the
requirements of the IPSASs retrospectively except if required, or otherwise permitted, in this
IPSAS.
17. A first-time adopter shall use the same accounting policies in its opening statement of
financial position and throughout all periods presented, except as specified in
paragraphs 36–134. The accounting policies shall comply with each IPSAS effective at the
date of adoption of IPSASs, except as specified in paragraphs 36–134.
18. A first-time adopter that takes advantage of the exemptions in paragraph 36–134 will be required to
amend its accounting policies after the exemptions that provided the relief have expired and/or
when the relevant items are recognized, measured and/or the relevant information is presented
and/or disclosed in the financial statements in accordance with the applicable IPSASs (whichever is
earlier).
19. A first-time adopter shall apply the versions of accrual basis IPSASs effective at the date of
adoption of IPSASs. A first-time adopter may apply a new IPSAS that is not yet mandatory if that
IPSAS permits early application. Any new IPSASs that become effective during the period of
transition shall be applied by the first-time adopter from the date it becomes effective.
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20. Except as described in paragraphs 36–134, a first-time adopter shall, in its opening statement of
financial position:
(a) Recognize all assets and liabilities whose recognition is required by IPSASs;
(b) Not recognize items as assets or liabilities if IPSASs do not permit such recognition;
(c) Reclassify items that it recognized in accordance with the previous basis of accounting as
one type of asset, liability or component of net assets/equity, but are a different type of asset,
liability or component of net assets/equity in accordance with IPSASs; and
(d) Apply IPSASs in measuring all recognized assets and liabilities.
21. The accounting policies that a first-time adopter uses in financial statements may differ from those
that it used at the end of its comparative period under its previous basis of accounting. The
resulting adjustments arise from transactions, other events or conditions before the date of
adoption of IPSASs. Therefore, a first-time adopter shall recognize those adjustments to the
opening balance of accumulated surplus or deficit in the period in which the items are recognized
and/or measured (or, if appropriate, another category of net assets/equity). The first-time adopter
shall recognize these adjustments in the earliest period presented.
22. The transitional exemptions and provisions in other IPSAS apply to changes in accounting policies
made by an entity that already applies accrual basis IPSASs. The transitional exemptions and
provisions in this IPSAS applies to a first-time adopter that prepares and presents its annual
financial statements on the adoption of, and during the transition to accrual basis IPSASs.
Exceptions to the Retrospective Application of IPSASs

23. A first-time adopter’s estimates in accordance with IPSASs at the date of adoption of
IPSASs, shall be consistent with estimates made in accordance with the previous basis of
accounting (after adjustments to reflect any difference in accounting policies), unless there
is objective evidence that those estimates were inconsistent with the requirements in
IPSASs.
24. This IPSAS prohibits retrospective application of some aspects of accrual basis IPSASs. A first-
time adopter may receive information after the date of adoption of IPSASs about estimates that it
had made under its previous basis of accounting. In accordance with paragraph 23, a first-time
adopter shall treat the receipt of that information in the same way as non-adjusting events after the
reporting period in accordance with IPSAS 14, Events after the Reporting Period.
25. A first-time adopter may need to make estimates in accordance with IPSASs at the date of adoption
of IPSASs or during the period of transition that were not required at that date under the previous
basis of accounting. To achieve consistency with IPSAS 14, those estimates in accordance with
IPSASs shall reflect conditions that existed at the date of adoption of IPSASs or at the date during
the period of transition. In particular, estimates determined at the date of adoption of IPSASs or
during the period of transition of market prices, interest rates or foreign exchange rates shall reflect
market conditions at that date. For non-financial assets, such as property, plant and equipment,
estimates about the asset’s useful life, residual value or condition reflect management’s
expectations and judgment at the date of adoption of IPSASs or the date during the period of
transition.
26. Paragraphs 23–25 apply to the opening statement of financial position. They also apply to a
comparative period where an entity elects to present comparative information in accordance with
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paragraph 78, in which case the references to the date of adoption of IPSASs are replaced by
references to the end of that comparative period.
Fair Presentation and Compliance with IPSASs

27. A first-time adopter’s first IPSAS financial statements shall fairly present the financial
position, financial performance, and cash flows of the entity. Fair presentation requires the
faithful representation of the effects of transactions, other events, and conditions in
accordance with the definitions and recognition criteria for assets, liabilities, revenue, and
expenses set out in IPSASs. If a first-time adopter takes advantage of the exemptions in
paragraphs 36–62, these exemptions will affect the fair presentation of the financial
statements and the first-time adopter’s ability to assert compliance with accrual basis
IPSASs, until the exemptions that provided the relief have expired and/or when the relevant
items are recognized and/or measured in accordance with the applicable IPSAS (whichever
is earlier).
28. A first-time adopter shall claim full compliance with IPSASs only when it has complied with
all the requirements of the applicable IPSASs effective at that date, subject to paragraph 11.
If a first-time adopter adopts one or more of the exemptions in paragraph 36–62, the fair
presentation of the financial statements and its ability to assert compliance with accrual
basis IPSASs will be affected. An entity’s whose financial statements comply with IPSASs
shall make an explicit and unreserved statement of such compliance in the notes. Financial
statements shall not be described as complying with IPSASs unless they comply with all the
requirements of IPSASs, and shall be qualified as accrual basis IPSAS complaint financial
statements.
29. In accordance with paragraph 29 of IPSAS 1 fair presentation is achieved in virtually all
circumstances by compliance with applicable IPSASs. For a first-time adopter to claim full
compliance with IPSASs, all the requirements of the applicable IPSASs needs to be complied with
to ensure that information is presented in a manner that meets the qualitative characteristics,
subject to paragraph 11.
30. The exemptions in paragraphs 36–62 provide relief from the recognition, measurement,
presentation and/or disclosure requirements in IPSASs on the date of adoption of IPSASs and
during the period of transition. A first-time adopter may elect to adopt these exemptions, but shall
consider that applying these exemptions will affect the fair presentation of its financial statements
and its ability to assert compliance with accrual basis IPSASs in accordance with paragraphs 27
and 28 until the exemptions that provided the relief have expired and/or when the relevant items
are recognized, measured, and/or the relevant information is presented and/or disclosed in the
financial statements in accordance with the applicable IPSASs (whichever is earlier). Before
making use of such exemptions, a first-time adopter shall consider all the relevant facts and
circumstances and the potential effect on its financial statements.
31. A first-time adopter shall assess whether the transitional exemptions adopted affect the fair
presentation of the financial statements and the first-time adopter’s ability to assert
32. For example, a first-time adopter adopts the three year transitional relief period for the recognition
and measurement of traffic fines because insufficient data is available about the value of fines
issued, fines written off, the compromises reached with offenders etc. The relief period is not
10
applied to any other class of non-exchange revenue. The revenue received from fines is not
material in relation to the financial statements as a whole. The entity concludes that, by adopting
the transitional exemption and provisions, fair presentation and compliance with IPSASs will not be
affected. As a result, the first-time adopter will still be able to achieve fair presentation and assert
compliance with accrual basis IPSASs at the date of adoption of accrual basis IPSASs or during the
period of transition.
Exemptions that Affect Fair Presentation and Compliance with Accrual Basis
IPSASs During the Period of Transition
33. A first-time adopter may adopt the exemptions in paragraphs 36–62. These exemptions will
affect the fair presentation of a first-time adopter’s financial statements and its ability to
assert compliance with accrual basis IPSASs during the period of transition in accordance
with paragraphs 27 and 28 while they are applied. A first-time adopter shall not apply these
exemptions by analogy to other items.
34. Notwithstanding the exemptions provided in paragraphs 36–62 a first-time adopter is

encouraged to comply in full with all the requirements of the applicable IPSASs as soon as
possible.
35. To the extent that a first-time adopter applies the exemptions in paragraph 36–62, it is not
required to apply any associated presentation and/or disclosure requirements in the
applicable IPSASs until the exemptions that provided the relief have expired or the relevant
items are recognized and/or measured in the financial statements in accordance with the
applicable IPSASs (whichever is earlier).
Three Year Transitional Relief Period for the Recognition and/or Measurement of Assets and/or
Liabilities
Recognition and/or Measurement of Assets and/or Liabilities
36. Where a first-time adopter has not recognized assets and/or liabilities under its previous
basis of accounting, it is not required to recognize and/or measure the following assets
and/or liabilities for reporting periods beginning on a date within three years following the
date of adoption of IPSASs:
(a) Inventories (see IPSAS 12, Inventories);

(b) Investment property (see IPSAS 16, Investment Property);
(c) Property, plant and equipment (see IPSAS 17, Property, Plant and Equipment);
(d) Defined benefit plans and other long-term employee benefits (see IPSAS 25, Employee
Benefits);
(e) Biological assets and agricultural produce (see IPSAS 27, Agriculture);
(f) Intangible assets (see IPSAS 31, Intangible Assets);

(g) Service concession assets and the related liabilities, either under the financial liability
model or the grant of a right to the operator model (see IPSAS 32, Service Concession
Arrangements: Grantor); and
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(h) Financial instruments (see IPSAS 29, Financial Instruments; Recognition and
Measurement).
37. Where a first-time adopter applies the exemption in paragraph 36(d), it shall recognize the
obligation and any related plan assets at the same time.
38. Where a first-time adopter has recognized the assets and/or liabilities included in paragraph
36 under its previous basis of accounting, it is not required to change its accounting
policy(ies) in respect of the measurement of these assets and/or liabilities for reporting
periods beginning on a date within three years following the date of adoption of IPSASs.
39. Subject to paragraphs 36 and 38, a first-time adopter is not required to change its accounting
policy(ies) in respect of the recognition and/or measurement of assets and/or liabilities for reporting
periods beginning on a date within three years following the date of adoption of IPSASs. The
transitional exemptions in paragraphs 36 and 38 are intended to allow a first-time adopter a period
to develop reliable models for recognizing and/or measuring its assets and/or liabilities during the
period of transition. The first-time adopter may apply accounting policies for the recognition and/or
measurement of such assets and/or liabilities that do not comply with the provisions of other
IPSASs.
40. Subject to the provisions of paragraphs 36 and 38, a first-time adopter shall only change its
accounting policies during the period of transition to better conform to the accounting
policies in accrual basis IPSASs, and may retain its existing accounting policies until the
exemptions that provided the relief have expired or when the relevant items are recognized
and/or measured in the financial statements in accordance with the applicable IPSASs
(whichever is earlier). A first-time adopter may change its accounting policy in respect of the
recognition and/or measurement of assets and/or liabilities on a class-by-class or category-
by-category basis where the use of classes or categories is permitted in the applicable
IPSAS.
41. To the extent that a first-time adopter applies the exemptions in paragraphs 36 and 38 which
allows a three year transitional relief period to not recognize and/or measure financial
assets, it is not required to recognize and/or measure any related revenue in terms of IPSAS
9, Revenue from Exchange Transactions, or other receivables settled in cash or another
financial asset in terms of IPSAS 23, Revenue from Non-Exchange Transactions (Taxes and
Transfers).
Recognition and/or Measurement of Non-Exchange Revenue
42. A first-time adopter is not required to change its accounting policy in respect of the
recognition and measurement of non-exchange revenue for reporting periods beginning on
a date within three years following the date of adoption of IPSASs. A first-time adopter may
change its accounting policy in respect of revenue from non-exchange transactions on a
class-by-class basis.
43. The transitional provision in paragraph 42 is intended to allow a first-time adopter a period to
develop reliable models for recognizing and measuring revenue from non-exchange transactions in
accordance with IPSAS 23, Revenue from Non-Exchange Transactions (Taxes and Transfers)
during the period of transition. The first-time adopter may apply accounting policies for the
recognition and/or measurement of revenue from non-exchange transactions that do not comply
with the provisions of IPSAS 23. The transitional provision in paragraph 42 allows a first-time
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adopter to apply IPSAS 23 incrementally to different classes of revenue from non-exchange

transactions. For example, a first-time adopter may be able to recognize and measure property
taxes and some other classes of transfers in accordance with IPSAS 23 from the date of adoption
of IPSASs, but may require three years to fully develop a reliable model for recognizing and
measuring income tax revenue.
Other Exemptions
IPSAS 5, Borrowing Costs

44. Where a first-time adopter applies the exemption in paragraph 36 which allows a three year
transitional relief period to not recognize and/or measure assets, and elects to account for
borrowing costs in terms of the allowed alternative treatment, it is not required to capitalize
any borrowing costs on qualifying assets for which the commencement date for
capitalization is prior to the date of adoption of accrual basis IPSASs, until the exemption
that provided the relief has expired and/or when the relevant assets are recognized and/or
measured in accordance with the applicable IPSASs (whichever is earlier).
45. Paragraph 36 allows a first-time adopter to not, recognize and/or measure assets in accordance
with IPSASs 16, 17, 27, 31 and 32 for a period of up to three years from the date of adoption of
IPSASs. During this period, a first-time adopter may need to consider the requirements of those
IPSASs at the same time as the capitalization of borrowing costs where it applies the allowed
alternative method. Where a first-time adopter takes advantage of the transitional exemption period
for the recognition and/or measurement of assets in accordance with IPSASs 16, 17, 27, 31 and 32
it is not required to capitalize borrowing costs incurred on qualifying assets prior, or during the
period of transition. Only when the exemptions that provided the relief have expired, and/or when
the relevant assets are recognized and/or measured in accordance with the applicable IPSASs
(whichever is earlier) will a first-time adopter be allowed to capitalize borrowing costs incurred on
the qualifying assets in accordance with the allowed alternative treatment.
IPSAS 13, Leases
46. Where a first-time adopter takes advantage of the exemption in paragraph 36 which allows a
three year transitional relief period to not recognize assets, it is not required to apply the
requirements related to finance leases until the exemption that provided the relief has
expired, and/or when the relevant assets are recognized in accordance with the applicable
IPSASs (whichever is earlier).
47. This IPSAS allows a first-time adopter a period of up to three years from the date of adoption of
IPSASs to not recognize assets in accordance with IPSASs 16, 17, 27, 31 and 32. During this
period, a first-time adopter may need to consider the recognition requirements of those IPSASs at
the same time as considering the recognition of finance leases in this IPSAS. Where a first-time
adopter takes advantage of the exemption in accordance with IPSASs 16, 17, 27, 31 and 32 it is
not required to recognize finance lease assets and/or liabilities until the exemptions that provided
the relief have expired, and/or when the relevant assets are recognized in accordance with the
IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets

48. Where a first-time adopter takes advantage of the exemption in paragraph 36 which allows a
three year transitional relief period to not recognize and/or measure property, plant and
13
equipment, it is not required to recognize and/or measure the liability relating to the initial
estimate of costs of dismantling and removing the item and restoring the site on which it is
located until the exemption for IPSAS 17 has expired, and/or the relevant asset is
recognized and/or measured in accordance with IPSAS 17 (whichever is earlier).
49. This IPSAS allows a first-time adopter a period of up to three years from the date of adoption of
IPSASs to not recognize and/or measure property, plant and equipment. IPSAS 17 requires an
entity to include as part of the cost of an item of property, plant and equipment, the initial estimate
of the costs of dismantling and removing the item and restoring the site on which it is located.
Where a first-time adopter takes advantage of the exemption that allows a three year transitional
relief period for the recognition and/or measurement of property, plant and equipment, a first-time
adopter is not required to apply the requirements related to the initial estimate of costs of
dismantling and removing the item and restoring the site on which it is located until the exemption
that provided the relief has expired, and/or when the relevant asset is recognized and/or measured
in accordance with IPSAS 17 (whichever is earlier). The liability shall be measured as at the date of
adoption of IPSASs, or where a first-time adopter has taken advantage of the exemption that allows
a three year transitional relief period for the recognition and/or measurement of an asset, the date
on which the exemption that provides the relief has expired and/or the asset has been recognized
and/or measured in accordance with the applicable IPSASs.
50. Where a first-time adopter takes advantage of the exemption in paragraph 48, it shall
recognize and/or measure the obligation and any related asset at the same time.
IPSAS 20, Related Party Disclosures
51. A first-time adopter is not required to disclose related party relationships, related party
transactions and information about key management personnel for reporting periods
beginning on a date within three years following the date of adoption of IPSASs.
52. Notwithstanding the transitional provision in paragraph 51, a first-time adopter is

encouraged to disclose information about related party relationships, related party
transactions and information about key management personnel that is known at the date of
adoption of IPSAS.
IPSAS 34, Separate Financial Statements, IPSAS 35, Consolidated Financial Statements and IPSAS 36,
Investments in Associates and Joint Ventures
53. Where a first-time adopter has not recognized its interests in controlled entities, associates
or joint ventures under its previous basis of accounting, it is not required to recognize
and/or measure its interests in other entities as a controlled entity, associate or joint venture
for reporting periods beginning on a date within three years following the date of adoption
of accrual basis IPSAS.
54. Subject to paragraph 53, a first-time adopter is not required to change its accounting policy in
respect of the recognition and/or measurement of its interests in controlled entities, associates or
joint ventures for reporting periods beginning on a date within three years following the date of
adoption of IPSASs. The transitional exemption in paragraph 53 is intended to allow a first-time
adopter a period to identify and appropriately classify its interests in other entities as either
controlled entities, associates or joint ventures during the period of transition. The first-time adopter
may apply accounting policies for the recognition and/or measurement of its interests in controlled
entities, associates or joint ventures that do not comply with the provisions of other IPSASs.
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IPSAS 35, Consolidated Financial Statements
55. Subject to paragraph 53, a first-time adopter shall present consolidated financial statements
following the adoption of accrual basis IPSASs. A first-time adopter presenting consolidated
financial statements is, however, not required to eliminate all balances, transactions,
revenue and expenses between entities within the economic entity for reporting periods
56. On adoption of IPSASs, an entity may have controlled entities with a significant number of
transactions between controlled entities. Accordingly, it may be difficult to identify some
transactions and balances that need to be eliminated for the purpose of preparing the consolidated
financial statements of the economic entity. For this reason, paragraph 55 provides relief for a
period of up to three years to fully eliminate balances, transactions, revenue and expenses
between entities within the economic entity.
57. Notwithstanding the transitional exemption in paragraph 55, a first-time adopter is

encouraged to eliminate those balances, transactions, revenue and expenses that are
known on the date of adoption of IPSASs to comply in full with the provisions of IPSAS 35 6
as soon as possible.
58. Where a first-time adopter has taken advantage of the transitional exemption in paragraph
53 and/or paragraph 55, it shall not present financial statements as consolidated financial
statements until:
(a) The exemptions that provided the relief have expired; and
(b) Its interests in other entities have been appropriately recognized and/or measured as
controlled entities, associates or joint ventures; or
(c) Inter-entity balances, transactions, revenue and expenses between entities within the
economic entity are eliminated (whichever is earlier).
IPSAS 36, Investments in Associates and Joint Ventures
59. When a first-time adopter applies the equity method on adoption of IPSAS 36, the investor is
not required to eliminate its share in the surplus and deficit resulting from upstream and
downstream transactions between the investor and its associate or joint venture for
reporting periods beginning on a date within three years following the date of adoption of
IPSASs.
60. On adoption of IPSASs, a first-time adopter may be an investor in one or more associates or joint
ventures with a significant number of upstream and downstream transactions between the investor
and the investee. Accordingly, it may be difficult to identify some upstream and/or downstream
transactions in which the investor’s share in the associate’s or joint venture’s surplus or deficit
needs to be eliminated in applying the equity method. For this reason, paragraph 59 provides the
investor relief with a period of up to three years to fully eliminate its share in the associate’s or joint
venture’s surplus or deficit resulting from upstream and/or downstream transactions.
61. Notwithstanding the transitional exemption in paragraph 59, a first-time adopter is
encouraged to eliminate its share in the associate’s and joint venture’s surplus and deficit
resulting from upstream and downstream transactions that are known on the date of
adoption of IPSASs, to comply in full with the provisions of IPSAS 36 as soon as possible.
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62. Where a first-time adopter has taken advantage of the transitional exemption in paragraph
53 and/or paragraph 59, it shall not present financial statements in which investments in
associates or joint ventures are accounted for using the equity method until:
(a) The exemptions that provided the relief have expired; and
(b) The interest in other entities have been appropriately recognized and/or measured as
an associate or joint venture; or
(c) Its share in the associate’s surplus and deficit resulting from upstream and
downstream transactions between the investor and the investee are eliminated
(whichever is earlier).
Exemptions that Do Not Affect Fair Presentation and Compliance with Accrual
Basis IPSASs During the Period of Adoption
63. A first-time adopter is required, or may elect, to adopt the exemptions in paragraphs 64–134.
These exemptions will not affect the fair presentation of a first-time adopter’s financial
statements and its ability to assert compliance with accrual basis IPSASs during the period
of transition in accordance with paragraphs 27 and 28 while they are applied. A first-time
adopter shall not apply these exemptions by analogy to other items.
Using Deemed Cost to Measure Assets and/or Liabilities

64. A first-time adopter may elect to measure the following assets and/or liabilities at their fair
value when reliable cost information about the assets and liabilities is not available, and use
that fair value as the deemed cost for:
(a) Inventory (see IPSAS 12);
(b) Investment property, if the first-time adopter elects to use the cost model in IPSAS 16;
(c) Property, plant and equipment (see IPSAS 17);
(d) Intangible assets, other than internally generated intangible assets (see IPSAS 31) that
meets:
(i) The recognition criteria in IPSAS 31 (excluding the reliable measurement

criterion); and
(ii) The criteria in IPSAS 31 for revaluation (including the existence of an active
market);
(e) Financial Instruments (see IPSAS 29); or
(f) Service concession assets (see IPSAS 32).
65. Deemed cost can only be determined where the acquisition cost of the asset and/or the liability is
not available. Deemed cost assumes that the entity had initially recognized the asset and/ or the
liability at the given date. Subsequent depreciation or amortization is based on that deemed cost on
the premise that the acquisition cost is equal to the deemed cost. For example, a first-time adopter
may elect to measure property, plant and equipment at deemed cost at the date of adoption of
IPSASs because cost information about the item of property, plant and equipment was not
available on that date, and use fair value as its deemed cost at that date. Any subsequent
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depreciation is based on the fair value determined at that date and starts from the date that the
deemed cost has been determined.
66. The use of deemed cost is not considered a revaluation or the application of the fair value model for
subsequent measurement in accordance with other IPSASs.
67. A first-time adopter may elect to use the revaluation amount of property, plant and
equipment under its previous basis of accounting as deemed cost if the revaluation was, at
the date of the revaluation, broadly comparable to:
(a) Fair value; or
(b) Cost or depreciated cost, where appropriate, in accordance with IPSASs adjusted to
reflect, for example, changes in a general or specific price index.
68. A first-time adopter may have established a deemed cost in accordance with its previous basis of
accounting for property, plant and equipment by measuring it at fair value at one particular date
because of a specific event:
(a) If the measurement date is at or before the date of adoption of IPSASs, a first-time adopter
may use such event-driven fair value measurements as deemed cost for IPSASs at the date
of that measurement.
(b) If the measurement date is after the date of adoption of IPSASs, but during the period of
transition where the first-time adopter takes advantage of the exemption that provides a
three year transitional relief period to not recognize and/or measure certain assets, the
event-driven fair value measurements may be used as deemed cost when the event occurs.
A first-time adopter shall recognize the resulting adjustments directly in accumulated surplus
or deficit when the asset is recognized and/or measured.
69. In determining the fair value in accordance with paragraph 67, the first-time adopter shall apply the
definition of fair value and guidance in other applicable IPSASs in determining the fair value of the
asset in question. The fair value shall reflect conditions that existed at the date on which it was
determined.
70. If reliable market-based evidence of fair value is not available for inventory, or investment
property that is of a specialized nature, a first-time adopter may consider the following
measurement alternatives in determining a deemed cost:
(a) For inventory, current replacement cost; and
(b) For investment property of a specialized nature, depreciated replacement cost.
Using Deemed Cost to Measure Assets Acquired Through a Non-Exchange Transaction
71. A first-time adopter may elect to measure an asset acquired through a non-exchange
transaction at its fair value when reliable cost information about the asset is not available,
and use that fair value as its deemed cost.
Using Deemed Cost for Investments in Controlled Entities, Joint Ventures and Associates (IPSAS
34)
72. Where a first-time adopter measures an investment in a controlled entity, joint venture or
associate at cost in its separate financial statements, it may, on the date of adoption of
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IPSASs, elect to measure that investment at one of the following amounts in its separate
opening statement of financial position:
(a) Cost; or
(b) Deemed cost. The deemed cost of such an investment shall be its fair value
(determined in accordance with IPSAS 29) at the first-time adopter’s date of adoption
of IPSASs in its separate financial statements.
73. A first-time adopter may have established a deemed cost in accordance with its previous basis of
accounting for an investment in a controlled entity, joint venture or associate by measuring it at its
fair value at one particular date because of a specific event. In such instances, a first-time adopter
applies paragraph 72(a) and (b).
Date at which Deemed Cost can be Determined
74. The date at which deemed cost is determined may vary depending on whether the first-time
adopter takes advantage of the exemptions that provides a three year transitional relief
period to not recognize and/or measure certain assets and/or liabilities. When the first-time
adopter takes advantage of the exemption, deemed cost can be determined at any date
during this period, or on the date that the exemption expires (whichever is earlier), and shall
be recognized in accordance with paragraph 76. If a first-time adopter does not adopt the
exemption, deemed cost shall be determined at the beginning of the earliest period for
which the first-time adopter presents IPSAS financial statements.
75. Where a first-time adopter takes advantage of the exemption that provides a three year transitional
relief period to not recognize and/or measure certain assets and/or liabilities, it may determine a
deemed cost for that asset and/or liability at any point of time within the three year transitional relief
period.
76. When a deemed cost is determined during the period in which a first-time adopter takes
advantage of the exemption that provides a three year transitional exemption not to
recognize and/or measure an asset and/or liability, a first-time adopter shall recognize the
adjustment against the opening accumulated surplus or deficit in the year in which the
deemed cost of the asset and/or liability is recognized and/or measured.
IPSAS 1, Presentation of Financial Statements
Comparative Information
77. A first-time adopter is encouraged, but not required, to present comparative information in
its first transitional IPSAS financial statements or its first IPSAS financial statements
presented in accordance with this IPSAS. When a first-time adopter presents comparative
information, it shall be presented in accordance with the requirements of IPSAS 1.
78. Where a first-time adopter elects to present comparative information, the transitional IPSAS
financial statements or the first IPSAS financial statements presented in accordance with
this IPSAS shall include:
(a) One statement of financial position with comparative information for the preceding
period, and an opening statement of financial position as at the beginning of the
reporting period prior to the date of adoption of accrual basis IPSAS;
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(b) One statement of financial performance with comparative information for the
preceding period;
(c) One statement of changes in net assets/equity with comparative information for the
preceding period;
(d) One cash flow statement with comparative information for the preceding period;
(e) A comparison of budget and actual amounts for the current year as a separate
additional financial statement or as a budget column in the financial statements if the
first-time adopter makes its approved budget publicly available; and
(f) Related notes including comparative information, and the disclosure of narrative
information about material adjustments as required by paragraph 142.
79. Where a first-time adopter elects to not present comparative information, its transitional
IPSAS financial statements following the adoption of accrual basis IPSASs or its first IPSAS
financial statements presented in accordance with this IPSASs shall include:
(a) One statement of financial position, and an opening statement of financial position at
the date of adoption of accrual basis IPSAS;
(b) One statement of financial performance;

(c) One statement of changes in net assets/equity;
(d) One cash flow statement;
(e) A comparison of budget and actual amounts for the current year as a separate
additional financial statement or as a budget column in the financial statements if the
first-time adopter makes its approved budget publicly available; and
(f) Related notes and the disclosure of narrative information about material adjustments
as required by paragraph 142.
80. Where a first-time adopter takes advantage of the exemptions in paragraphs 36–62 which
allow a three year transitional relief period to not recognize and/or measure an item,
comparative information for the year following the date of adoption of IPSASs shall be
adjusted only when information is available about the items following their recognition
and/or measurement during the relief period.
81. IPSAS 1 requires an entity to present comparative information in respect of the previous period for
all amounts reported in the financial statements. Where a first-time adopter takes advantage of the
exemption that provides a three year transitional exemption to not recognize and/or measure an
item, it shall, during the period of transition present comparative information for an item recognized
and/or measured during that period only, if information is available about the item for the
comparative period. The first-time adopter shall apply the requirements in IPSAS 1 after it has
adjusted its first IPSAS financial statements.
Non-IPSAS Comparative Information
82. A first-time adopter may present comparative information in accordance with its previous basis of
accounting. In any financial statements containing comparative information in accordance with the
previous basis of accounting, the first-time adopter shall label the information prepared using the
19
previous basis of accounting information as not being prepared in accordance with IPSASs, and
disclose the nature of the main adjustments that would be required to comply with IPSASs.
83. Where a first-time adopter presents non-IPSAS comparative information in its first IPSAS or first
transitional IPSAS financial statements following its adoption of accrual basis IPSASs, the
transitional exemptions and provisions provided in this Standard shall not be applied to the non-
IPSAS comparative information presented in the first IPSAS financial statements or first transitional
Non-IPSAS Historical Summaries
84. A first-time adopter may elect to present historical summaries of selected data for periods before
the first period for which it presents financial statements in accordance with IPSASs. This IPSAS
does not require such summaries to comply with the recognition and measurement requirements of
IPSASs. In any financial statements containing historical summaries in accordance with the
previous basis of accounting, the first-time adopter shall label the previous basis of accounting
information prominently as not being prepared in accordance with IPSASs, and disclose the nature
of the main adjustments that would be required to comply with IPSASs. The first-time adopter need
not quantify those adjustments.
IPSAS 4, The Effects of Changes in Foreign Exchange Rates
85. On the date of adoption of IPSASs a first-time adopter need not comply with the
requirements for cumulative translation differences that exist at that date. If a first-time
adopter uses this exemption:
(a) The cumulative translation differences for all foreign operations are deemed to be zero
at the date of adoption of IPSASs; and
(b) The gain or loss on a subsequent disposal of any foreign operation shall exclude
translation differences that arose before the date of adoption of IPSASs and shall
include later translation differences.
86. A first-time adopter shall apply the requirement to treat any goodwill (see the relevant
international or national accounting standard dealing with entity combinations) arising on
the acquisition of a foreign operation and any fair value adjustments to the carrying
amounts of assets and liabilities arising on the acquisition of that foreign operation, as
assets and liabilities of the foreign operation, prospectively on the date of adoption of
IPSASs.
87. In applying the transitional exemption in paragraph 85, a first-time adopter shall not restate prior
years for the acquisition of a foreign operation acquired prior to the date of adoption of IPSASs, and
accordingly shall, where appropriate, treat goodwill and fair value adjustments arising on acquisition
as assets and liabilities of the entity rather than as assets and liabilities of the foreign operation.
Therefore, those goodwill and fair value adjustments either are already expressed in the entity’s
functional currency or are non-monetary foreign currency items, which are reported using the
exchange rate at the date of the acquisition.
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88. A first-time adopter is encouraged, but not required, to apply the requirements of IPSAS 5
retrospectively where it adopts or changes its accounting policy to the benchmark
treatment.
89. Where a first-time adopter adopts or changes its accounting policy to the benchmark
treatment it is allowed to designate any date before the date of adoption of IPSASs and
apply IPSAS 5 prospectively on or after that designated date.
90. Where a first-time adopter changes its accounting policy to the allowed alternative
treatment, any borrowing costs incurred both before and after date of adoption of IPSASs on
qualifying assets for which the commencement date for the capitalization is prior to the date
of adoption of IPSASs, shall be recognized retrospectively in accordance with the allowed
alternative treatment.
IPSAS 10, Financial Reporting in Hyperinflationary Economies

Severe Hyperinflation
91. If a first-time adopter has a functional currency that was, or is, the currency of a
hyperinflationary economy, it shall determine whether it was subject to severe
hyperinflation before the date of adoption of IPSASs.
92. The currency of a hyperinflationary economy is subject to severe hyperinflation if it has both of the
following characteristics:
(a) A reliable general price index is not available to all entities with transactions and balances in
the currency; and
(b) Exchangeability between the currency and a relatively stable foreign currency does not exist.
93. The functional currency of a first-time adopter ceases to be subject to severe hyperinflation on the
functional currency normalization date. That is the date when the functional currency no longer has
either, or both, of the characteristics in paragraph 94 or when there is a change in the first-time
adopter’s functional currency to a currency that is not subject to severe hyperinflation.
94. When a first-time adopter’s date of adoption of IPSASs is on, or after, the functional
currency normalization date, the first-time adopter may elect to measure all assets and
liabilities held before the functional currency normalization date at fair value on the date of
adoption to IPSASs. The first-time adopter may use that fair value as the deemed cost of
those assets and liabilities in the opening statement of financial position.
IPSAS 13, Leases
95. A first-time adopter shall on the date of adoption of IPSAS, classify all existing leases as
operating or finance leases on the basis of circumstances existing at the inception of the
lease, to the extent that these are known on the date of adoption of IPSASs.
96. If, however, the lessee and the lessor have agreed to change the provisions of the lease
between the date of inception of the lease and the date of adoption of accrual basis IPSASs
in a manner that would have resulted in a different classification of the lease at the date of
adoption, the revised agreement shall be regarded as a new agreement. A first-time adopter
21
shall consider the provisions of the new agreement at the date of adoption of accrual basis
IPSASs in classifying the lease as an operating or finance lease.
IPSAS 18, Segment Reporting
97. A first-time adopter is not required to present segment information for reporting periods
IPSAS 21, Impairment of Non-Cash-Generating Assets
98. A first-time adopter shall apply the requirements in IPSAS 21 prospectively from the date of
adoption of IPSASs, except in relation to those assets where a first-time adopter takes
advantage of the exemption in paragraph 36 which allows a three year transitional relief
period to not recognize and/or measure assets. When a first-time adopter takes advantage
of the exemption that provides a three year transitional relief period in IPSAS 16, 17, 27, 31
and 32, it applies IPSAS 21 when the exemption that provided the relief has expired, and/or
the relevant assets are recognized and/or measured in accordance with the applicable
99. On the date that the transitional exemption that provided the relief has expired, and/or when
the relevant assets are recognized and/or measured in the financial statements (whichever
is earlier), a first-time adopter shall assess whether there is any indication that the non-
cash-generating assets recognized and/or measured are impaired. Any impairment loss
shall be recognized in opening accumulated surplus or deficit on the date of adoption of
IPSASs, or in opening accumulated surplus or deficit in the reporting period in which the
transitional exemption expires, and/or the relevant assets are recognized and/or measured
100. A first-time adopter shall apply the requirements of IPSAS 21 prospectively. This means that on the
date of adoption of accrual basis IPSASs, or if the first-time adopter has adopted transitional relief
relating to the recognition and/or measurement of assets, only when the three year transitional
exemption expires, and/or when the relevant assets are recognized and/or measured in the
financial statements (whichever is earlier), will a first-time adopter be required to assess whether
there is an indication that any non-cash-generating assets included in the opening statement of
financial position, are impaired.
IPSAS 25, Employee Benefits
101. A first-time adopter shall recognize and/or measure all employee benefits on the date of
adoption of IPSASs, except for defined benefit plans and other long-term employee benefits
where it takes advantage of the exemption in paragraph 36.
Defined Benefit Plans and Other Long-Term Employee Benefits

102. On the date of adoption of IPSASs, or where a first-time adopter takes advantage of the
three year transitional exemption, the date on which the exemption expires, or when the
relevant liabilities are recognized and/or measured in the financial statements (whichever is
earlier), a first-time adopter shall determine its initial liability for defined benefit plans and
other long-term employee benefits at that date as:
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(a) The present value of the obligation at the date of adoption of IPSASs, or where a first-
time adopter takes advantage of the three year transitional relief period, the date on
which the exemption expires, or when the relevant liabilities are recognized and/or
measured in the financial statements (whichever is earlier), by using the Projected
Unit Credit Method;
(b) Minus the fair value, at the date of adoption of IPSASs, or where a first-time adopter
takes advantage of the three year transitional relief period, the date on which the
exemption expires, or when the relevant liabilities are recognized and/or measured in
the financial statements (whichever is earlier) of plan assets (if any) out of which the
obligations are to be settled directly; and
(c) Minus any past service cost that shall be recognized in later periods as an expense on
a straight-line basis over the average period until the benefits become vested.
103. If the initial liability in accordance with paragraph 102 is more or less than the liability that
was recognized and/or measured at the end of the comparative period under the first-time
adopter’s previous basis of accounting, the first-time adopter shall recognize that
increase/decrease in opening accumulated surplus or deficit in the period in which the items
are recognized and/or measured.
104. The effect of the change in the accounting policy to IPSAS 25 includes any actuarial gains and
losses that arose, if any, in earlier periods, even if they fall outside the corridor specified in IPSAS
25. Under its previous basis of accounting, a first-time adopter may not have recognized and/or
measured any liability, in which case the increase in the liability will represent the full amount of the
liability minus the fair value, at the date of adoption of IPSASs or where a first-time adopter takes
advantage of the three year transitional relief period, the date on which the exemption expires, or
when the relevant liabilities are recognized and/or measured in the financial statements (whichever
is earlier), of any plan assets in accordance with paragraph 102(b) and any past service cost to be
recognized in later periods in accordance with paragraph 102(c). This increased liability is
recognized in opening accumulated surplus or deficit in the period in which the items are
recognized and/or measured.
105. A first-time adopter shall not separate the cumulative actuarial gains and losses from the
inception of the defined benefit plan(s), until the date of adoption of IPSASs into a
recognized and unrecognized portion. All cumulative actuarial gains and losses shall be
recognized in opening accumulated surplus or deficit in the period in which the items are
106. A first-time adopter is not permitted to separate cumulative actuarial gains and losses into
recognized and unrecognized portions on adoption of IPSAS 25. All cumulative actuarial gains and
losses shall be recognized in opening accumulated surplus or deficit in the period in which the
items are recognized and/or measured. This requirement does however not preclude a first-time
adopter electing to recognize only parts of its actuarial gains and losses in accordance with
paragraphs 105–107 of IPSAS 25 in subsequent reporting periods.
107. A first-time adopter shall disclose information on experience adjustments in accordance

with paragraph 141(p) of IPSAS 25 prospectively on the date of adoption of IPSASs.
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IPSAS 26, Impairment of Cash-Generating Assets
adoption of IPSASs, except in relation to those assets where a first-time adopter takes
advantage of the exemption in paragraph 36 which allows a three year transitional relief
period to not recognize and/or measure assets. When a first-time adopter takes advantage
of the exemption that provides a three year transitional relief period in IPSASs 16, 17, 27, 31
and 32, it applies IPSAS 26 when the exemption that provided the relief has expired, and/or
the relevant assets are recognized and/or measured in accordance with the applicable
109. On the date that the transitional exemption that provided the relief has expired, and/or when
the relevant assets are recognized and/or measured in the financial statements (whichever
is earlier), a first-time adopter shall assess whether there is any indication that the cash-
generating assets recognized and/or measured are impaired. Any impairment loss shall be
recognized in opening accumulated surplus or deficit on the date of adoption of IPSASs, or
in opening accumulated surplus or deficit in the reporting period in which the transitional
exemption expires, and/or the relevant assets are recognized and/or measured (whichever is
earlier).
110. A first-time adopter shall apply the requirements of IPSAS 26 prospectively. This means that on the
date of adoption of accrual basis IPSASs, or if the first-time adopter has adopted the transitional
relief relating to the recognition and/or measurement of assets, only when the three year
transitional exemption expires, and/or when the relevant assets are recognized and/or measured in
the financial statements (whichever is earlier), will a first-time adopter be required to assess
whether there is an indication that any cash-generating assets included in the opening statement of
financial position, are impaired.
IPSAS 28, Financial Instruments: Presentation
111. On the date of adoption of IPSASs, a first-time adopter shall evaluate the terms of the
financial instrument to determine whether it contains both a liability component and a net
asset/equity component. If the liability component is no longer outstanding on the date of
adoption of IPSASs, the first-time adopter need not separate the compound financial
instrument into a liability component and a net asset/equity component.
112. IPSAS 28 requires an entity to split a compound financial instrument at inception into separate
liability and net asset/equity components. If the liability component is no longer outstanding,
retrospective application of IPSAS 28 involves separating two portions of net assets/equity. The
first portion is in accumulated surplus and deficit and represents the cumulative interest accreted on
the liability component. The other portion represents the original net asset/equity component.
However, this IPSASs allows a first-time adopter to not separate these two portions if the liability
component is no longer outstanding at the date of adoption of IPSASs.
IPSAS 29, Financial Instruments: Recognition and Measurement
Designation of Financial Instruments on the Date of Adoption of IPSAS or During the Period of Transition
113. A first-time adopter may designate a financial asset or financial liability as a financial asset
or financial liability at fair value through surplus or deficit that meet the criteria for
designation in IPSAS 29, in accordance with paragraph 114. A first-time adopter shall
24
disclose the fair value of financial assets and financial liabilities designated into each
category at the date of designation, their classification and carrying amount.
114. IPSAS 29 permits a financial asset to be designated on initial recognition as available for
sale or a financial instrument (provide it meets certain criteria) to be designated as a
financial asset or financial liability at fair value though surplus or deficit. Despite this
requirement, exceptions apply in the following circumstances:
(a) A first-time adopter is permitted to make an available-for-sale designation at the date

of adoption of IPSASs.
(b) A first-time adopter is permitted to designate, at the date of adoption of IPSASs, any
financial asset or financial liability as at fair value through surplus or deficit provided
the asset or liability meets the criteria in paragraph 10(b)(i), 10(b)(ii) or 13 of IPSAS 29
at that date.
Derecognition of Financial Assets and Financial Liabilities

115. Except as permitted by paragraph 116 a first-time adopter shall apply the derecognition
requirements in IPSAS 29 prospectively for transactions occurring on or after the date of
adoption of IPSASs, or where a first-time adopter takes advantage of the exemptions not to
recognize financial instruments, the date on which the exemptions that provided the relief
have expired and/or the financial instruments are recognized (whichever is earlier). For
example, if a first-time adopter derecognized non-derivative financial assets or non-
derivative financial liabilities in accordance with its previous basis of accounting as a result
of a transaction that occurred before the date of adoption of IPSASs, it shall not recognize
those assets and liabilities in accordance with IPSAS 29, unless they qualify for recognition
as a result of a later transaction or event.
116. Notwithstanding the provision in paragraph 115, a first-time adopter may apply the
derecognition requirements in IPSAS 29 retrospectively from a date of the first-time adopter
choosing, provided that the information needed to apply IPSAS 29 to financial assets and
financial liabilities derecognized as a result of past transactions was obtained at the time of
initially accounting for these transactions.
Hedge Accounting
117. As required by IPSAS 29, a first-time adopter shall at the date of adoption of IPSASs, or
where a first-time adopter takes advantage of the exemption that provides a three year
transitional relief period to not recognize and/or measure financial instruments, the date
when the exemption that provided the relief has expired and/or the relevant financial
instruments are recognized and/or measured in accordance with the applicable IPSASs
(whichever is earlier):
(a) Measure all derivatives at fair value; and
(b) Eliminate all deferred losses and gains arising on derivatives that were reported in
accordance with its previous basis of accounting as if they were assets or liabilities.
118. A first-time adopter shall not reflect in its opening statement of financial position a hedging
relationship of a type that does not qualify for hedge accounting in accordance with IPSAS
29 (for example, many hedging relationships where the hedging instrument is a cash
25
instrument or written option; or where the hedged item is a net position). However, if a first-
time adopter designated a net position as a hedged item in accordance with its previous
basis of accounting, it may designate an individual item within that net position as a hedged
item in accordance with IPSASs, provided that it does so no later than the date of adoption
of IPSASs or where it takes advantage of the exemption that provides a three year
transitional relief period to not recognize and/or measure financial instruments, the date
when the exemption that provided the relief has expired, and/or the relevant financial
instruments are recognized and/or measured in accordance with the applicable IPSASs
119. If, before the date of adoption of IPSASs, or where a first-time adopter takes advantage of
the exemption that provides a three year transitional relief period to not recognize and/or
measure financial instruments the date on which the exemption that provided the relief has
expired, and/or the relevant financial instruments are recognized and/or measured in
accordance with the applicable IPSASs (whichever is earlier), a first-time adopter had
designated a transaction as a hedge but the hedge does not meet the conditions for hedge
accounting in IPSAS 29, the first-time adopter shall apply paragraphs 102 and 112 of IPSAS
29 to discontinue hedge accounting. Transactions entered into before the date of adoption
of IPSASs, or where a first-time adopter takes advantage of the exemption that provides a
three year transitional relief period to not recognize and/or measure financial instruments,
the date when the transitional exemption expires and/or the relevant financial instruments
are recognized and/or measured in accordance with IPSAS 29 (whichever is earlier), shall
not be retrospectively designated as hedges.
Impairment of Financial Assets
120. A first-time adopter shall apply the impairment requirements prospectively from the date of
adoption of IPSASs, except in relation to those financial assets where it takes advantage of
the exemptions in paragraphs 36, 38 and 42 which allow a three year transitional relief
period to not recognize and/or measure financial instruments. When a first-time adopter
adopts the three year transitional relief period provided, it applies the impairment provisions
when exemption that provided the relief has expired, and/or the relevant financial
instruments are recognized and/or measured in accordance with IPSAS 29 (whichever is
earlier).
121. A first-time adopter shall on the date of adoption of IPSASs, or when the exemptions that
provided the relief have expired, and/or when the relevant financial instruments are
recognized and/or measured and relevant information has been presented and/or disclosed
in the financial statements in accordance with the applicable IPSAS (whichever is earlier),
assess at that date whether there is any indication that the financial instrument recognized
and/or measured in the statement of financial position, is impaired. Any impairment loss
incurred shall be recognized in opening accumulated surplus or deficit in the period in
which the financial instrument is recognized and/or measured.
122. A first-time adopter shall apply the impairment requirements prospectively. This means that on the
date of adoption of IPSAS 29, when the exemptions that provided the relief have expired, and/ or
when the relevant financial instruments are recognized and/or measured, a first-time adopter shall
be required to assess whether there is an indication that the financial instrument is impaired. Any
impairment loss shall be recognized in opening accumulated surplus or deficit on the date of
26
adoption of IPSASs, or in the opening accumulated surplus or deficit of the reporting period in
which the exemptions that provided the relief have expired, and/or the relevant financial
instruments are recognized and/or measured (whichever is earlier).
IPSAS 30, Financial Instruments: Disclosures

123. Where the first-time adopter elects to present comparative information in accordance with
paragraph 78, it is not required to present information about the nature and extent of risks
arising from financial instruments for the comparative period in its transitional IPSAS
financial statements or its first IPSAS financial statements.
adoption of IPSASs, or when the exemptions that provided the relief have expired, and/or
when the relevant financial instrument is recognized and/or measured in accordance with
IPSAS 29 (whichever is earlier).
IPSAS 31, Intangible Assets

125. A first-time adopter shall recognize and/or measure an internally generated intangible asset
if it meets the definition of an intangible asset and the recognition criteria in IPSAS 31, even
if the first-time adopter has, under its previous basis of accounting, expensed such costs. A
deemed cost may not be determined for internally generated intangible assets.
126. As required by paragraph 20, a first-time adopter is required to recognize all assets for which
recognition is required by IPSASs. A first-time adopter shall therefore recognize any internally
generated intangible asset if it meets the definition of an intangible asset and the recognition criteria
in IPSAS 31, irrespective of whether such costs were expensed under its previous basis of
accounting.
IPSAS 32, Service Concession Arrangements
Initial Measurement of Related Liability
127. Where a first-time adopter elects to measure service concession assets using deemed cost,
the related liabilities shall be measured as follows:
(a) For the liability under the financial liability model, the remaining contractual cash
flows specified in the binding arrangement and the rate prescribed in IPSAS 32; or
(b) For the liability under the grant of a right to the operator model, the fair value of the
asset less any financial liabilities, adjusted to reflect the remaining period of the
service concession arrangement.
128. A first-time adopter shall recognize and/or measure any difference between the value of the
service concession asset and the financial liability under the financial liability model in
paragraph 127 in opening accumulated surplus or deficit in the period in which the items are
27
IPSAS 34, Separate Financial Statements, IPSAS 35, Consolidated Financial Statements and
IPSAS 36, Investments in Associates and Joint Ventures
129. If a controlled entity becomes a first-time adopter later than its controlling entity, except for
the controlled entity of an investment entity, the controlled entity shall, in its financial
statements, measure its assets and liabilities at either:
(a) The carrying amounts determined in accordance with this IPSAS that would be
included in the controlling entity’s consolidated financial statements, based on the
controlled entity’s date of adoption of IPSASs, if no adjustments were made for
consolidation procedures and for the effects of the entity combination in which the
controlling entity acquired the controlled entity; or
(b) The carrying amounts required by the rest of this IPSAS, based on the controlled
entity’s date of adoption of IPSASs. These carrying amounts could differ from those
described in (a):
(i) When the exemptions in this IPSAS result in measurements that depend on the
date of adoption of IPSASs.
(ii) When the accounting policies used in the controlled entity’s financial
statements differ from those in the consolidated financial statements. For
example, the controlled entity may use as its accounting policy the cost model
in IPSAS 17, whereas the economic entity may use the revaluation model.
A similar election is available to an associate or joint venture that becomes a first-time
adopter later than an entity that has significant influence or joint control over it.
130. However, if a controlling entity becomes a first-time adopter later than its controlled entity
(or associate or joint venture) the controlling entity shall, in its consolidated financial
statements, measure the assets and liabilities of the controlled entity (or associate or joint
venture) at the same carrying amounts as in the financial statements of the controlled entity
(or associate or joint venture), after adjusting for consolidation and equity accounting
adjustments and for the effects of the entity combination in which the controlling entity
acquired the controlled entity (or associate or joint venture), subject to the exemptions that
may be adopted in terms of this IPSAS. Similarly, if a controlled entity becomes a first-time
adopter for its separate financial statements earlier or later than for its consolidated
financial statements, it shall measure its assets and liabilities at the same amounts in both
financial statements, subject to the exemptions that may be adopted in this IPSAS, except
for consolidation adjustments.

131. A first-time adopter that is a controlled entity shall assess whether it is an investment entity
on the basis of the facts and circumstances that exist at the date of adoption of accrual
basis IPSASs, and measure its investment in each controlled entity at fair value through
surplus or deficit at the date of adoption of accrual basis IPSASs.
IPSAS 37, Joint Arrangements
132. Where a first-time adopter accounted for its investment in a joint venture under its previous
basis of accounting basis using proportionate consolidation, the investment in the joint
28
venture shall be measured on the date of adoption as the aggregate of the carrying amount
of the assets and liabilities that the entity previously proportionately consolidated, including
any purchased goodwill arising from acquisition transactions (see the relevant international
or national accounting standard dealing with entity combinations).
133. The opening balance of the investment determined in accordance with paragraph 132 is
regarded as the deemed cost of the investment at initial recognition. A first-time adopter
shall test the investment for impairment as at the date of adoption, regardless of whether
there is any indication that the investment may be impaired. Any impairment loss shall be
adjusted to the accumulated surplus or deficit at the date of adoption.
134. If aggregating all previously proportionately consolidated assets and liabilities results in
negative net assets, the first-time adopter shall assess whether it has legal or constructive
obligations in relation to the negative net assets and, if so, the first-time adopter shall
recognize a corresponding liability. If the first-time adopter concludes that it does not have
legal or constructive obligations in relation to the negative net assets, it shall not recognize
the corresponding liability but it shall adjust accumulated surplus or deficit at the date of
adoption. The first-time adopter shall disclose this fact, along with its cumulative
unrecognized share of losses of its joint ventures as at the date of adoption of accrual basis
IPSASs.
Disclosures
135. A first-time adopter with financial statements that comply with the requirements of this
IPSAS while taking advantage of the transitional exemptions and provisions that affect fair
presentation and its ability to assert compliance with accrual basis IPSASs, shall make an
explicit and unreserved statement of compliance with this IPSAS in the notes to the financial
statements. This statement shall be accompanied by a statement that the financial
statements do not fully comply with accrual basis IPSASs.
136. Where a first-time adopter takes advantage of the transitional exemptions in this IPSAS, the
first-time adopter shall disclose:
(a) The extent to which it has taken advantage of the transitional exemptions that affect
the fair presentation of the financial statements and its ability to assert compliance
with accrual basis IPSASs; and/or
(b) The extent to which it has taken advantage of the transitional exemptions that do not
affect the fair presentation of the financial statements and its ability to assert
137. To the extent that a first-time adopter has taken advantage of the transitional exemptions
and provisions in this IPSAS that affect fair presentation and compliance with accrual basis
IPSASs in relation to assets, liabilities, revenue and/or expenses, it shall disclose:
(a) Progress made towards recognizing, measuring, presenting and/or disclosing assets,
liabilities revenue and/or expenses in accordance with the requirements of the
applicable IPSAS;
(b) The assets, liabilities, revenue and/or expenses that have been recognized and
measured under an accounting policy that is not consistent with the requirements of
applicable IPSAS;
29
(c) The assets, liabilities, revenue and/or expenses that have not been measured,
presented and/or disclosed in the previous reporting period, but which are now
recognized and/or measured, and/or presented and/or disclosed;
(d) The nature and amount of any adjustments recognized during the reporting period;
and
(e) An indication of how and by when it intends to comply in full with the requirements of
the applicable IPSAS.
138. Where a first-time adopter takes advantage of the transitional exemption to not eliminate
some balances, transactions, revenue and expenses, and/or where it applies the three year
transitional relief for the recognition and/or measurement of its interest in controlled
entities, associates or joint ventures in paragraph 55, it shall disclose the nature of the
balances, transactions, revenue and expenses and/or upstream or downstream transactions
that have been eliminated during the reporting period.
139. Where a first-time adopter is not able to present consolidated financial statements because
of the transitional exemptions and provisions adopted in paragraphs 58 or 62, it shall
disclose:
(a) The reason why the financial statements, investments in associates or interests in
joint ventures could not be presented as consolidated financial statements; and
(b) An indication by when the first-time adopter will be able to present consolidated
financial statements.
140. The disclosure requirements of paragraphs 135 and 139 will assist users to track the progress of
the first-time adopter in conforming its accounting policies to the requirements in the applicable
IPSASs during the period of transition.
Explanation of Transition to IPSASs
141. A first-time adopter shall disclose:
(a) The date of adoption of IPSASs; and
(b) Information and explanations about how the transition from the previous basis of
accounting to IPSASs affected its reported financial position, and, where appropriate,
its reported financial performance and cash flows.
Reconciliations
142. A first-time adopter shall present in the notes to its transitional IPSAS financial statements
or its first IPSAS financial statements:
(a) A reconciliation of its net assets/equity reported in accordance with its previous basis
of accounting to its opening balance of net assets/equity at the date of adoption of
IPSASs; and
(b) A reconciliation of its surplus or deficit in accordance with its previous basis of
accounting to its opening balance of surplus or deficit at the date of adoption of
IPSASs.
30
A first-time adopter that has applied a cash basis of accounting in its previous financial
statements is not required to present such reconciliations.
143. The reconciliation presented in accordance with paragraph 142 shall provide sufficient detail, both
quantitative and qualitative, to enable users to understand the material adjustments to the opening
statement of financial position and, where applicable, the opening statement of financial
performance presented in accordance with accrual basis IPSAS. Where narrative explanations are
included in other public documents issued in conjunction with the financial statements, a cross
reference to those documents shall be included in the notes.
144. If an entity becomes aware of errors made under its previous basis of accounting, the
reconciliations required by paragraph 142 shall distinguish the correction of those errors from
changes in accounting policies.
145. If an entity did not present financial statements for previous periods, its transitional IPSAS
financial statements or its first IPSAS financial statements shall disclose that fact.
146. Where a first-time adopter takes advantage of the exemptions in paragraph 36–43 which
allow a three year transitional relief period to not recognize and/or measure items, it shall
present as part of the notes, a reconciliation of items that have been recognized and/or
measured during the reporting period when these items were not included in the previous
reported financial statements. The reconciliation shall be presented in each period when
new items are recognized and/or measured in accordance with this IPSAS.
147. The reconciliation presented in accordance with paragraph 146 provides sufficient detail to enable
users to understand which items have been recognized and/or measured during the reporting
period where the first-time adopter adopts one of more of the exemptions that provide a three year
transitional relief period to not recognize and/or measure an item. The reconciliation explains the
adjustments to the previously reported statement of financial position and, where applicable, the
previously reported statement of financial performance in each period when new items are
recognized and/or measured in accordance with this IPSAS.
Disclosures where Deemed Cost is Used for Inventory, Investment Property, Property, Plant and
Equipment, Intangible Assets, Financial Instruments or Service Concession Assets
148. If a first-time adopter uses fair value, or the alternative in paragraphs 64, 67 or 70, as
deemed cost for inventory, investment property, property, plant and equipment, intangible
assets, financial instruments, or service concession assets, its financial statements shall
disclose:
(a) The aggregate of those fair values or other measurement alternatives that were
considered in determining deemed cost;
(b) The aggregate adjustment to the carrying amounts recognized under the previous
basis of accounting; and
(c) Whether the deemed cost was determined on the date of adoption of IPSASs or during
the period of transition.
31
Disclosures Where Deemed Cost is Used for Investments in Controlled Entities, Joint Ventures or
Associates
149. If a first-time adopter uses fair value as deemed cost in its opening statement of financial
position for an investment in a controlled entity, joint venture or associate in its separate
financial statements, its separate financial statements shall disclose:
(a) The aggregate deemed cost of those investments for which deemed cost is fair value;
and
(b) The aggregate adjustment to the carrying amounts reported under the previous basis
of accounting.
150. The disclosure requirements required in paragraph 148 and 149 shall be disclosed in each
period when new items are recognized and/or measured until the exemptions that provided
the relief have expired and/or when the relevant assets are recognized and/or measured in
accordance with the applicable IPSASs (whichever is earlier).
Exemptions from Disclosure Requirements in IPSASs During the Period of Transition
151. To the extent that a first-time adopter takes advantage of the exemption that provides a
three year relief period to not recognize and/or measure items, it is not required to apply any
associated presentation and/or disclosure requirements related to such items as required in
IPSAS 1, IPSAS 18 and/or the applicable IPSASs until such time as the exemptions that
provided the relief have expired and/or when the relevant items have been recognized
and/or measured in accordance with the applicable IPSASs (whichever is earlier).
152. Notwithstanding the transitional provision in paragraph 151, a first-time adopter is

encouraged to disclose the information required by IPSAS 1, IPSAS 18 and/or the applicable
IPSAS as soon as possible.
Transitional Provisions
153. Where a first-time adopter has adopted the existing transitional provisions in other accrual
basis IPSASs, it shall continue to apply those transitional provisions until they expire and/or
the relevant items are recognized and/or measured in accordance with the applicable IPSAS
(whichever is earlier). If the first-time adopter elects to adopt the transitional exemptions in
this IPSAS, the relief period applied in adopting accrual basis IPSASs, may not be longer
than the relief period provided in this IPSAS.
Effective Date
154. A first-time adopter shall apply this Standard if its first IPSAS financial statements are for a
period beginning on or after January 1, 2017. Earlier application is permitted.
32
Appendix A
Amendments to Other IPSASs
IPSAS 1, Presentation of Financial Statements

Paragraphs 151, 152 and 154 are amended and paragraph 154A is added as follows:
151. All provisions of this Standard shall be applied from the date of first adoption of this
Standard, except in relation to items that have not been recognized as a result of
transitional provisions under another IPSAS. The disclosure provisions of this Standard
would not be required to apply to such items until the transitional provision in the other
IPSAS expires. Comparative information is not required in respect of the financial
statements to which accrual accounting is first adopted in accordance with IPSASs.
152. Notwithstanding the existence of transitional provisions under another IPSAS, entities that are in
the process of adopting the accrual basis of accounting for financial reporting purposes are
encouraged to comply in full with the provisions of that other Standard as soon as possible.
Effective Date
154. When an entity adopts the accrual basis IPSASs of accounting as defined in IPSAS 33, First-time
Adoption of Accrual Basis International Public Sector Accounting Standards (IPSASs) by IPSASs
for financial reporting purposes subsequent to this effective date, this Standard applies to the
entity’s annual financial statements covering periods beginning on or after the date of adoption of
IPSASs.
154A. Paragraphs 151, 152 and 154 were amended by IPSAS 33, First-time Adoption of Accrual
Basis International Public Sector Accounting Standards (IPSASs) issued in January 2015.
An entity shall apply those amendments for annual financial statements covering periods
beginning on or after January 1, 2017. Earlier application is permitted. If an entity applies
IPSAS 33 for a period beginning before January 1, 2017, the amendments shall also be
applied for that earlier period.
IPSAS 2, Cash Flow Statements

Paragraph 64 is amended and paragraph 64A is added as follows:
Effective Date
IPSASs.
64A. Paragraph 64 was amended by IPSAS 33, First-time Adoption of Accrual Basis International
Public Sector Accounting Standards (IPSASs) issued in January 2015. An entity shall apply
that amendment for annual financial statements covering periods beginning on or after
33
January 1, 2017. Earlier application is permitted. If an entity applies IPSAS 33 for a period
beginning before January 1, 2017, the amendments shall also be applied for that earlier
period.
IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors

Effective Date
IPSASs.
beginning before January 1, 2017, the amendments shall also be applied for that earlier
period.
IPSAS 4, The Effects of Changes in Foreign Exchange Transactions

Paragraphs 67, 68, 69 and 72 are amended and paragraph 72A is added as follows:
First-time Adoption of Accrual Accounting
67. A reporting entity need not comply with the requirements for cumulative translation
differences that existed at the date of first adoption of accrual accounting in accordance
with IPSASs. If a first-time adopter uses this exemption:
(a) The cumulative translation differences for all foreign operations are deemed to be zero at
the date of first adoption to IPSASs; and
(b) The gain and loss on a subsequent disposal of any foreign operation shall exclude
translation differences that arose before the date of first adoption of IPSASs, and shall
include later translation differences.
68. This Standard requires entities to:
(a) Classify some translation differences as a separate component of net assets/equity; and
(b) On disposal of a foreign operation, to transfer the cumulative translation difference for that
foreign operation to the statement of financial performance as part of the gain or loss on
disposal.
The transitional provisions provide first-time adopters of IPSASs with relief from this requirement.
Transitional Provisions for All Entities
69. An entity shall apply paragraph 56 prospectively to all acquisitions occurring after the
beginning of the financial reporting period in which this Standard is first applied.
34
Retrospective application of paragraph 56 to earlier acquisitions is permitted. For an

acquisition of a foreign operation treated prospectively, but which occurred before the date
on which this Standard is first applied, the entity shall not restate prior years and
accordingly may, when appropriate, treat goodwill and fair value adjustments arising on that
acquisition as assets and liabilities of the entity rather than as assets and liabilities of the
foreign operation. Therefore, those goodwill and fair value adjustments either are already
expressed in the entity’s functional currency, or are nonmonetary foreign currency items,
which are reported using the exchange rate at the date of the acquisition.
70. All other changes resulting from the application of this Standard shall be accounted for in
accordance with the requirements of IPSAS 3, Accounting Policies, Changes in Accounting
Estimates and Errors.
Effective Date
IPSASs.
72A. Paragraphs 67, 68, 69 and 72 were amended by IPSAS 33, First-time Adoption of Accrual

Paragraphs 41 and 43 are amended and paragraph 43A is added as follows:
Transitional Provision
41. When the adoption of this Standard constitutes a change in accounting policy, an entity is
encouraged to adjust its financial statements in accordance with IPSAS 3, Accounting
Policies, Changes in Accounting Estimates and Errors. Alternatively, entities following the
allowed alternative treatment shall capitalize only those borrowing costs incurred after the
effective date of this Standard that meet the criteria for capitalization.
Effective Date
IPSASs.
43A. Paragraphs 41 and 43 were amended by IPSAS 33, First-time Adoption of Accrual Basis
International Public Sector Accounting Standards (IPSASs) issued in January 2015. An
entity shall apply those amendments for annual financial statements covering periods
35
IPSAS 9, Revenue from Exchange Transactions

Effective Date
IPSASs.
beginning before January 1, 2017, the amendment shall also be applied for that earlier
period.

Effective Date
IPSASs.
period.
IPSAS 11, Construction Contracts

Effective Date
IPSASs.
36
period.
IPSAS 12, Inventories

Effective Date
IPSASs.
period.
IPSAS 13, Leases

79. All provisions of this Standard shall be applied from the date of first adoption of accrual
accounting in accordance with IPSASs, except in relation to leased assets that have not
been recognized as a result of transitional provisions under another IPSAS. The provisions
of this Standard would not be required to apply to such assets until the transitional
provision in the other IPSAS expires. In no case shall the existence of transitional
provisions in other Standards preclude the full application of accrual accounting in
accordance with IPSASs.
80. Notwithstanding the existence of transitional provisions under another IPSAS, entities that are in
the process of adopting the accrual basis of accounting are encouraged to comply in full with the
provisions of that other standard as soon as possible.
Effective Date
IPSASs.
86A. Paragraphs 79, 80 and 86 were amended by IPSAS 33, First-time Adoption of Accrual Basis
37

IPSAS 14, Events After the Reporting Date

Effective Date
IPSASs.
period.
IPSAS 16, Investment Property

Paragraphs 91, 92, 93, 94, 95, 96, 98, 99 and 102 are amended and paragraph 102A is added as
follows:
Initial Adoption of Accrual Accounting
91. An entity that adopts accrual accounting for the first time in accordance with IPSASs shall
initially recognize investment property at cost or fair value. For investment properties that
were acquired at no cost, or for a nominal cost, cost is the investment property’s fair value
as at the date of acquisition.
92. The entity shall recognize the effect of the initial recognition of investment property as an
adjustment to the opening balance of accumulated surpluses or deficits for the period in
which accrual accounting is first adopted in accordance with IPSASs.
93. Prior to first adoption of accrual accounting in accordance with IPSASs, an entity (a) may recognize
investment property on a basis other than cost or fair value as defined in this Standard, or (b) may
control investment property that it has not recognized. This Standard requires entities to initially
recognize investment property at cost or fair value as at the date of first adoption of accrual
accounting in accordance with IPSASs. Where assets are initially recognized at cost and were
acquired at no cost, or for a nominal cost, cost will be determined by reference to the investment
property’s fair value as at the date of acquisition. Where the cost of acquisition of an investment
property is not known, its cost may be estimated by reference to its fair value as at the date of
acquisition.
Fair Value Model
94. Under the fair value model, an entity shall recognize the effect of applying this Standard as
38
an adjustment to the opening balance of accumulated surpluses or deficits for the period in
which this Standard is first applied. In addition:
(a) If the entity has previously disclosed publicly (in financial statements or otherwise) the
fair value of its investment property in earlier periods (determined on a basis that
satisfies the definition of fair value in paragraph 7 and the guidance in paragraphs 45–
61), the entity is encouraged, but not required:
(i) To adjust the opening balance of accumulated surpluses or deficits for the
earliest period presented for which such fair value was disclosed publicly; and
(ii) To restate comparative information for those periods; and
(b) If the entity has not previously disclosed publicly the information described in (a), it
shall not restate comparative information and shall disclose that fact.
95. On the first application of this Standard, an entity may choose to apply the fair value model in
respect of investment property already recognized in its financial statements. When this occurs, this
Standard requires any adjustment to the carrying amount of the investment property to be taken to
the opening balance of accumulated surpluses or deficits for the period in which the Standard is
first applied. This Standard requires a treatment different from that required by IPSAS 3. IPSAS 3
requires comparative information to be restated unless such restatement is impracticable. This
Standard only encourages such comparative information to be restated in certain circumstances.
96. When an entity first applies this Standard, the adjustment to the opening balance of accumulated
surpluses or deficits includes the reclassification of any amount held in revaluation surplus for
investment property.
Cost Model
98. Prior to first application of this Standard, an entity may recognize its investment property on a basis
other than cost, for example fair value or some other measurement basis. IPSAS 3 applies to any
change in accounting policies that is made when an entity first applies this Standard and chooses
to use the cost model. The effect of the change in accounting policies includes the reclassification
of any amount held in revaluation surplus for investment property.
99. IPSAS 3 requires an entity to retrospectively apply accounting policies unless it is impracticable to
do so. Therefore, when an entity (a) initially recognizes investment property at cost, and (b)
chooses to use the cost model in accordance with this Standard, it shall also recognize any
accumulated depreciation and any accumulated impairment losses that relate to that property, as if
it had always applied those accounting policies.
Effective Date
IPSASs.
102A. Paragraphs 91, 92, 93, 94, 95, 96, 98, 99 and 102 were amended by IPSAS 33, First-time
Adoption of Accrual Basis International Public Sector Accounting Standards (IPSASs)
issued in January 2015. An entity shall apply those amendments for annual financial
statements covering periods beginning on or after January 1, 2017. Earlier application is
39
permitted. If an entity applies IPSAS 33 for a period beginning before January 1, 2017, the
amendments shall also be applied for that earlier period.
IPSAS 17, Property, Plant and Equipment

Paragraphs 95, 96, 97, 98, 99, 100, 101, 102, 103, 104 and 108 are amended and paragraph 108A is
added as follows:
95. Entities are not required to recognize property, plant, and equipment for reporting periods
beginning on a date within five years following the date of first adoption of accrual
accounting in accordance with IPSASs.
96. An entity that adopts accrual accounting for the first time in accordance with IPSASs shall
initially recognize property, plant, and equipment at cost or fair value. For items of
property, plant, and equipment that were acquired at no cost, or for a nominal cost, cost is
the item’s fair value as at the date of acquisition.
97. The entity shall recognize the effect of the initial recognition of property, plant, and
equipment as an adjustment to the opening balance of accumulated surpluses or deficits
for the period in which the property, plant, and equipment is initially recognized.
98. Prior to first application of this Standard, an entity may recognize its property, plant, and
equipment on a basis other than cost or fair value as defined in this Standard, or may control
assets that it has not recognized. This Standard requires entities to initially recognize items of
property, plant, and equipment at cost or, fair value as at the date of initial recognition in
accordance with this Standard. Where assets are initially recognized at cost and were acquired at
no cost, or for a nominal cost, cost will be determined by reference to the asset’s fair value as at
the date of acquisition. Where the cost of acquisition of an asset is not known, its cost may be
estimated by reference to its fair value as at the date of acquisition.
99. IPSAS 3 requires an entity to retrospectively apply accounting policies unless it is impracticable to
do so. Therefore, when an entity initially recognizes an item of property, plant, and equipment at
cost in accordance with this Standard, it shall also recognize any accumulated depreciation and
any accumulated impairment losses that relate to that item, as if it had always applied those
accounting policies.
100. Paragraph 14 of this Standard requires the cost of an item of property, plant, and equipment to be
recognized as an asset if, and only if:
(a) It is probable that future economic benefits or service potential associated with the item will
flow to the entity; and
(b) The cost or fair value of the item can be measured reliably.
101. The transitional provisions in paragraphs 95 and 96 are intended to give relief in situations where
an entity is seeking to comply with the provisions of this Standard, in the context of implementing
accrual accounting for the first time in accordance with IPSASs, with effect from the effective date
of this Standard or subsequently. When entities adopt accrual accounting in accordance with
IPSASs for the first time, there are often difficulties in compiling comprehensive information on the
existence and valuation of assets. For this reason, for a five-year period following the date of first
adoption of accrual accounting in accordance with IPSASs, entities are not required to comply
40
fully with the requirements of paragraph 14.
102. Notwithstanding the transitional provisions in paragraph 95 and 96, entities that are in the process
of adopting accrual accounting are encouraged to comply in full with the provisions of this
Standard as soon as possible.
103. The exemption from the requirements of paragraph 14 implies that the associated measurement
and disclosure provisions of this Standard do not need to be complied with in respect of those
assets or classes of asset that are not recognized under paragraphs 95 and 96.
104. When an entity takes advantage of the transitional provisions in paragraphs 95 and 96,
that fact shall be disclosed. Information on the major classes of asset that have not been
recognized by virtue of paragraph 95 shall also be disclosed. When an entity takes
advantage of the transitional provisions for a second or subsequent reporting period,
details of the assets or classes of asset that were not recognized at the previous reporting
date but that are now recognized shall be disclosed.
Effective Date
IPSASs.
108A. Paragraphs 95, 96, 97, 98, 99, 100, 101, 102, 103, 104 and 108 were amended by IPSAS 33,
First-time Adoption of Accrual Basis International Public Sector Accounting Standards
(IPSASs) issued in January 2015. An entity shall apply those amendments for annual
financial statements covering periods beginning on or after January 1, 2017. Earlier
application is permitted. If an entity applies IPSAS 33 for a period beginning before January
1, 2017, the amendments shall also be applied for that earlier period.

Effective Date
IPSASs.
period.
41
IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets

110. The effect of adopting this Standard on its effective date (or earlier) shall be reported as an
adjustment to the opening balance of accumulated surpluses/(deficits) for the period in
which the Standard is first adopted. Entities are encouraged, but not required, to (a) adjust
the opening balance of accumulated surpluses/(deficits) for the earliest period presented,
and (b) to restate comparative information. If comparative information is not restated, this
fact shall be disclosed.
Effective Date
IPSASs.

Effective Date
IPSASs.
period.
IPSAS 21, Impairment of Non-Cash-Generating Assets

80. This Standard shall be applied prospectively from the date of its application. Impairment
42
losses (reversals of impairment losses) that result from adoption of this IPSAS shall be
recognized in accordance with this Standard (i.e., in surplus or deficit).
81. Before the adoption of this Standard, entities may have adopted accounting policies for the
recognition and reversal of impairment losses. On adoption of this Standard, a change in
accounting policy may arise. It would be difficult to determine the amount of adjustments resulting
from a retrospective application of the change in accounting policy. Therefore, on adoption of this
Standard, an entity shall not apply the benchmark or the allowed alternative treatment for other
changes in accounting policies in IPSAS 3, Accounting Policies, Changes in Accounting Estimates
and Errors.
Effective Date
IPSASs.
83A. Paragraphs 80, 81 and 83 were amended by IPSAS 33, First-time Adoption of Accrual Basis
IPSAS 22, Disclosure of Financial Information about the General Government

Sector
Effective Date
IPSASs.
period.
43
IPSAS 23, Revenue from Non-Exchange Transactions (Taxes and Transfers)

Paragraphs 116, 117, 118, 119, 120, 121, 122, 123 and 125 are amended and paragraph 125A is
added as follows:
116. Entities are not required to change their accounting policies in respect of the recognition
and measurement of taxation revenue for reporting periods beginning on a date within five
years following the date of first adoption of this Standard.
117. Entities are not required to change their accounting policies in respect of the recognition
and measurement of revenue from non-exchange transactions, other than taxation revenue,
for reporting periods beginning on a date within three years following the date of first
adoption of this Standard.
118. Changes in accounting policies in respect of the recognition and measurement of revenue
from non-exchange transactions made before the expiration of the five year period permitted
in paragraph 116, or the three year period permitted in paragraph 117, shall only be made to
better conform to the accounting policies of this Standard. Entities may change their
accounting policies in respect of revenue from non-exchange transactions on a class-by-
class basis.
119. When an entity takes advantage of the transitional provisions in paragraph 116 or 117, that
fact shall be disclosed. The entity shall also disclose (a) which classes of revenue from non-
exchange transactions are recognized in accordance with this Standard, (b) those that have
been recognized under an accounting policy that is not consistent with the requirements of
this Standard, and (c) the entity’s progress towards implementation of accounting policies
that are consistent with this Standard. The entity shall disclose its plan for implementing
accounting policies that are consistent with this Standard.
120. When an entity takes advantage of the transitional provisions for a second or subsequent
reporting period, details of the classes of revenue from non-exchange transactions
previously recognized on another basis, but which are now recognized in accordance with
this Standard, shall be disclosed.
121. The transitional provisions are intended to allow entities a period to develop reliable models for
measuring revenue from non-exchange transactions during the transitional period. Entities may
adopt accounting policies for the recognition of revenue from non-exchange transactions that do
not comply with the provisions of this Standard. The transitional provisions allow entities to apply
this Standard incrementally to different classes of revenue from non-exchange transactions. For
example, entities may be able to recognize and measure property taxes and some classes of
transfers in accordance with this Standard from the date of application, but may require up to five
years to fully develop a reliable model for measuring income tax revenue.
122. When an entity takes advantage of the transitional provisions in this Standard, its accounting
policies for each class of revenue from non-exchange transactions may only be changed to better
conform to this Standard. An entity may retain its existing accounting policies until it decides to fully
apply the provisions of this Standard, or until the transitional provisions expire, whichever is earlier,
or it may change them to apply the requirements of this Standard progressively. An entity may, for
example, change from a policy of recognition on a cash basis to a modified cash or modified
accrual basis before it fully applies this Standard.
44
123. The disclosure requirements of paragraph 119 assist users to track the progress of the entity in
conforming its accounting policies to the requirements of this IPSAS during the reporting periods in
which the transitional provisions apply. This disclosure facilitates the objective of full accountability
and transparency.
Effective Date
IPSASs.
125A. Paragraphs 116, 117, 118, 119, 120, 121, 122, 123 and 125 were amended by IPSAS 33, First-
time Adoption of Accrual Basis International Public Sector Accounting Standards (IPSASs)
issued in January 2015. An entity shall apply those amendments for annual financial
statements covering periods beginning on or after January 1, 2017. Earlier application is
permitted. If an entity applies IPSAS 33 for a period beginning before January 1, 2017, the
amendments shall also be applied for that earlier period.
IPSAS 24, Presentation of Budget Information in Financial Statements

Effective Date
IPSASs.
period.

Paragraphs 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176 and 178 are amended and
paragraph 179A is added as follows:
First Time Adoption of this Standard
166. On first adopting this Standard, an entity shall determine its initial liability for defined benefit
plans at that date as:
(a) The present value of the obligations (see paragraph 77) at the date of adoption;
(b) Minus the fair value, at the date of adoption, of plan assets (if any) out of which the
obligations are to be settled directly (see paragraphs 118–120);
45
(c) Minus any past service cost that, under paragraph 112, shall be recognized in later
periods.
167. If the initial liability determined in accordance with paragraph 166 is more or less than the
liability that would have been recognized at the same date under the entity’s previous
accounting policy, the entity shall recognize that increase/decrease in opening accumulated
surpluses or deficits.
168. On the initial adoption of this Standard, the effect of the change in accounting policy includes all
actuarial gains and losses that arose in earlier periods, even if they fall inside the corridor specified
in paragraph 105. Entities reporting under accrual accounting for the first time will not have
recognized any liability, in which case the increase in the liability will represent the full amount of
the liability minus the fair value, at the date of adoption, of any plan assets in accordance with
paragraph 166(b) and any past service cost to be recognized in later periods in accordance with
paragraph 166(c). Under the provisions of this Standard, this increased liability is recognized in
accumulated surpluses or deficits.
169. On first adopting this Standard, an entity shall not split the cumulative actuarial gains and
losses from the inception of the defined benefit plan(s) until the date of first adoption of this
Standard into a recognized and unrecognized portion. All cumulative actuarial gains and
losses shall be recognized in opening accumulated surpluses or deficits.
170. On first adoption of this Standard, entities are not permitted to split cumulative actuarial gains and
losses into recognized and unrecognized portions. All cumulative gains and losses are recognized
in opening accumulated surpluses or deficits. This requirement on first-time adoption of this
Standard does not preclude an entity electing to recognize only part of its actuarial gains and
losses in accordance with the requirements in paragraphs 105–107 in subsequent reporting
periods.
171. In the first year of adoption of this Standard, an entity is not required to provide comparative
information.
172. Paragraph 171 provides relief from the inclusion of comparative information to all entities in the first
year of adoption of this Standard. An entity is encouraged to include comparative information where
this is available.
173. In the first year of adoption of this Standard, an entity is not required to provide the
disclosures in paragraphs 141(c), 141(e), and 141(f).
174. The reconciliations in paragraphs 141(c) and 141(e) both involve the disclosure of opening
balances relating to components of defined benefit obligations, plan assets, and reimbursement
rights. The disclosure in paragraph 141(f) requires a reconciliation that relies on information in
paragraphs 141(c) and 141(e). These disclosures are not required in the first year of adoption of
this Standard. An entity is encouraged to include these disclosures where the information is
available.
175. In the first year of adoption of this Standard, an entity may provide the information required
in paragraph 141(p) prospectively.
176. The information specified in paragraph 141(p) relates to the present value of the defined benefit
obligation, the fair value of the plan assets, the surplus or deficit in the plan, and certain experience
adjustments. This disclosure is only required for the current annual period in the first year of
adoption. Information on prior annual periods can be provided prospectively as the entity reports
46
under the requirements of this Standard. This allows entities to build trend information over a
period, rather than producing such information for reporting periods prior to the period of first
adoption of the Standard.
Effective Date
IPSASs.
178A. Paragraphs 166, 167, 168, 169, 170, 171, 172, 173, 174, 175, 176 and 178 were amended by
IPSAS 33, First-time Adoption of Accrual Basis International Public Sector Accounting
Standards (IPSASs) issued in January 2015. An entity shall apply those amendments for
annual financial statements covering periods beginning on or after January 1, 2017. Earlier
IPSAS 26, Impairment of Cash-Generating Assets

Effective Date
IPSASs.
IPS Paragraph 127 was amended by IPSAS 33, First-time Adoption of Accrual Basis International
period.
IPSAS 27, Agriculture

Initial Adoption of Accrual Accounting
55. Where an entity initially recognizes biological assets or agricultural produce on the first-
time adoption of the accrual basis of accounting, the entity shall report the effect of the
initial recognition of those assets, and that produce as an adjustment to the opening
balance of accumulated surpluses or deficits for the period in which this Standard is first
adopted.
47
Effective Date
IPSASs.

Transition
56. An entity shall apply this Standard retrospectively on first time application.
57. When an entity that previously applied IPSAS 15, Financial Instruments: Disclosure and
Presentation, applies the requirements in paragraphs 15 to 18, an entity is required to split a
compound financial instrument with an obligation to deliver to another party a pro rata share
of the net assets of the entity only on liquidation into a liability and net assets/equity
component. If the liability component is no longer outstanding, a retrospective application
of these requirements would involve separating two components of net assets/equity. The
first component would be in accumulated surpluses and deficits and represent the
cumulative interest accreted on the liability component. The other component would
represent the original net assets/equity component. Therefore, an entity need not separate
these two components if the liability component is no longer outstanding when the Standard
is adopted.
58. An entity that either previously did not apply IPSAS 15 or adopts accrual accounting for the
first time, applies the transitional provision in paragraph 57 to all compound financial
instruments.
Effective Date
IPSASs.
61A. Paragraphs 56, 57, 58 and 61 were amended by IPSAS 33, First-time Adoption of Accrual
48

Paragraphs 114, 115, 116, 117, 118, 119, 120, 121, 122, 123 and 126 are amended and paragraph is
126A is added as follows:
Transitional
114. This Standard shall be applied retrospectively except as specified in paragraphs 115–123.
The opening balance of accumulated surplus or deficit for the earliest prior period presented
and all other comparative amounts shall be adjusted as if this Standard had always been in
use unless restating the information would be impracticable. If restatement is impracticable,
the entity shall disclose that fact and indicate the extent to which the information was
restated.
115. When this Standard is first applied, an entity is permitted to designate a financial asset,
including those that may have been recognized previously, as available for sale. For any
such financial asset the entity shall recognize all cumulative changes in fair value in a
separate component of net assets/equity until subsequent derecognition or impairment,
when the entity shall transfer that cumulative gain or loss to surplus or deficit. For financial
assets that were previously recognized, the entity shall also:
(a) Restate the financial asset using the new designation in the comparative financial
statements; and
(b) Disclose the fair value of the financial assets at the date of designation and their
classification and carrying amount in the previous financial statements.
116. When this Standard is first applied, an entity is permitted to designate a financial asset or a
financial liability, including those that may have been recognized previously, at fair value
through surplus or deficit that meet the criteria for designation in paragraphs 10, 13, 14, 15,
51, AG7–AG16, AG47, and AG48. Where an entity previously recognized financial assets and
financial liabilities, the following apply:
(a) Notwithstanding paragraph 111, any financial assets and financial liabilities
designated as at fair value through surplus or deficit in accordance with this
subparagraph that were previously designated as the hedged item in fair value hedge
accounting relationships shall be de-designated from those relationships at the same
time they are designated as at fair value through surplus or deficit.
(b) Shall disclose the fair value of any financial assets or financial liabilities designated in
accordance with subparagraph (a) at the date of designation and their classification
and carrying amount in the previous financial statements.
(c) Shall de-designate any financial asset or financial liability previously designated as at
fair value through surplus or deficit if it does not qualify for such designation in
accordance with those paragraphs. When a financial asset or financial liability will be
measured at amortized cost after de-designation, the date of dedesignation is deemed
to be its date of initial recognition.
(d) Shall disclose the fair value of any financial assets or financial liabilities de-designated
in accordance with subparagraph (c) at the date of de-designation and their new
classifications.
117. An entity shall restate its comparative financial statements using the new designations in
49
paragraph 116 provided that, in the case of a financial asset, financial liability, or group of
financial assets, financial liabilities or both, designated as at fair value through surplus or
deficit, those items or groups would have met the criteria in paragraph 10(b)(i), 10(b)(ii), or
13 at the beginning of the comparative period or, if acquired after the beginning of the
comparative period, would have met the criteria in paragraph 10(b)(i), 10(b)(ii), or 13 at the
date of initial recognition.
118. Except as permitted by paragraph 119, an entity shall apply the derecognition requirements
in paragraphs 17–39 and Appendix A paragraphs AG51–AG67 prospectively. If an entity
derecognized financial assets under another basis of accounting as a result of a transaction
that occurred before the adoption of this Standard and those assets would not have been
derecognized under this Standard, it shall not recognize those assets.
119. Notwithstanding paragraph 118, an entity may apply the derecognition requirements in
paragraphs 17–39 and Appendix A paragraphs AG51–AG67 retrospectively from a date of
the entity’s choosing, provided that the information needed to apply this Standard to assets
and liabilities derecognized as a result of past transactions was obtained at the time of
initially accounting for those transactions.
120. Notwithstanding paragraph 114, an entity may apply the requirements in the last sentence of
paragraph AG108, and paragraph AG109, in either of the following ways:
(a) Prospectively to transactions entered into after the adoption of this Standard; or
(b) Retrospectively from a date of the entity’s choosing, provided that the information
needed to apply this Standard to assets and liabilities as a result of past transactions
was obtained at the time of initially accounting for those transactions.
121. An entity shall not adjust the carrying amount of non-financial assets and non-financial
liabilities to exclude gains and losses related to cash flow hedges that were included in the
carrying amount before the beginning of the financial year in which this Standard is first
applied. At the beginning of the financial period in which this Standard is first applied, any
amount recognized directly in net assets/equity for a hedge of a firm commitment that under
this Standard is accounted for as a fair value hedge shall be reclassified as an asset or
liability, except for a hedge of foreign currency risk that continues to be treated as a cash
flow hedge.
122. If an entity has designated as the hedged item an external forecast transaction that:
(a) Is denominated in the functional currency of the entity entering into the transaction;
(b) Gives rise to an exposure that will have an effect on consolidated surplus or deficit
(i.e., is denominated in a currency other than the economic entity’s presentation
currency); and
(c) Would have qualified for hedge accounting had it not been denominated in the
functional currency of the entity entering into it;
it may apply hedge accounting in the consolidated financial statements in the period(s)
before the date of first application of the last sentence of paragraph 89 and paragraphs
AG133 and AG134.
123. An entity need not apply paragraph AG134 to comparative information relating to periods
before the date of application of the last sentence of paragraph 89 and paragraph AG133.
50
Effective Date
IPSASs.
126A. Paragraphs 114, 115, 116, 117, 118, 119, 120, 121, 122, 124 and 126 were amended by IPSAS
33, First-time Adoption of Accrual Basis International Public Sector Accounting Standards
(IPSASs) issued in January 2015. An entity shall apply those amendments for annual
financial statements covering periods beginning on or after January 1, 2017. Earlier

Effective Date and Transition

IPSASs.
period.

Transition
129. An entity that has not previously recognized intangible assets and uses the accrual basis of
accounting shall apply this Standard prospectively. However, retrospective application is
permitted.
130. For intangible items that meet:
(a) The recognition criteria in this Standard (including reliable measurement of original cost); and
(b) The criteria in this Standard for revaluation (including existence of an active market);
an entity may elect to measure an intangible asset on the date of transition, at its fair value and use
that fair value as its deemed cost at that date.
131. An entity may elect to use a previous revaluation of an intangible asset at, or before, the date of
transition as deemed cost at the date of the revaluation, if the revaluation was, at the date of the
51
revaluation, broadly comparable to:
(a) Fair value; or
(b) Cost or depreciated cost in accordance with IPSASs, adjusted to reflect, for example,
changes in a general or specific price index.
Effective Date
IPSASs.
133A. Paragraphs 129, 130, 131 and 133 were amended by IPSAS 33, First-time Adoption of
Accrual Basis International Public Sector Accounting Standards (IPSASs) issued in January
2015. An entity shall apply those amendments for annual financial statements covering
periods beginning on or after January 1, 2017. Earlier application is permitted. If an entity
applies IPSAS 33 for a period beginning before January 1, 2017, the amendments shall also
be applied for that earlier period.
IPSAS 32, Service Concession Arrangements: Grantor

Paragraphs 35, 37 and Application Guidance AG68–AG73 are amended and paragraph 37A is
added as follows:
Transitional (see paragraphs AG68–AG73)
35. A grantor that has not previously recognized service concession assets and related
liabilities, revenues, and expenses shall either:
(a) Apply this Standard retrospectively in accordance with IPSAS 3; or
(b) Elect to recognize and measure service concession assets and related liabilities at the
beginning of the earliest period for which comparative information is presented in the
When the grantor makes this election, it shall disclose this fact, along with disclosures
relating to the measurement of those assets and liabilities.
Effective Date
IPSASs.
52
Application Guidance
Transition(see paragraphs 34–35)
AG68. Where the grantor has not previously recognized service concession assets, it may elect to under
paragraph 35(b) to recognize and measure service concession assets and related liabilities
prospectively, using deemed cost. Deemed cost is determined at the beginning of the earliest
period for which comparative information is presented in the financial statements.
AG69. Deemed cost for service concession assets should be determined using the following
measurement bases:
(a) For property, plant, and equipment – fair value, or depreciated replacement cost as a
means of estimating fair value where there is no market. IPSAS 17 allows revaluation using
fair value or depreciated replacement cost (see IPSAS 17, paragraphs 46–48); and
(b) For intangible assets – fair value. IPSAS 31 only allows fair value for revaluation, thus the
deemed cost is limited to fair value.
AG70. The related liability should be determined using the following approaches:
(a) For the liability under the financial liability model, the remaining contractual cash flows
specified in the binding arrangement and the rate described in paragraphs AG41–AG46.
(b) For the liability under the grant of a right to the operator model, the fair value of the asset
less any financial liabilities, adjusted to reflect the remaining period of the service
concession arrangement.
AG71. Depreciation or amortization is based on that deemed cost and starts from the date for which the
entity established the deemed cost.
Use of Deemed Cost under the Financial Liability Model
AG72. Where the grantor uses deemed cost under the financial liability model, it measures:
(a) The service concession asset at fair value (see paragraph 11); and
(b) The financial liability using the remaining contractual cash flows specified in the binding
arrangement and the rate described in paragraphs AG41–AG46 at the beginning of the
earliest period for which comparative information is presented in the financial statements.
Any difference between the value of the asset and the financial liability is recognized directly in
net assets/equity. If the entity chooses as its accounting policy the revaluation model in IPSAS 17
or IPSAS 31, this difference is included in any revaluation surplus.
Use of Deemed Cost under the Grant of a Right to the Operator Model
AG73. Where the grantor uses deemed cost under the grant of a right to the operator model, it
measures:
(a) The service concession asset at fair value (see paragraph 11); and
(b) The liability representing the unearned portion of any revenue arising from the receipt of the
service concession asset. This amount should be determined as the fair value of the asset
less any financial liabilities, adjusted to reflect the remaining period of the service
concession arrangement.
53
Basis for Conclusions

This Basis for Conclusions accompanies, but is not part of, IPSAS 33.
Background
BC1. Prior to the development of IPSAS 33, there was no Standard that addresses issues arising from
the first-time adoption of IPSASs. As a result, the IPSASB approved a project in June 2011 to
develop a comprehensive set of principles to be used by entities on the adoption of accrual basis
International Public Sector Accounting Standards (IPSASs).
BC2. While this IPSAS has Implementation Guidance, it is not within the scope of this project to
develop more detailed practical guidance on the first-time adoption of IPSASs. The IPSASB is of
the view that because specific issues relating to first-time adoption are likely to vary from one
jurisdiction to the next, and because the starting point for first-time adopters varies depending on
their previous basis of accounting, individual jurisdictions need to play a role in the development
of additional implementation guidance to assist first-time adopters in their transition to accrual
basis IPSASs.
BC3. This IPSAS addresses the transition from either a cash basis, or an accrual basis under another
reporting framework, or a modified version of either the cash or accrual basis of accounting.
Consequently, the IPSASB agreed that the project is not an IFRS convergence project.
BC4. The IPSASB did, however, consider the transitional exemptions included in IFRS 1 First-time
Adoption of International Financial Reporting Standards, as well as the transitional provisions
included in the existing suite of IPSASs, in developing this IPSAS.
BC5. In developing this IPSAS, the IPSASB agreed that, because this IPSAS is not a convergence
project, all the transitional provisions and exemptions should be included in a single
pronouncement. In comparison with IFRS 1, the IPSASB agreed that no transitional provisions
and exemptions should be included as appendices, as this could be confusing to the preparers of
the financial statements if the provisions and exemptions are dispersed all over the Standard.
BC6. The transitional exemptions provided in this IPSAS will replace many of the transitional provisions
in IPSASs once they are applied.
BC7. When the IPSASB issues new pronouncements, it will consider specific transitional provisions to
be included in this IPSAS that will provide relief to a first-time adopter. Transitional provisions for
entities already applying accrual basis IPSASs will be included in the new pronouncements that
are developed.
Scope
BC8. This IPSAS applies when an entity first adopts accrual basis IPSASs for the first time and during
the period that it transitions to accrual basis IPSASs to the extent that it has adopted one or more
of the transitional exemptions and provisions in this IPSASs. This IPSAS provides relief to a first-
time adopter in presenting its financial statements, and allows a first-time adopter certain
voluntary exemptions during the period of transition.
BC9. This IPSAS requires an entity to comply with each effective IPSAS on the date of adoption, but
grants limited exemptions from requirements in certain areas where the benefits to users of
financial statements are less than the cost of complying with those requirements. Retrospective
54
application of some IPSASs is prohibited, particularly where they require judgment by

management about past conditions.
BC10. The exemptions provided in this IPSAS may override some of the requirements in existing
accrual basis IPSASs during the transition to accrual basis IPSASs.
BC11. The date of adoption of accrual basis IPSASs is the start of the reporting period in which the first-
time adopter elects to adopt accrual basis IPSASs. If, on the date of adoption of accrual basis
IPSASs the first-time adopter elects to apply one or more of the voluntary exemptions or
provisions that affect fair presentation and the first-time adopter’s ability to assert compliance with
accrual basis IPSASs, the first-time adopter will present transitional IPSAS financial statements
during the period of transition. At the end of the transitional period the first-time adopter must
comply with the recognition, measurement, presentation and disclosure requirements in the other
accrual basis IPSASs in order to assert compliance with accrual basis IPSASs as required in
IPSAS 1, Presentation of Financial Statements, even though the date of adoption of accrual basis
IPSAS may have been at an earlier point.
BC12. If, however, on the date of adoption of accrual basis IPSASs the first-time adopter elects not to
apply one or more of the exemptions or provisions that affect fair presentation and the ability to
assert compliance with accrual basis IPSASs, the first-time adopter can present IPSAS financial
statements during the period of transition. IPSAS financial statements are financial statements in
which the first-time adopter can make an explicit and unreserved statement in those financial
statements of compliance with accrual basis IPSASs. If a first-time adopter does not adopt the
exemptions in this IPSAS that affect fair presentation and compliance with accrual basis IPSASs,
its first financial statements following the adoption of accrual basis IPSASs may also be its first
Developing Criteria to Develop and Assess Transitional Exemptions

BC13. In developing the transitional exemptions in this IPSAS, the IPSASB developed a set of criteria
based on what user information needs are likely to be on the adoption of and transition to accrual
basis IPSASs as set out in Chapter 2 of the Conceptual Framework for General Purpose
Financial Reporting by Public Sector Entities (the Conceptual Framework). These criteria were
used to evaluate these transitional provisions, along with an assessment of the qualitative
characteristics, and constraints on, information included in GPFRs as outlined in Chapter 3 of the
Conceptual Framework. The results of these evaluations are included in paragraphs BC14 to
BC19.
BC14. In developing requirements for the first-time adopter’s opening statement of financial position and
in considering the transitional exemptions, the IPSASB referred to the objective of financial
statements, as set out in Chapter 2 of the Conceptual Framework.
BC15. Chapter 2 of the Conceptual Framework states that the objective of financial statements is to
provide information about the financial position, performance and changes in financial position of
an entity that is useful to a wide range of users in providing information for accountability and
decision-making purposes.
BC16. Chapter 3 of the Conceptual Framework also identifies qualitative characteristics of information
included in the general purpose financial reports (GPFRs) of public sector entities. These
qualitative characteristics are relevance, faithful representation, understandability, timeliness,
comparability and verifiability. The constraints on information included in GPFRs are materiality
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and cost-benefit.
Criteria Used to Develop the Transitional Exemptions
Fair Presentation and Compliance with IPSASs
BC17. IPSAS 1 requires that an entity whose financial statements comply with IPSASs shall make an
explicit and unreserved statement of such compliance in the notes to the financial statements.
Financial statements shall not be described as complying with IPSASs unless they comply with all
the requirements of IPSASs. Due to the complexity of issues relating to the first-time adoption of
IPSASs, the IPSASB agreed that relief should be provided in certain instances. The IPSASB
however agreed that some relief will affect the fair presentation of a first-time adopter’s financial
statements and the ability to assert compliance with accrual basis IPSASs.
BC18. The IPSASB agreed that there should be a differentiation between those transitional exemptions
which do not affect fair presentation of a first-time adopter’s financial statements and those that
do. The IPSASB also agreed that, structuring the Standard in this way will give preparers a better
understanding of the affect that the various transitional provisions and exemptions will have on
their financial statements during the period of transition. Following the differentiation the IPSASB
agreed that first-time adopters should be alerted to the fact that they will not be able to assert
compliance with accrual basis IPSASs as required by IPSAS 1 if they adopt certain exemptions
provided in this IPSAS.
BC19. The IPSASB agreed that where a first-time adopter takes advantage of the exemptions that affect
fair presentation and compliance with accrual basis IPSASs, it will not be able to make an
unreserved statement of compliance with accrual basis IPSASs until such time as the exemptions
that provided the relief have expired, or when the relevant items are recognized, measured and/or
the relevant information has been presented and/or disclosed in the financial statements in
BC20. Following comment received on the proposed IPSAS on First-time Adoption of Accrual Basis
IPSAS, the IPSASB agreed to clarify that a first-time adopter should apply judgment in assessing
to what extent the transitional exemptions and provisions adopted affect fair presentation of the
financial statements and the first-time adopter’s ability to assert compliance with accrual basis
IPSAS. Where a first-time adopter elects to apply one or more of the transitional exemptions and
provisions that affect the fair presentation of the financial statements and its ability to assert
compliance with accrual basis IPSAS, the first-time adopter may still conclude that fair
presentation is achieved because the recognition and/or measurement of the item, transaction or
event that are exempted is not significant in relation to the financial statements as a whole.
Applying judgment to assess the significance of the transitional exemption and provision adopted
in relation to the financial statements as a whole needs to be assessed based on the first-time
adopter’s specific circumstances.
BC21. The IPSASB agreed that the financial statements presented at the end of the first reporting period
where a first-time adopter takes advantage of one of more of the transitional exemptions that
affect fair presentation and compliance with accrual basis IPSASs, should be referred to as the
transitional IPSAS financial statements. This is because the first-time adopter will not be able to
make an explicit and unreserved statement of compliance with IPSASs while applying the
exemptions in this IPSAS that affect the fair presentation of the financial statements and a first-
time adopter’s ability to assert compliance with accrual basis IPSASs.
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BC22. To provide relevant information during the transition to accrual basis IPSASs disclosures to
inform users about the transitional exemptions adopted by a first-time adopter, and how it
transitions from its previous basis of accounting to accrual basis IPSASs.
BC23. The IPSASB noted that, as part of a first-time adopter’s transition to accrual accounting, an
implementation plan should be developed so as to assess the first-time adopter’s progress
reporting under accrual basis IPSASs. Disclosures on the progress towards recognizing,
measuring, presenting and/or disclosing assets, liabilities, revenue and/or expenses in
accordance with this plan will provide useful information to the users of financial statements in
understanding how and by when the first-time adopter intends to comply in full with the
requirements of all the applicable IPSASs.
Presentation of Information on First-Time Adoption
Presenting Comparative Information Following the Adoption of Accrual Basis IPSASs
BC24. The IPSASB considered whether comparative information should be required on the adoption of
IPSASs, as the existing transitional provisions in IPSAS 1, Presentation of Financial Statements
do not require comparative information in respect of the financial statements in which accrual
accounting is first adopted in accordance with IPSASs.
BC25. In considering the cost-benefit criterion, the IPSASB confirmed that the current approach in
IPSAS 1 for the presentation of comparative information should be retained to promote the
adoption of accrual IPSASs. This IPSAS therefore only encourages the provision of comparative
information, with no requirement that a first-time adopter should provide comparative information
in its transitional IPSAS financial statements, or first IPSAS financial statements.
BC26. Where a first-time adopter elects to not present comparative information, the IPSASB agreed
that, as a minimum, a first-time adopter’s transitional IPSAS financial statements, should include
one statement of financial position and an opening statement of financial position at the date of
adoption of accrual basis IPSASs.
BC27. Where an entity elects to present comparative information, the IPSASB agreed that a first-time
adopter should present one statement of financial position with comparative information for the
preceding period and an opening statement of financial position as at the beginning of the
reporting period prior to the date of adoption of accrual basis IPSASs.
BC28. As the adoption of the three year transitional relief period also affects the presentation of
comparative information, the IPSASB agreed that where the first-time adopter takes advantage of
any of the transitional relief periods permitted, it should only adjust comparative information for
the year following the date of adoption of accrual basis IPSASs when information is available
about the items that were recognized and/or measured during that period. Comparative
information will thus only be adjusted retrospectively to the extent that the information is available.
BC29. A first-time adopter shall apply the requirements in IPSAS 1 relating to the disclosure of
comparative information after it has presented its first IPSAS financial statements.
Presenting a Reconciliation Following the Adoption of Accrual Basis IPSASs
BC30. In considering what information would be useful to users of the financial statements in relation to
the first-time adoption of IPSASs, the IPSASB agreed that a reconciliation should be presented in
the notes to the transitional IPSAS financial statements, or first IPSAS financial statements. The
presentation of a reconciliation provides an important link between the information previously
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presented under the first-time adopter’s previous basis of accounting, and the information
prepared using IPSASs. The purpose of the reconciliation is to illustrate the adjustments that are
necessary to conform with the requirements of accrual basis IPSASs, and how the transition from
the previous basis of accounting to IPSASs affected the first-time adopter’s reported financial
position, financial performance and cash flows. This information will be useful to the users of
BC31. The IPSASB considered two types of reconciliations that could be presented – the first one
reconciling opening balances as at the date of adoption of IPSASs, and the second a
reconciliation reconciling the end of the latest period presented in the first-time adopter’s most
recent annual financial statements in accordance with its previous basis of accounting.
BC32. The IPSASB concluded that the latter option will be too onerous and that the cost of presenting
the reconciliation, outweighs the benefit. It was also concluded that users will not likely make use
of such reconciliations and that the information will not have predictive value.
BC33. As a result, it was agreed that a first-time adopter should only present a reconciliation of its
closing balances reported under its previous basis of accounting, to its net assets/equity in
accordance with IPSASs for the opening statement of financial position. The information should
be presented in the notes to the transitional IPSAS financial statements, or the first IPSAS
BC34. If a first-time adopter previously applied a cash basis of accounting it would not have presented
net assets/equity. The IPSASB therefore agreed that if a first-time adopter’s previous basis of
accounting is cash, it is not required to present a reconciliation.
BC35. To meet the qualitative characteristics of relevance, understandability and comparability during
the period of transition where a first-time adopter takes advantage of the exemption that provides
relief from the recognition and/or measurement of assets and/or liabilities, the IPSASB
considered whether a first-time adopter should be required to present a reconciliation at different
points during its transition to accrual basis IPSASs.
BC36. The IPSASB agreed that where a first-time adopter takes advantage of any of the transitional
relief periods permitted, it should present a reconciliation of items that have been recognized
and/or measured during the reporting period when these items have not been recognized and/or
measured in the previous reported financial statements. This reconciliation should be presented
in addition to the reconciliation that is presented to explain differences between the first-time
adopter’s previous basis of accounting and those items that are recognized and/or measured in
accordance with IPSASs in the opening statement of financial position.
Presenting a Comparison of Budget and Actual Information in a First-time Adopter’s Financial Statements
BC37. The IPSASB debated whether a first-time adopter should be required to present a comparison of
budget and actual information following the adoption of accrual basis IPSASs, and whether such
information is useful to the users of the financial statements.
BC38. The IPSASB considered that if a first-time adopter prepares its budget on the cash-basis of
accounting after the adoption of IPSASs, presenting this comparison in its transitional IPSAS
financial statements, or its first IPSAS financial statements could be onerous. The IPSASB,
however, agreed that such a comparison should be included in a first-time adopter’s financial
statements, as the comparison is a unique feature of IPSASs and promotes accountability and
decision-making.
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Presenting a Cash Flow Statement in a First-time Adopter’s Financial Statements
BC39. During the comment period, respondents requested the IPSASB to consider providing transitional
exemptions and provisions for the preparation of the cash flow statement where a first-time
adopter elects to adopt a three year relief period for the recognition and/or measurement of
certain assets and/or liabilities. Respondents noted that it did not seem appropriate to present a
cash flow statement when the statement of financial position is incomplete.
BC40. The IPSASB confirmed its previous decision to not provide any transitional relief as, during the
transitional period, users still need cash flow information on: (a) the sources of cash inflows: (b)
the items on which cash was expensed during the reporting period; and (c) the cash balance as
at the end of the reporting period.
Alignment of Accrual IPSASs and Government Finance Statistics Reporting
BC41. As the objective of this Standard is to provide a suitable starting point for accounting in
accordance with accrual basis IPSAS it does not provide specific guidance to a first-time adopter
on alignment of GFS reporting and accrual basis IPSASs. In its Consultation Paper, Alignment of
IPSASs and Government Finance Statistics Reporting Guidelines: Resolution of Differences
through Convergence and Management, the IPSASB discusses where guidance on GFS
alignment options within the suite of IPSASB’s pronouncements will be best addressed. By
choosing Government Finance Statistics (GFS) aligned policy options on the first-time adoption of
accrual IPSASs, a first-time adopter may facilitate production of high quality and timely data for
inclusion in their GFS reports.
Exemptions that Affect Fair Presentation and Compliance with Accrual Basis IPSAS
Transitional Exemptions Relating to the Recognition, Measurement and Classification of Non-Financial

Assets
BC42. When an entity first adopts IPSASs, it may not have comprehensive information about the
existence of all the assets under its control, and may require a period of time to obtain and
compile appropriate records to account for such assets. As this is relevant to entities that
previously did not apply the accrual basis of accounting, it is likely that these entities will require
considerable effort to recognize, measure and/or classify their assets in accordance with IPSASs.
BC43. In considering the relief that should be provided to a first-time adopter for the recognition of its
assets, the IPSASB considered the existing five year relief period in IPSAS 17. To encourage
entities to prepare for the adoption of IPSASs in advance of the preparation of their transitional
IPSAS financial statements, or their first IPSAS financial statements, the IPSASB agreed that a
grace period not exceeding three years should be allowed. As entities should prepare well in
advance for their transition to accrual basis IPSASs and not solely rely on the relief period
provided in this IPSAS, the IPSASB is of the view that the three year transitional period is more
manageable, and reduces the period over which entities will not be able to assert compliance with
IPSASs.
BC44. The IPSASB agreed that prescribing a relief period in this IPSAS, rather than allowing each
jurisdiction to prescribe their own transitional period, reduces inconsistencies between
jurisdictions. The credibility and comparability of financial statements during the period of
transition will also be enhanced.
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BC45. The IPSASB confirmed that the relief provided in this IPSAS should not be seen as a complete
roadmap for the adoption of accrual basis IPSASs, but rather the end stage of their adoption
process. The relief period of three years provided in this IPSAS is aimed at providing relief to a
first-time adopter to assist with the final conversion to accrual basis IPSASs. Prior to the adoption
of this IPSAS, a first-time adopter should adequately prepare for its transition to accrual basis
IPSASs. The complexity and length of the transition will depend on its previous basis of
accounting. The three year relief period should not be seen as the entire adoption phase.
BC46. The guidance in Study 14, Transition to the Accrual Basis of Accounting: Guidance for
Governments and Government Entities issued by the IPSASB may assist a first-time adopter in
planning their conversion to accrual basis IPSASs, prior to adoption of this IPSAS.
BC47. The IPSASB proposed that a relief period of three years should be provided for the following
assets:
(a) Investment property;
(b) Property, plant and equipment;
(c) Biological assets and agricultural produce;
(d) Intangible assets; and

(e) Service concession assets.
BC48. Following comment received on this proposed IPSAS, the IPSASB agreed to also allow a relief
period for the recognition and/or measurement of inventory. The IPSASB agreed that, even
though inventory is a current asset which is realised, consumed, sold or used in an entity’s
operating cycle, a first-time adopter may need time to identify and classify its assets appropriately
between inventory, investment property or property, plant and equipment, particularly in respect
of land. Inventory may also comprise specialized assets or high volumes of items, e.g. medical
supplies, for which additional time may be required for appropriate classification.
BC49. In considering whether a relief period should be allowed for the recognition of biological assets
and agricultural produce, the IPSASB noted that these assets and activities may be limited in
some jurisdictions while they may be more significant in other jurisdictions, for example,
developing countries. On balance, the IPSASB agreed that a three year relief period should be
provided for the recognition of biological assets and agricultural produce to assist those
jurisdictions where this is a significant issue.
BC50. IPSAS 5 allows a first-time adopter to either adopt the benchmark treatment or the allowed
alternative treatment in accounting for borrowing costs incurred on qualifying assets. When a first-
time adopter elects to apply the allowed alternative treatment, there may a timing difference
between the capitalization of borrowing costs on qualifying assets where the first-time adopter
takes advantage of the three year transitional relief period to not recognize certain assets. To
address this timing difference, and because it might not be practical to obtain information on
borrowing costs incurred prior to the recognition of the asset where the first-time adopter takes
advantage of the three year transitional exemption period, the IPSASB agreed that a first-time
adopter should not be required to capitalize any borrowing costs on qualifying assets for which
the commencement date for capitalization is prior to the date of adoption of accrual basis
IPSASs. Based on comment received from respondents on the proposed Exposure Draft, the
IPSASB also agreed that any borrowing costs incurred during the period of transition should also
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not be capitalized until the exemptions that provided the relief have expired and/or when the
relevant assets are recognized in accordance with the applicable IPSASs (whichever is earlier).
BC51. After comment received on the proposed IPSAS, the IPSASB also agreed that a first-time adopter
may change its accounting policy in respect of the recognition and/or measurement of assets
and/or liabilities on a class-by-class or category-by-category basis where the use of classes or
categories are permitted in the applicable IPSAS.
Transitional Exemptions relating to the Measurement of Non-Financial Assets

BC52. The IPSASB acknowledged that some entities may have recognized non-financial assets under
their previous basis of accounting. The IPSASB therefore agreed that a three year transitional
relief period should be allowed for the measurement of all non-financial assets that were
recognized by a first-time adopter under its previous basis of accounting. During this transitional
period, a first-time adopter will be able to develop reliable models for applying the principles in the
IPSASs. During the transitional period the first-time adopter will not be required to change its
accounting policy in respect of the measurement of these assets.
Transitional Exemptions Relating to the Recognition of Liabilities
Interaction Between the Asset Standards and Other IPSASs

BC53. Where a first-time adopter takes advantage of one or more of the transitional exemptions relating
to the recognition of assets, it would, as part of this process, analyze title deeds, contracts and
other similar arrangements, including lease arrangements, in determining what assets should be
accounted for and their measurement. As a result, a first-time adopter may not be in a position to
account for finance lease liabilities related to finance lease assets until such time as the
transitional relief period provided has expired and/or the relevant assets are recognized in
BC54. Likewise, where a first-time adopter has elected to adopt the transitional relief provided for the
recognition of service concession assets in accordance with IPSAS 32, it will not be in a position
to account for the related liability under either the financial liability model or the grant of a right to
the operator model until such time as the transitional relief period provided has expired and/or the
relevant assets are recognized and/or measured in accordance with IPSAS 32 (whichever is
earlier).
BC55. The IPSASB agreed that the recognition of finance lease liabilities and the recognition and/or
measurement of liabilities related to service concession assets should also be delayed until the
relief period related to the relevant assets have expired and/or the applicable assets have been
Recognition of Provisions Included in the Initial Cost of Property, Plant and Equipment
BC56. The IPSASB concluded that no transitional relief period should be provided for provisions in
IPSAS 19 and that a first-time adopter should account for all its liabilities on the date of adoption
of IPSASs. The IPSASB, however, acknowledges that the delay in the recognition and/or
measurement of property, plant and equipment affects the recognition and/or measurement of
certain provisions which are included in the cost of such assets.
BC57. IPSAS 17 requires an entity to include, as part of the cost of an item of property, plant and
equipment, the initial estimate of the costs of dismantling and removing the item and restoring the
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site on which it is located, the obligation which an entity incurs either when the item is acquired,
or as a consequence of having used the item during a particular period for purposes other than to
produce inventories during that period. IPSAS 17 requires that the obligation for costs accounted
for in accordance with IPSAS 17 is recognized and measured in accordance with IPSAS 19.
BC58. The IPSASB agreed that it would not be possible to recognize and/or measure provisions for the
initial estimate of costs to dismantle and remove the item and restore the site on which it is
located until such time as the relevant item of property, plant and equipment is recognized and/or
measured in accordance with IPSAS 17. A transitional relief period was therefore also provided
for the recognition and/or measurement of the provision to address the timing difference.

BC59. The IPSASB acknowledged that the recognition and/or measurement of specific liabilities in
IPSAS 25, will be challenging for many public sector entities as new systems may be required
and/or existing systems may need to be upgraded. The IPSASB therefore agreed that a first-time
adopter should be given a three year relief period for the recognition and/or measurement of
assets and liabilities related to defined benefit plans and other long-term employee benefits. To
avoid a skewed statement of financial position, the IPSASB further agreed that any plan assets
should be recognized and/or measured at the same time as the liabilities. All other employee
benefits should be recognized and/or measured on the date of adoption of IPSASs.
BC60. The IPSASB further noted that full retrospective application of IPSAS 25 would require a first-time
adopter to determine actuarial gains or losses for each year since the inception of the plan in
order to determine the net cumulative unrecognized gains or losses at the date of adoption of
IPSASs. It was concluded that this would be costly and would not benefit users. A first-time
adopter is therefore not required to separate cumulative actuarial gains and losses into
recognized and unrecognized portions. All cumulative actuarial gains and losses should be
recognized in opening accumulated surplus or deficit.
Transitional Exemptions Relating to the Recognition and Measurement of Monetary Assets and/or
Liabilities
BC61. The existing transitional provisions in IPSAS 29 do not provide any relief to a first-time adopter for
the recognition and/or measurement of financial instruments. Because many public sector entities
will need some time to identify and appropriately classify their financial instruments, the IPSASB
agreed that a transitional relief period should be provided to a first-time adopter for the
recognition and/or measurement of financial instruments. A transitional relief period of three years
was granted in line with the relief period provided for the recognition and/or measurement of other
items.
BC62. The IPSASB, however, agreed that a distinction should be made between those entities that
previously recognized financial instruments and those that did not. The IPSASB was of the view
that many basic financial instruments such as cash, debtors and creditors are already recognized
by public sector entities. A three year relief period for the recognition of financial instruments that
have not been recognized under a first-time adopter’s previous basis of accounting, is therefore
provided.
BC63. As with non-monetary assets, the IPSASB agreed that the same principle should be applied to
the recognition and/or measurement of monetary assets and/or liabilities, i.e. to the extent that a
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first-time adopter has recognized financial instruments under its previous basis of accounting, the
IPSASB agreed that a three year relief period should be granted for the measurement and
classification of financial instruments following the date of adoption of IPSASs. During this
transitional period, a first-time adopter will be able to develop reliable models for applying the
principles in IPSAS 29. It would also be allowed to apply accounting policies for the measurement
of financial instruments that differs from the requirements in IPSAS 29 during the period of
transition.
Transitional Exemptions Relating to the Recognition and Measurement of Non-Exchange Revenue
IPSAS 23, Revenue from Non-Exchange Transactions (Taxes and Transfers)
BC64. The existing transitional provisions in IPSAS 23 allow a first-time adopter to not change its
accounting policy in respect of the recognition and measurement of taxation revenue for a period
of five years. IPSAS 23 also allows a first-time adopter to not change its accounting policy in
respect of recognition and measurement of revenue from non-exchange transactions, other than
taxation revenue, for a period of three years. It also requires that changes in accounting policies
should only be made to better conform to IPSAS 23.
BC65. The IPSASB concluded that it will be challenging for many public sector entities to implement
IPSAS 23 as new systems may be required and/or existing systems may need to be upgraded.
Because of these practical challenges, the IPSASB agreed that a transitional relief period should
be provided. The IPSASB, however, acknowledged that a first-time adopter should build up
models to assist with the transition to accrual accounting prior to the adoption of the accrual
basis. In line with the relief period of three years provided for the recognition of assets and/or
liabilities in other IPSASs, and in line with the existing three year transitional relief period provided
for other non-exchange revenue in IPSAS 23, it was agreed that a first-time adopter should be
granted a relief period of three years to develop reliable models for recognizing and measuring
revenue from non-exchange transactions. The IPSASB agreed that a transitional period of three
years is manageable, and reduces the period over which an entity will not be able to assert
compliance with accrual basis IPSASs. During the period of transition, a first-time adopter will be
allowed to apply accounting policies for the recognition of non-exchange revenue transactions
that do not comply with the provisions in IPSAS 23.
Exemptions from Presentation and/or Disclosure Requirements Where a First-time Adopter Takes
Advantage of the Exemptions that Provide a Three Year Transitional Relief Period
BC66. The IPSASB acknowledged and agreed that the three year exemption provided for the
recognition and/or measurement of assets and/or liabilities also implies that the associated
presentation and/or disclosure requirements in the applicable IPSASs do not need to be complied
with as the information will not be available. The IPSASB agreed that the information need not be
provided until the exemptions that provided the relief have expired or when the relevant assets
and/or liabilities are recognized and/or measured in accordance with the applicable IPSASs
BC67. For the same reason, the IPSASB agreed that a first-time adopter should not be required to
provide any related disclosure requirements in IPSAS 1, Presentation of Financial Statements
and IPSAS 18, Segment Reporting.
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BC68. The existing transitional provisions in IPSAS 5 encouraged a first-time adopter to adjust its
financial statements retrospectively if it did not recognize borrowing costs under its previous basis
of accounting. The IPSASB agreed that it does not want to provide more relief to a first-time
adopter than to those entities that already apply IPSASs, particularly where the first-time adopter
elects to adopt the allowed alternative treatment under which borrowing costs that are directly
attributable to the acquisition, construction or production of a qualifying asset are capitalized as a
part of the cost of an asset.
BC69. As a result, the IPSASB agreed that a first-time adopter should only be encouraged to apply the
requirements of IPSAS 5 retrospectively where it adopts or changes its accounting policy to the
benchmark treatment. Providing this relief was seen a necessary because obtaining information
retrospectively may be costly and considerable effort may be needed to obtain such information.
BC70. The IPSASB, however acknowledged that some information may be available to a first-time
adopter depending on its previous basis of accounting. It was therefore agreed that a first-time
adopter who adopted or changed its accounting policy to the benchmark treatment, should apply
the principles in IPSAS 5 prospectively, but it may designate a date before the date of adoption of
IPSASs in applying IPSAS 5. This relief can only be adopted to the extent that the information is
available.
BC71. The IPSASB does not want to encourage first-time adopters to adopt the allowed alternative
treatment. Therefore it was agreed that where a first-time adopter changes its accounting policy
to the allowed alternative treatment, any borrowing costs incurred on qualifying assets both
before and after the date of adoption of IPSASs, for which the commencement date for
capitalization is prior to the date of adoption of IPSASs, should be recognized retrospectively
where the first-time adopter has not taken advantage of the transitional relief to not recognise
and/or measure assets for a period of three years.
IPSAS 34, Separate Financial Statements, IPSAS 35, Consolidated Financial Statements and IPSAS 36,
Investments in Associates and Joint Ventures
BC72. The IPSASB considered whether it should provide transitional relief that allows a first-time
adopter to not present consolidated financial statements on adoption of IPSASs. In considering
this proposal, it was argued that providing such an exemption would contradict the concept of a
reporting entity and would not result in fair presentation.
BC73. The IPSASB therefore agreed that providing a relief period to not present consolidated financial
statements should not be provided, but instead, a first-time adopter should be given a three year
relief period from eliminating balances, transactions, revenues and expenses between entities
within the economic entity.
BC74. As some balances, transactions revenues and expenses may be known on adoption of IPSASs, a
first-time adopter is encouraged to eliminate only those known balances, transactions revenues
and expenses.
BC75. For the same reason, the IPSASB agreed that a similar exemption should also be provided where
a first-time adopter has one or more jointly controlled entity in terms of IPSAS 8, and where it has
one or more associate in terms of IPSAS 7.
Providing a three year relief for the initial recognition and/or measurement of interests in other entities
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BC76. Following comments received on Exposure Draft, the IPSASB agreed that relief should be
provided to a first-time adopter for the initial recognition and/or measurement of its interests in
other entities. This relief would allow those first-time adopters that have not gathered the
necessary information on the date of adoption, more time to appropriately classify and measure
their interests in other entities. The relief provided is consistent with that provided for financial
instruments.
Presenting consolidated financial statements where the three year relief is adopted for the initial
recognition and/or measurement of interests in other entities and/or to not eliminate inter-entity balances,
transactions, revenue and expenses
BC77. Some respondents to the Exposure Draft expressed a view that relief should be provided from
preparing consolidated financial statements where a first-time adopter has elected to not
eliminate some, or all of the inter-entity balances, transactions, revenue and expenses between
entities within the economic entity. The IPSASB concluded that the financial statements that are
presented where a first-time adopter has taken advantage of the three year relief for the initial
recognition and/or measurement of interests in other entities, and/or where it has elected to not
eliminate some, or all inter-entity balances, transactions, revenue and expenses, cannot be
presented as consolidated financial statements, until (a) the exemptions that provided the relief
have expired, and/or (b) inter-entity balances, transactions, revenue and expenses have been
eliminated, and/or (c) its interests other entities have been recognized and/or measured
appropriately. The IPSASB agreed that disclosure requirements should be added to explain to
users why the financial statements are not presented as consolidated financial statements.
BC78. The IPSASB agreed that providing this clarification is necessary because, where a first-time
adopter has not eliminated inter-entity balances, transactions, revenue and expenses as required
by IPSAS 35 preparing consolidated financial statements will merely be an aggregation of inter-
entity balances, transactions, revenue and expenses within the economic entity. Such statements
would not be useful for accountability and decision-making purposes.
BC79. Likewise eliminating the carrying amount of an investment in the controlled entity as required by
IPSAS 35 may not be possible if the first-time adopter has not recognized and/measured its
interest in other entities as required by the applicable IPSASs.
Exemptions that Do Not Affect Fair Presentation and Compliance with Accrual Basis IPSAS
Deemed Cost
Deemed Cost for Assets and/or Liabilities
BC80. Some measurements in accordance with IPSASs are based on an accumulation of past costs or
other transaction data. If a first-time adopter has not previously collected the necessary
information, collecting or estimating it retrospectively may be costly and/or impractical. To avoid
excessive cost, this IPSAS allows a first-time adopter to use the fair value as a substitute for the
initial cost of inventory, investment property where the first-time adopter elects to use the cost
model in IPSAS 16, property, plant and equipment, financial instruments and service concession
assets at the date of adoption of IPSASs. Where a first-time adopter takes advantage of the
exemption that provides a three year transitional relief period to not recognize and/or measure
certain assets, the fair value is the deemed cost at the date at which the asset is recognized
and/or measured during the period of transition.
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BC81. While it could be argued that the use of fair value would lead to a lack of comparability, the
IPSASB noted that cost is generally equivalent to fair value at the date of acquisition. Therefore,
the use of fair value as the deemed cost of an asset means that a first-time adopter reports the
same cost data as if it had acquired an asset with the same value or same remaining service
potential at the date of adoption of IPSASs. If there is any lack of comparability, it arises from the
aggregation of costs incurred at different dates, rather than from the use of fair value as deemed
cost for some assets at a date. In the view of the IPSASB, using deemed cost facilitates the
introduction of IPSASs in a cost-effective way.
BC82. Under the revaluation model in IPSAS 17, if an entity revalues an asset, it must revalue all assets
in that class. This restriction prevents selective revaluation of only those assets whose
revaluation would lead to a particular result. The IPSASB considered whether a similar restriction
should be included in determining a deemed cost. IPSAS 21, Impairment of Non-cash-generating
Assets and IPSAS 26, Impairment of Cash-generating Assets requires an impairment test if there
is any indication that an asset is impaired. Thus, if a first-time adopter uses fair value as deemed
cost for assets whose fair value is likely to be above cost, it cannot ignore indications that the
recoverable amount or recoverable service amount of other assets may have fallen below their
carrying amount.
BC83. The IPSASB also considered the circumstances under which a first-time adopter should be
allowed to determine a deemed cost on initial adoption of IPSAS, or where a first-time adopter
takes advantage of the exemption that provides a three year transitional relief period to not
recognize and/or measure certain assets. The IPSASB considered whether the use of a deemed
cost should be restricted to those situations where cost information is not available for assets, or
whether it should be allowed in all circumstances, irrespective of whether cost information is
available on the date of adoption of IPSASs, or the date on which the asset is recognized and/or
measured where a first-time adopter has taken advantage of the exemption that provides a three
year transitional relief period to not recognize and/or measured certain assets.
BC84. The IPSASB agreed that, to avoid the selective valuation of assets, the use of a deemed cost
should be restricted to those circumstances where reliable information about the historical cost of
the asset is not available.
Deemed Cost for Investments in Controlled Entities, Joint Ventures or Associates
BC85. The IPSASB also agreed that a first-time adopter may elect to measure an investment in a
controlled entity, joint venture or associate at cost in its separate financial statements on the
date of adoption of IPSASs at either cost as determined in accordance with IPSAS 6, or deemed
cost. Deemed cost is determined as fair value in accordance with IPSAS 29, Financial
Instruments: Recognition and Measurement.
Deemed Cost for Intangible Assets
BC86. In considering whether a first-time adopter should be allowed to determine a deemed cost for
intangible assets, the IPSASB considered the existing transitional provisions in IPSAS 31. IPSAS
31 allows a first-time adopter to use a previous revaluation of intangible assets at, or before, the
date of transition as deemed cost at the date of the revaluation if the revaluation is broadly
comparable to fair value or cost or depreciated cost that is adjusted to reflect for example,
changes in a general or specific price index. IPSAS 31, however, only allows a first-time adopter
to determine a deemed cost if the recognition criteria in IPSAS 31 (including the reliable
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measurement of original cost), and the criteria for revaluation (including the existence of an active
market), have been met.
BC87. The IPSASB debated whether public sector entities will be likely to fulfil the second criterion on
initial adoption of IPSAS, i.e. existence of an active market. The IPSASB acknowledged that it
may be uncommon for an active market to exist in the public sector for intangible assets, and as a
consequence, the use of the deemed cost approach will likely be considerably restricted. As a
result, a first-time adopter may be unable to determine a deemed cost for some intangible assets
such as in-house developed IT systems.
BC88. The IPSASB considered whether the reliable measurement of original cost should be required for
first-time adopters which previously applied a cash basis of accounting, as some entities might
find it cumbersome to identify the original cost of their intangible assets. It was also argued that
where a first-time adopter has previously applied the accrual basis of accounting and it has
acquired intangible assets through a non-exchange transaction, it might not be able to reliably
measure original cost.
BC89. Based on these considerations, the IPSASB concluded that the reliable measurement of the
original cost should be excluded as a criterion for the application of the deemed cost approach on
first-time adoption of IPSASs.
BC90. The IPSASB therefore agreed that a first-time adopter is allowed to determine a deemed cost for
intangible assets where that deemed costs meets: (a) the recognition criteria in IPSAS 31
(excluding the reliable measurement criterion) and (b) the criteria in IPSAS 31 for revaluation
(including the existence of an active market).
BC91. In considering whether a first-time adopter should be allowed to determine a deemed cost for
internally generated intangible assets, the IPSASB concluded that it would be difficult to
retrospectively assess the probability of expected future economic benefits or service potential
through reasonable and supportable assumptions as management would not be able to apply
hindsight in obtaining such information. Due to the absence of reliable information on the date of
adoption of IPSASs, it was therefore agreed that a deemed cost may not be determined for
internally generated intangible assets.
Alternative Measurement Bases for Fair Value in Determining Deemed Cost
BC92. The IPSASB considered whether some revaluations in accordance with a first-time adopter’s
previous basis of accounting might be more relevant to users than original cost. It was concluded
that it would not be reasonable to require a time-consuming and expensive estimation of cost, if
previous revaluations already comply with IPSASs. This IPSAS therefore allows a first-time
adopter to use a revaluation under its previous basis of accounting for property, plant and
equipment determined at or before the date of adoption of IPSASs, as deemed cost. This may be
used if the revaluation is, at the date of the revaluation, broadly comparable to:
(a) Fair value; or

(b) Cost or depreciated cost, where appropriate, in accordance with IPSASs adjusted to reflect,
for example, changes in a general or specific price index.
BC93. In determining “fair value”, the guidance in each applicable IPSAS is considered, where such
guidance is provided. In IPSAS 17 it is noted that fair value is normally determined by reference
to market-based evidence, often by appraisal. IPSAS 17 also states that if market based
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evidence is not available to measure items of property, plant and equipment, an entity can
estimate fair value using replacement cost, reproduction cost or a service units approach.
BC94. The IPSASB noted that the fair value guidance in IPSAS 16 only considers a market-based value,
and that limited guidance is provided in IPSAS 12 in determining fair value. The IPSASB
concluded that because a first-time adopter may find it difficult to determine a market-based fair
value for all investment properties and all inventories, other measurement alternatives may need
to be considered in determining deemed cost for inventory or investment property.
BC95. The IPSASB agreed that a first-time adopter may consider the following measurement
alternatives in determining a deemed cost if reliable market-based evidence of fair value is not
available on the date of adoption of IPSASs, or on the date that the asset is recognized and/or
measured where a first-time adopter takes advantage of the exemption that provides a three year
transitional relief period to not recognize and/or measure certain assets:
(a) For inventory, current replacement cost; and
(b) For investment property of a specialized nature, depreciated replacement cost.
Determining a Deemed Cost Where the First-Time Adopter has Taken Advantage of the Three Year
Transitional Exemption Period
BC96. The IPSASB concluded that, to the extent that a first-time adopter has elected to adopt one of
more of the transitional exemptions that provides relief for the recognition and/or measurement of
assets, it may not be able to retrospectively adjust the value of the asset to the date of adoption of
accrual basis IPSASs. Retrospectively adjusting the value of the asset would require
consideration of the price of the asset and other market factors that existed on the date of
adoption of accrual basis IPSASs, including whether there was any indication that the asset was
impaired.
BC97. The IPSASB concluded that this would not be cost effective. It was therefore agreed that, where a
first-time adopter takes advantage of the exemption which allows a three year transitional relief
period to not recognize and/or measure an asset, it may determine a deemed cost for that asset
at any point of time within the three year transitional relief period. Any adjustments resulting from
the recognition of the asset are recognized against the opening accumulated surplus or deficit in
the year in which asset is recognized and/or measured.
BC98. The IPSASB considered whether relief should be provided to a first-time adopter for the
presentation of segment information. The IPSASB agreed that, despite the fact that the
presentation of segment information might be useful, a first-time adopter should be provided a
relief period, as the information used in presenting segment information needs to be built on
existing information in the financial statements.
BC99. As the IPSASB agreed to allow a three year transitional relief period for the recognition and/or
measurement of assets and liabilities, the information which is needed to present segment
information may only be available when the exemptions that provided the relief have expired, or
when the relevant items are recognized and/or measured in accordance with the applicable
IPSASs (whichever is earlier). As relevant and reliable information may not be available to
present a meaningful segment report during the period of transition, and because the
presentation of a segment report may not be a priority for users during the transition to accrual
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basis IPSASs it was agreed that a three year exemption period should also be provided for the
presentation of segment information.
BC100. The IPSASB also concluded that, because segment information is additional to the information
required on the elements presented in the financial statements, allowing this relief is appropriate.
BC101. In providing a first-time adopter time to build up information on its related party relationships and
related party transactions, the IPSASB agreed that the disclosure of related party relationships,
related party transactions and information about key management personnel should be treated in
the same way as the required eliminations of balances, transactions, revenue and expenses
between entities in IPSAS 6 to 8.
BC102. This IPSAS therefore provides a transitional exemption for a period of three years for the
disclosure of related party relationships, related party transactions and information about key
management personnel.
IPSAS 21, Impairment of Non-Cash-Generating Assets and IPSAS 26, Impairment of Cash-Generating
Assets
BC103. The IPSASB acknowledged that a first-time adopter may have applied an accounting policy for
the recognition and reversal of impairment losses that are different to the requirements in IPSAS
21 and 26, or may have not considered impairment at all. On adoption of IPSASs, it may be
difficult to determine the amount of adjustments resulting from retrospective application of a
change in an accounting policy, as this requires hindsight.
BC104. As a result, the IPSASB agreed that IPSAS 21 and 26 should be applied prospectively, but that
the first-time adopter should be required to assess whether an indicator of impairment has been
triggered for its cash-generating and non-cash-generating assets in the opening statement of
financial position.
BC105. In recognizing the effect of an impairment loss on first-time adoption of IPSAS 21 or IPSAS 26,
the IPSASB considered two options. The first option was to measure such assets at their
recoverable amount, or recoverable service amount and use that as the deemed cost. The
IPSASB noted that the effect of applying this option may means that impairment losses could not
be reversed in the future. This option was therefore not seen as appropriate.
BC106. The second option, which provides more relevant information is to measure the assets at their
recoverable amount, or recoverable service amount, and report the effect in net assets/equity.
The IPSASB supported this option.
Timing of Impairment Test for Assets Where an Entity Adopts the Relief Period for the Recognition of
Assets
BC107. The IPSASB concluded that where a first-time adopter takes advantage of the exemption that
provides relief for the recognition and/or measurement of assets, it may be difficult to
retrospectively adjust the value of the asset to the date of adoption of IPSASs. A first-time adopter
may find it difficult to determine the amount of adjustments that would be required based on
impairment that may or may not have existed at the date of transition.
BC108. The IPSASB therefore agreed that IPSAS 21 and IPSAS 26 should be applied prospectively from
the date when the transitional exemptions that provided the relief have expired, or when the
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relevant asset is recognized and/or measured in accordance with the applicable IPSASs
BC109. The IPSASB also agreed that, where a first-time adopter takes advantage of the exemptions that
provide relief for the recognition and/or measurement of liabilities, it should provide information
about amounts for the current and previous four annual periods of the present value of the
defined benefit obligation, the fair value of the plan assets, and the surplus or deficit in the plan
and adjustments as required by IPSAS 25 prospectively.
BC110. IPSAS 28 requires an entity to split a compound financial instrument at inception of the
agreement, into separate liability and equity components. It was concluded that separating these
two portions would be costly and would not provide relevant information to users of financial
statements if the liability component of the compound instrument is no longer outstanding at the
date of adoption of IPSASs. As a result, this IPSAS requires that, if the liability component is no
longer outstanding at the date of adoption of IPSAS, the first-time adopter need not separate the
cumulative interest on the liability component from the net assets/equity component.
BC111. The IPSASB concluded that, as it is in most instances impracticable to apply impairment
principles retrospectively, the impairment of financial instruments should be applied prospectively.
This exemption is consistent with the exemption provided for non-cash-generating assets and
cash-generating assets in accordance with IPSAS 21 and 26.
BC112. The IPSASB concluded that if a first-time adopter did not disclose information relating to financial
instruments, and the nature and extent of risks arising from financial instruments under its
previous basis of accounting, obtaining such information may be costly, and therefore is not
feasible.
BC113. The IPSASB therefore agreed that the disclosure requirements relating to financial instruments
should be applied prospectively from the date of adoption of IPSAS, or where the first-time
adopter takes advantage of the exemption that provides a three year transitional relief period to
not recognize and/or measure financial assets, when the exemptions expire, or when the relevant
items are recognized and/or measured in accordance with the applicable IPSASs (whichever is
earlier).
BC114. To the extent that a first-time adopter elects to present comparative information, it was agreed
that a first-time adopter need not present comparative information for disclosures relating to the
nature and extent of risks arising from financial instruments for the comparative period because
obtaining such information may be costly, and is therefore not feasible.

BC115. On first-time adoption of IPSASs, a first-time adopter will be required to recognize all assets and
liabilities for which recognition is required by IPSASs. IPSAS 31 requires that past expenditure on
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an intangible asset that was initially recognized as an expense should not be recognized as part
of the cost of an intangible asset at a later date.
BC116. The IPSASB concluded that, because a first-time adopter may have expensed costs incurred on
intangible assets under its previous basis of accounting prior to the adoption of IPSASs, a first-
time adopter should be allowed to recognize all intangible assets that meet the recognition criteria
and other criteria in IPSAS 31 (i.e., identifiable control of an asset and that future economic
benefits or service potential that are attributable to the asset will flow to the entity), even though
such costs may have been expensed prior to adoption of IPSASs. It was however, confirmed that
such assets should only be recognized as intangible assets if reliable cost information is available
and an active market exists for that asset on the date of adoption of IPSASs.
Interests in Other Entities
BC117. The IPSASB considered whether IPSAS 33 should refer to IPSAS 6, Consolidated and Separate
Financial Statements, IPSAS 7, Investments in Associates, and IPSAS 8, Interests in Joint
Ventures, as well as IPSAS 34, Separate Financial Statements, IPSAS 35, Consolidated
Financial Statements, and IPSAS 36, Investments in Associates and Joint Ventures, which were
published in January 2015 with an effective date of January 1, 2017, with early adoption
permitted. The IPSASB noted that as IPSAS 33 was published in January 2015, any entity
adopting IPSAS 33 and electing to apply the 3 year exemptions, would be required to apply
IPSASs 34–36 by the time the transitional period is complete. The IPSASB formed a view that it
was very unlikely that entities adopting IPSAS 33, prior to January 1, 2017, would adopt IPSASs
6–8 as this would require a further transition to IPSAS 34–36 shortly afterwards. The IPSASB
therefore concluded that IPSAS 33 should not include provisions relating to IPSASs 6-8.
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Implementation Guidance
This guidance accompanies, but is not part of, IPSAS 33.
IG1. The purpose of this Implementation Guidance is to illustrate certain aspects of the requirements of
IPSAS 33.
IG2. The date of adoption of IPSASs is the date an entity adopts accrual basis IPSAS for the first time
in preparing its financial statements.
IG3. Prior to the adoption of this IPSAS, a first-time adopter shall have adequately prepared for its
transition to accrual basis IPSASs. The guidance provided in Study 14, Transition to the Accrual
Basis of Accounting: Guidance for Governments and Government Entities issued by the IPSASB,
may assist a first-time adopter with planning the conversion to accrual basis IPSASs. The relief
provided in this IPSAS shall therefore not be seen as a complete roadmap for the adoption of
accrual basis IPSASs, but rather the end stage of the adoption process.
IG4. A first-time adopters’ date of adoption will therefore to be the start of the reporting period in which
it elects to adopt accrual basis IPSASs for which it presents its transitional IPSAS financial
statements or its first IPSAS financial statements. For example, an entity elects to adopt accrual
basis IPSASs from January 1, 20X1 for its reporting period ending December 31,20X1. The date
of adoption of IPSASs will be January 1, 20X1.
Transitional IPSAS Financial Statements
IG5. On the date of adoption of IPSASs, a first-time adopter may elect to adopt one of more of the
exemptions included in IPSAS 33, First-time Adoption of Accrual Basis International Public Sector
Accounting Standards (IPSASs). Some of the exemptions included in IPSAS 33 affect the fair
presentation of a first-time adopter’s financial statements and its ability to assert compliance with
accrual basis IPSASs (Appendix A lists the transitional exemptions and provisions that a first-time
adopter is required to apply and/or can elect to apply on adoption of accrual basis IPSASs and
illustrates whether fair presentation and the first-time adopter’s ability to assert compliance with
accrual basis IPSASs will be affected).
IG6. As a first-time adopter is not able to make an explicit and unreserved statement of compliance
with accrual basis IPSASs following the adoption of the exemptions provided in IPSAS 33, the
financial statements presented for the first reporting period following the adoption of accrual basis
IPSASs, will be referred to as the “transitional IPSAS financial statements”.
IG7. For example, if the first-time adopter adopts the transitional exemption that provides relief for the
recognition of certain items of property, plant and equipment when adopting accrual basis IPSASs
on January 1, 20X1, it would not be able to make an explicit and unreserved statement of
compliance with accrual basis IPSASs at the end of its first reporting period, i.e. December 31,
20X1. The financial statements prepared for the first reporting period, will therefore be referred to
as the “first transitional IPSAS financial statements”.
IG8. The financial statements presented during the period of transition until the exemptions that
provided the relief have expired, and/or when the relevant items are recognized and/or measured
in the financial statements in accordance with the applicable IPSASs, will be referred to as the
“transitional IPSAS financial statements”.
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Basis of Preparation When Preparing Transitional IPSAS Financial Statements
IG9. As stated in paragraph 27 of IPSAS 33, a first-time adopter that elects to adopt one or more of the
exemptions included in IPSAS 33, may not be able to make an explicit and unreserved statement
of compliance with accrual basis IPSASs as required by IPSAS 1. During the period of transition,
this fact shall be highlighted to the users of financial statements in presenting the “basis of
preparation” in the financial statements.
IG10. As an illustration, if a first-time adopter elected to adopt the transitional exemption that allows it
three years in which to recognize and/or measure investment property, the following explanation
may be provided in the “basis of preparation” paragraph in the financial statements during the
period of transition:
Basis of preparation
The financial statements have been prepared in accordance with accrual basis International
Public Sector Accounting Standards (IPSASs). IPSAS 33 allows a first-time adopter a period of
up to three years to recognize and/or measure certain assets and/or liabilities.
In its transition to accrual basis IPSASs, Public Sector Entity X took advantage of this transitional
exemption for investment property. As a result, it is unable to make and explicit an unreserved
statement of compliance with accrual basis IPSASs in preparing its transitional IPSAS financial
statements for this reporting period. Public Sector Entity X intends to recognize and/or measure
its investment property by 20X3.
First IPSAS Financial Statements
IG11. A first-time adopter’s first IPSAS financial statements will be the first set of financial statements
that it presents in which it makes an explicit and unreserved statement of compliance with accrual
basis IPSASs.
IG12. A first-time adopter will not be able to prepare its first IPSAS financial statements until the
exemptions in IPSAS 33 that provided relief which affected fair presentation and compliance with
IPSAS, have expired, or when the relevant items are recognized, measured and/or the relevant
information has been presented and/or disclosed in accordance with the applicable IPSASs
IG13. Following from the example in IG5, the transitional exemptions that provided the relief for the
recognition of certain items of property, plant and equipment expire after three years, i.e.
December 31, 20X3. If it is assumed that the entity has not adopted any other transitional
exemptions in IPSAS 33 that affect fair presentation and compliance with IPSASs, and that it
recognizes and/or measures the items of property, plant and equipment during the transitional
period, a first-time adopter will present its first IPSAS financial statements for the period ending
December 31, 20X3.
IG14. If a first-time adopter has not adopted any of the exemptions in IPSAS 33 that affect fair
presentation and its ability to claim compliance with accrual basis IPSASs, its first accrual
financial statements will also be its first IPSAS financial statements.
To illustrate:
Timeline – First Time Adoption IPSAS (assuming that entity elects to apply the three year
transitional relief for the recognition and/or measurement of certain assets)
An entity adopts accrual basis IPSASs on 1 January 20X0 by applying IPSAS 33, First Time
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Adoption of Accrual Basis IPSASs
The first-time adopter elects to apply the three year relief for the recognition of property, plant and
equipment. Assume that it does not adopt of any other relief periods. It also elects not to present
comparative information.
The first-time adopter recognizes all property, plant and equipment by 31 December 20X2.
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Start of second reporting period Start of third reporting period

1 January 20X1 1 January 20X2
Year 2
Year 1 Year 3
Date of adoption End of first reporting period End of second reporting period End of third reporting period
1 January 20X0 31 December 20X0 31 December 20X1 31 December 20X2
Year 1 (ending 31 December 20X0) – First Transitional Year 2 (ending 31 December 20X1) – Transitional Year 3 (ending 31 December 20X3) – First IPSAS
IPSAS Financial Statements IPSAS Financial Statements Financial Statements
Cannot assert compliance with accrual basis IPSASs Cannot assert compliance with IPSASs Can assert compliance with IPSASs
Present the following statements: Present the following statements for both Present the following statements for both 31/12/20X2
*opening statement of financial position as at 01/01/20X0 31/12/20X1 and 20X1:
*statement of financial position as at 31/12/20X0 and 20X0: *statement of financial position
*statement of financial performance for 31/12/20X0 *statement of financial position *statement of financial performance
*statement of changes in net assets as at 31/12/20X0 *statement of financial performance *statement of changes in net assets
*cash flow statement for 31/12/20X0 *statement of changes in net assets *cash flow statement
*statement of comparison of budget and actual *cash flow statement
information for 31/12/20X0 Present the statement of statement of comparison of
(depending on the policy chosen for presentation of Present the statement of statement of comparison of budget and actual information for 31/12/20X2 only
information the first-time adopter may include an budget and actual information for 31/12/20X1 only (depending on policy chosen for presentation of info
additional column in the annual financial statements) (depending on policy chosen for presentation of info information the first-time adopter may include an
information the first-time adopter may include an additional column in the annual financial statements)
Present the following in the notes: additional column in the annual financial
*reconciliation of changes from its previous basis statements) Present the following in the notes:
of accounting (reflect adjustments related to the *reconciliation of adjustments made to recognize property,
adoption of all IPSASs besides IPSAS 17) plant and equipment
Note: If the first-time adopter elected to present

comparative information, the following statements shall
have been presented:
*opening statement of financial position as at 01/01/19X0
*statement of financial position as at 31/12/19X0 and
31/12/20X0
*statement of financial performance for 31/12/10X0 and
31/12/20X0
*statement of changes in net assets as at 31/12/19X0 and
31/12/20X0
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*cash flow statement for 31/12/19X0 and 31/12/20X0
*statement of comparison of budget and actual
information for 31/12/19X0 and 31/12/20X0
Estimates
IG15. Paragraph 23 of IPSAS 33 requires that a first-time adopter’s estimates in accordance with
IPSASs at the date of adoption of IPSASs shall be consistent with estimates made at the end of
its comparative period in accordance with the previous basis of accounting (after adjustments to
reflect any difference in accounting policies), unless there is objective evidence that those
estimates were in error. An entity may receive information after the date of adoption of IPSASs
about estimates that it had made under the previous basis of accounting. In accordance with
paragraph 24, a first-time adopter shall treat the receipt of that information in the same way as
non-adjusting events after the reporting period in accordance with IPSAS 14, Events after the
Reporting Period.
IG16. For example, assume that a first-time adopter’s date of adoption of IPSASs is January 1, 20X4
and new information on July 15, 20X4 requires the revision of an estimate made in accordance
with the previous basis of accounting at December 31, 20X3. The first-time adopter shall not
reflect that new information in its opening statement of financial position (unless the estimates
require adjustment for any differences in accounting policies or there is objective evidence that
the estimates were in error). Instead, the first-time adopter shall reflect that new information in
surplus or deficit for the year ended December 31, 20X4.
Transitional Exemptions that Provide Three Year Relief for the Recognition and/or Measurement
of Assets and/or Liabilities
IG17. IPSAS 33 provides a first-time adopter a period of up to three years’ relief in which it is allowed to
not recognize and/or measure certain assets and liabilities. Where a first-time adopter takes
advantage of this exemption, it will have to consider and analyze title deeds, contracts and other
similar arrangements in accounting for, and classifying these assets in accordance with the
applicable IPSAS.
IG18. For example, assume that a first-time adopter controls a wide range of property, plant and
equipment when it adopts accrual basis IPSASs on January 1, 20X1. If the first-time adopter
takes advantage of the exemption that provides a three year transitional relief period to not
recognize and/or measure the property, plant and equipment, it may recognize and/or measure
the property, plant and equipment during the period of transition from January 1, 20X1 until
December 31, 20X3. If the property, plant and equipment is recognized for example, on April 1,
20X2, the first-time adopter shall adjust the opening accumulated surplus or deficit on January 1,
20X2. As required by paragraph 142 of IPSAS 33, the first-time adopter shall, as part of the notes
to the financial statements, provide a reconciliation to the accumulated surplus or deficit as at
December 31, 20X1 (i.e. the opening balance as at January 1, 20X2) for the property, plant and
equipment that was recognized on April 1, 20X2.
IG19. Where a first-time adopter has taken advantage of the three year relief period, it shall not
derecognise any of the assets and/or liabilities that were recognized under its previous basis of
accounting unless it is to comply with an IPSAS requirement. Any adjustments to the assets
and/or liabilities recognized under its previous basis of accounting shall be adjusted during the
period of transition against the opening accumulated surplus of deficit in the period in which the
adjustment is made.
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Accounting for Finance Leases Assets and Finance Lease Liabilities
IG20. Where a first-time adopter takes advantage of the exemption that provides a three year
transitional relief period to not recognize its finance lease assets, it will also not be able to comply
with the recognition requirements relating to the finance lease liabilities, until the transitional
exemptions related to the finance leased assets have expired, or the finance leased assets have
been recognized in accordance with IPSAS 13.
IG21. For example, assume that a first-time has a motor vehicle that is subject to a finance lease
agreement on the date of adoption of accrual basis IPSASs on January 1, 20X1. The first-time
adopter takes advantage of the exemption that provides a three year transitional relief period to
not recognize the motor vehicle. The motor vehicle is recognized on December 31, 20X3 when
the exemption expires. IPSAS 33 requires the first-time adopter to only recognize the
corresponding finance lease liability for the motor vehicle on December 31, 20X3, i.e. on the date
that the finance lease asset (the motor vehicle) is recognized.
Recognition of Provisions Included in the Initial Cost of an Item of Property, Plant and Equipment
IG22. IPSAS 17 recognizes that in some cases, the construction or commissioning of an item of
property, plant and equipment will result in an obligation for an entity to dismantle or remove the
item of property, plant and equipment and restore the site on which the asset is located. An entity
is required to apply IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets in
recognising and measuring the resulting provision to be included in the initial cost of the item of
property, plant and equipment.
IG23. IPSAS 33 provides an exemption for the recognition of this liability. A first-time adopter is allowed
to not recognize and/or measure the liability relating to the initial estimate of costs of dismantling
and removing the item and restoring the site on which it is located, until such time as the
exemption for IPSAS 17 expires and/or the relevant asset is recognized and/or measured and
relevant information has been presented and/or disclosed in the financial statements in
accordance with IPSAS 17 (whichever is earlier).
IG24. For example, an entity adopts accrual basis IPSASs on January 1, 20X1 and takes advantage of
the exemption in IPSAS 33 that provides a three year transitional relief period to not recognize a
government owned nuclear power station. The first-time adopter determines a deemed cost for
the asset on June 30, 20X3 and recognizes the asset on that date at CU1,000,000. The first-time
adopter determines that it has a decommissioning obligation under IPSAS 19 of CU500,000 at
the date of adoption of IPSASs. The obligation amounts to CU550,000 on June 30, 20X3 when
the asset is recognized.
IG25. IPSAS 33 requires the first-time adopter to only recognize and/or measure its obligation relating
to the dismantling and restoring of the site on June 30, 20X3, i.e. the date on which the asset is
recognized. The liability will be measured at CU550,000 which reflects the first-time adopter’s
obligation on the date that the asset is recognized. The first-time adopter shall, as part of the
notes to the financial statements, provide a reconciliation to the accumulated surplus or deficit as
at December 31, 20X2 (i.e. the opening balance as at January 1, 20X3) for the recognition of the
obligation and the related asset that was recognized on June 30, 20X2.
Borrowing Costs Incurred on Qualifying Assets

IG26. Paragraph 90 of IPSAS 33 requires that, where a first-time adopter elects to account for
borrowing costs in accordance with the allowed alternative treatment, it is required to apply the
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requirements in IPSAS 5, Borrowing Costs retrospectively, for any borrowing costs incurred on
qualifying assets before the date for adoption of IPSASs.
IG27. Paragraph 44 of IPSAS 33 provides an exemption to this requirement by allowing a first-time

adopter to commence capitalization of borrowings costs incurred on qualifying assets after the
recognition of an asset where the first-time adopter takes advantage of the exemption that
provides a three year transitional relief period for the recognition of assets.
IG28. For example, a first-time adopter adopts the allowed alternative treatment in accounting for
borrowing costs incurred on qualifying assets. The date of adoption of IPSASs is January 1,
20X1. The first-time adopter determines that the borrowing cost incurred prior to the adoption of
IPSASs on January 1, 20X1 amounts to CU500,000 and that borrowing costs incurred at the end
following two reporting periods amounted to CU20,000 and CU30,000. In addition, the first-time
adopter adopts the exemption that provides three year transitional relief from the recognition of
property, plant and equipment and as a result, recognizes the item of property, plant and
equipment at the end of the second reporting period at CU1,000,000.
At the end of 20X2, the item of property, plant and equipment recognized on the statement of
financial position will be CU1,030,000 (CU1,000,000 + CU30,000). Borrowing costs incurred prior
to the recognition of the item of property, plant and equipment, i.e. CU500,000 and CU20,000
shall not be included as part of the cost of the qualifying asset.
Presenting Comparative Information
IG29. Paragraph 78 of IPSAS 33 encourages, but does not require an entity to present comparative
information in its transitional IPSAS financial statements or its first IPSAS financial statements in
accordance with this IPSAS. The decision to present comparative information affects not only the
extent of the information presented, but also the date of adoption of IPSASs.
IG30. To illustrate: The end of a first-time adopter’s first accrual basis reporting period is December 31,
20X5. The first-time adopter decides to present comparative information in those financial
statements for one year only (see paragraph 78 of IPSAS 33). Therefore, its date of adoption of
IPSASs is the beginning of the comparative period i.e. January 1, 20X4 (or equivalently
December 31, 20X3).
Information Presented when a First-Time Adopter Elects to Prepare Comparative Information
IG31. Where the first-time adopter elects to prepare comparative information, it is required to apply the
accrual basis IPSASs effective for periods ending on December 31, 20X5 in:
(a) Preparing and presenting its opening accrual basis statement of financial position at
January 1, 20X4; and
(b) Preparing and presenting its:
(i) Statement of financial position for December 31, 20X5 (including comparative
amounts for 20X4);
(ii) Statement of financial performance (including comparative amounts for 20X4);
(iii) Statement of changes in net assets/equity for December 31, 20X5 (including
comparative amounts for 20X4);
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(iv) Statement of cash flows for the year to December 31, 20X5 (including comparative
amounts for 20X4);
(v) Disclosures (including comparative information for 20X4);
(vi) A comparison of budget and actual amounts for the year to December 31, 20X5; and
(vii) Reconciliations in accordance with paragraph 142.
First-Time Adopter Elects to Not Prepare Comparative Information
IG32. Where a first-time adopter elects to not prepare comparative information, it is required to apply
the accrual basis effective for periods ending on December 31, 20X5:
(a) Preparing and presenting its opening accrual basis statement of financial position at 1
January 20X5; and
(b) Preparing and presenting its:
(i) Statement of financial position for December 31, 20X5;
(ii) Statement of financial performance for December 31, 20X5;
(iii) Statement of changes in net assets/equity for December 31, 20X5;
(iv) Statement of cash flows for the year to December 31, 20X5;
(v) Disclosures;
(vi) A comparison of budget and actual amounts for the year to December 31, 20X5; and
(vii) Reconciliations in accordance with paragraph 142.
Adoption of Three Year Transitional Relief Period
IG33. Where the first-time adopter takes advantage of the exemptions that provide relief from the
recognition and/or measurement of assets and/or liabilities, IPSAS 33 requires it to only adjust
comparative information for reporting periods following the date of adoption of IPSASs to the
extent that reliable and relevant information is available about the items that have been
IG34. To illustrate: The end of a first-time adopter’s first accrual basis reporting period is December 31,
20X2. The first-time adopter on the date of adoption of IPSASs on January 1, 20X1, adopts the
transitional exemption providing a three year relief period for the recognition of investment
property. At the end of 20X3 the first-time adopter has recognized the investment property, which
is included in the statement of financial position as at December 31, 20X3. Only if reliable and
relevant information if available about the value of the investment property recognized during
20X3, will the first-time adopter adjust the comparative information presented (i.e., for the period
ending December 31, 20X2).
Presenting Reconciliations
IG35. Paragraph 142 of IPSAS 33 requires a first-time adopter to present a reconciliation of its closing
balances reported under its previous basis of accounting, to its net assets/equity in accordance
with IPSASs for the transitional IPSAS financial statements or its first IPSAS financial statements.
A reconciliation is presented of its surplus or deficit in accordance with its previous basis of
accounting to its opening balance of surplus or deficit at the date of adoption of IPSASs.
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IG36. For example, a first-time adopter, which previously applied a modified-accrual basis of
accounting, adopts accrual basis IPSASs on January 1, 20X4 and elects to not present
comparative information as permitted in IPSAS 33. The first-time adopter shall, in accordance
with paragraph 142 of IPSAS 33, present a reconciliation in the notes to its transitional IPSAS
financial statements that provides sufficient detail to enable users to understand the material
adjustments to the opening statement of financial position, and where applicable, the opening
statement of financial performance as at January 1, 20X4.
IG37. Paragraph 146 further requires a first-time adopter that takes advantage of the exemptions that
provide a three year transitional relief period to not recognize and/or measure items, to present a
reconciliation of items that have been recognized and/or measured during the reporting period
which were not recognized and/or measured in the previous financial statements.
IG38. Following from the example in IG29, a first-time adopter adopts the exemption in IPSAS 33 that
allows it to not recognize investment property for a period of three years. The first-time adopter
applies this exemption and only recognizes the investment property at the end of year three, i.e.
December 31, 20X4. As an adjustment is made to the opening balance of accumulated surplus or
deficit as on January 1, 20X4 in recognizing the investment property, paragraph 146 requires the
first-time adopter to present a reconciliation in its notes to the financial statements for the year
ending December 31, 20X4 to allow users to understand the adjustment that was made following
the recognition of the investment property.
Deemed Cost
IG39. IPSAS 33 allows a first-time adopter to determine a deemed cost as a substitute for acquisition
cost or depreciated cost at the date of adoption of IPSASs, where a first-time adopter takes
advantage of the exemption that provides a three year transitional relief period to not recognize
and/or measure certain assets and/or liabilities. A deemed cost may however only be determined
if no cost information is available about the historical cost of the asset and/or liability. W hen a
first-time adopter initially measures these assets on the date of adoption of IPSASs, or when the
transitional exemptions that provided the first-time adopter with a three year relief period to not
recognize and/or measure certain assets have expired, it recognizes the effect:
(a) As an adjustment to the opening balance of accumulated surplus or deficit in the opening
statement of financial position in the period in which the deemed is determined; or
(b) In the revaluation surplus if the first-time adopter adopts the revaluation model in IPSAS 17
or in IPSAS 31, Intangible Assets.
To illustrate:
Public Sector Entity X adopted accrual basis IPSAS on January 1, 20X4 and applied deemed cost
to measure investment property. In applying deemed cost, investment property was valued at CU
1,800,000 on the date of adoption. Public Sector Entity X elected to not present comparative
information.
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Statement of Changes in Net Assets/Equity for the Year ended December 31, 20X4
Attributable to owners of the controlling entity Total net

assets/equity
Accumulated Other Reserves

surplus/deficit
CU
CU CU
Opening balance as at 210,000 10,000 220,000

January 1, 20X4
Measurement of investment 1,500,000 1,500,000

property at deemed cost in
accordance with IPSAS 33
(see note 34)
Restated opening balance 1,710,000 10,000 1,720,000

as at January 1, 20X4
Surplus for the period 5,000 5,000
Balance as at December 31, 1,715,000 10,000 1,725,000

20X4
Notes to the financial statements of Public Sector Entity X as at December 31. 20X4:
Note 34 – Investment Property
December 31, 20X4
CU
Opening balance of investment property recognized 300,000

under previous basis of accounting
Investment property measured at deemed cost as 1,500,000

provided in IPSAS 33 on January 1, 20X4
Restated opening balance of investment property at 1,800,000

January 1, 20X4
Additions …….
Transitional exemptions adopted in IPSAS 33 on adoption of accrual basis IPSASs
Public Sector Entity X adopted accrual basis IPSAS on January 1, 20X4 and applied deemed cost
in measuring investment property as reliable cost information about some investment properties
was not available. As a result, Public Sector Entity X restated its opening balance of investment
property with an additional value of CU1,500,000 on January 1, 20X4.
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Note 54 – Reconciliation of net assets/equity and surplus or deficit on January 1, 20X4
Reconciliation of net assets/equity as on January 1, 20X4
Net assets/equity as on
January 1, 20X4
CU
Opening balance of net assets/equity as on January 1, 220,000

20X4 reported under previous basis of accounting
Recognition of investment property at deemed cost (see 1,500,000

note 34)
Restated opening balance of net assets/equity as on 1,720,000

January 1, 20X4
Reconciliation of surplus or deficit on January 1, 20X4
Surplus or deficit on January 1,

20X4
CU
Surplus or deficit as at 31, December 20X3 as reported 210,000

under previous basis of accounting
Recognition of investment property at deemed cost (see 1,500,000

note 34)
Restated surplus or deficit as on January 1, 20X4 1,710,000
Determining a Deemed Cost During the Period of Transition
IG40. If a first-time adopter takes advantage of the exemption in IPSAS 33 that provides a three year
transitional relief period to not recognize and/or measure an asset, the IPSAS requires that it may
determine a deemed cost for that asset during any point of time within the three year transitional
relief period.
IG41. Subsequent depreciation and amortization, if applicable, is based on that deemed cost and starts
from the date of adoption of IPSASs, or when the transitional exemptions that provided the relief
have expired, or when the relevant items are recognized and/or measured in accordance with the
IG42. For example, a first-time adopter adopts IPSASs on January 1, 20X1 and adopts the exemption
that provides a three year transitional relief period for the recognition of an investment property.
Because the first-time adopter does not have reliable cost information about the historical cost of
the investment property on the date of adoption of IPSASs it decides to determine a deemed cost
for the investment property. The deemed cost for the investment property is determined during
the second reporting period (i.e. 20X2) in which the first-time adopter applies the exemption.
IPSAS 33 allows the first-time adopter to use the deemed cost determined during 20X2 in
recognizing the investment property by adjusting the opening accumulated surplus and deficit on
January 1, 20X2. The deemed cost as determined on January 1, 20X2 will be used in determining
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subsequent depreciation and in assessing impairment where the first-time adopter elects to apply
the cost model as its subsequent measurement basis in applying IPSAS 16.
IG43. An entity adopts the accrual basis IPSASs on January 1, 20X3 and adopts the allowed alternative
treatment in accounting for borrowing costs. Borrowing costs directly attributable to the acquisition
of the asset amounts to CU525,000, of which CU500,000 was incurred prior to the adoption of
accrual basis IPSASs, while CU25,000 was incurred in the first reporting period ending December
31, 20X3. Paragraph 90 of IPSAS 33 requires the first-time adopter to retrospectively recognize
any borrowing costs incurred prior to the adoption of accrual basis IPSASs when it adopts the
allowed alternative method. Therefore, CU500,000 shall be capitalized to the cost of the asset
recognized in the opening statement of financial position as at January 1, 20X3.
IG44. If the entity has elected to apply the benchmark treatment, paragraph 88 of IPSAS 33
encourages, but does not require, the first-time adopter to apply the accounting policy
retrospectively. If the first-time adopter elects to apply its accounting policy prospectively, it will
only expense CU25,000 in the statement of financial performance for the period ending
December 31, 20X3.
IPSAS 9, Revenue from Exchange Transactions
IG45. If a first-time adopter has received amounts that do not yet qualify for recognition as revenue in
accordance with IPSAS 9 (for example, the proceeds of a sale that does not qualify for
recognition as revenue), the first-time adopter recognizes the amounts received as a liability in its
opening statement of financial position and measures that liability at the amount received. It shall
derecognize the liability and recognize the revenue in its statement of financial performance when
the recognition criteria in IPSAS 9 are met.
IG46. A first-time adopter complies with IPSAS 4, The Effects of Changes in Foreign Exchange Rates in
determining its functional currency and presentation currency. When the first-time adopter
prepares its opening statement of financial position, it applies IPSAS 10, Hyperinflationary
Economies, to any periods during which the economy of the functional currency or presentation
currency was hyperinflationary.
IG47. If the first-time adopter elects to use the exemptions in paragraphs 64 to 76 of IPSAS 33, it
applies IPSAS 10 to periods after the date for which the revalued amount or fair value was
determined.
IPSAS 14, Events After the Reporting Date
IG48. Except as described in paragraph IG49, a first-time adopter applies IPSAS 14, Events After the
Reporting Date in determining whether:
(a) Its opening statement of financial position reflects an event that occurred after the date of
transition; and
(b) Comparative amounts in its transitional IPSAS financial statements or its first IPSAS financial
statements, where applicable, reflect an event that occurred after the end of that comparative
period.
IG49. Paragraphs 23–26 of IPSAS 33 require some modifications to the principles in IPSAS 14 when a
first-time adopter determines whether changes in estimates are adjusting or non-adjusting events
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at the date of adoption of IPSASs (or, when applicable, the end of the comparative period). Cases
1 and 2 below illustrate those modifications. In case 3 below, paragraphs 23–26 of IPSAS 33 do
not require modifications to the principles in IPSAS 14.
(a) Case 1—If a first-time adopter’s previous basis of accounting required estimates of
similar items for the date of adoption of IPSASs, using an accounting policy that is
consistent with IPSASs. In this case, the estimates in accordance with IPSASs need to
be consistent with estimates made for that date in accordance with previous basis of
accounting, unless there is objective evidence that those estimates were in error (see
IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors). The first-
time adopter reports later revisions to those estimates as events of the period in which it
makes the revisions, rather than as adjusting events resulting from the receipt of further
evidence about conditions that existed at the date of adoption of IPSASs.
(b) Case 2—Previous basis of accounting required estimates of similar items for the date of
adoption of IPSASs, but the first-time adopter made those estimates using accounting
policies that are not consistent with its accounting policies in accordance with IPSASs. In this
case, the estimates in accordance with IPSASs need to be consistent with the estimates
required in accordance with the previous basis of accounting for that date (unless there is
objective evidence that those estimates were in error), after adjusting for the difference in
accounting policies. The opening statement of financial position reflects those adjustments for
the difference in accounting policies. As in case 1, the first-time adopter reports later revisions
to those estimates as events of the period in which it makes the revisions.
For example, the previous basis of accounting may have required a first-time adopter to
recognize and measure provisions on a basis consistent with IPSAS 19, Provisions,
Contingent Liabilities and Contingent Assets, except that the previous basis of accounting’s
measurement was on an undiscounted basis. In this example, the first-time adopter uses the
estimates in accordance with its previous basis of accounting as inputs in making the
discounted measurement required by IPSAS 19.
(c) Case 3—Previous basis of accounting did not require estimates of similar items for the date
of adoption of IPSASs. Estimates in accordance with IPSASs for that date reflect conditions
existing at that date. In particular, estimates of market prices, interest rates or foreign
exchange rates at the date of adoption of IPSASs reflect market conditions at that date.
This is consistent with the distinction in IPSAS 14 between adjusting events after the
reporting period and non-adjusting events after the reporting period.
IG50. To illustrate: Entity A’s first transitional IPSAS financial statements are for the period ending
December 31, 20X5 with the first-time adopter electing to present comparative information. In
terms of its previous basis of accounting the following transactions and events are noted in entity
A’s financial statements for December 31, 20X3 and 20X4:
(a) Estimates of accrued expenses and provisions were made at those dates;
(b) The entity accounted on a cash basis for a defined benefit pension plan; and
(c) No provision was recognized for a court case arising from events that occurred in
September 20X4. When the court case was concluded on June 30, 20X5, entity A was
required to pay CU1 000 and paid this on July 10, 20X5.
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In preparing its transitional IPSAS financial statements, entity A concludes that its estimates in
accordance with its previous basis of accounting of accrued expenses and provisions at
December 31, 20X3 and 20X4 were made on a basis consistent with its accounting policies in
accordance with IPSASs. Although some of the accruals and provisions turned out to be
overestimates and others to be underestimates, entity A concludes that its estimates were
reasonable and that, therefore, no error had occurred. As a result, accounting for those
overestimates and underestimates involves the routine adjustment of estimates in accordance
with IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors.
Application of Requirements
In preparing its opening statement of financial position at January 1, 20X4 and in its comparative
statement of financial position at December 31, 20X4, entity A:
(a) Does not adjust the previous estimates for accrued expenses and provisions; and
(b) Makes estimates (in the form of actuarial assumptions) necessary to account for the
pension plan in accordance with IPSAS 25, Employee Benefits. Entity A’s actuarial
assumptions at January 1, 20X4 and December 31, 20X4 do not reflect conditions that
arose after those dates. For example, entity A’s:
(i) Discount rates at January 1, 20X4 and December 31, 20X4 for the pension plan and
for provisions reflect market conditions at those dates; and
(ii) Actuarial assumptions at January 1, 20X4 and December 31, 20X4 about future
employee turnover rates do not reflect conditions that arose after those dates—such
as a significant increase in estimated employee turnover rates as a result of a
curtailment of the pension plan in 20X5.
The treatment of the court case at December 31, 20X4 depends on the reason why entity A did
not recognize a provision in accordance with its previous basis of accounting at that date.
Assumption 1 – The previous basis of accounting was consistent with IPSAS 19, Provisions,
Contingent Liabilities and Contingent Assets. Entity A concluded that the recognition criteria were
not met. In this case, entity A’s assumptions in accordance with IPSASs are consistent with its
assumptions in accordance with its previous basis of accounting. Therefore, entity A does not
recognize a provision at December 31, 20X4.
Assumption 2 – Entity A’s previous basis of accounting was not consistent with IPSAS 19.
Therefore, entity A develops estimates in accordance with IPSAS 19. Under IPSAS 19, an entity
determines whether an obligation exists at the end of the reporting period by taking account of all
available evidence, including any additional evidence provided by events after the reporting
period. Similarly, in accordance with IPSAS 14, Events after the Reporting Period, the resolution
of a court case after the reporting period is an adjusting event after the reporting period if it
confirms that the entity had a present obligation at that date. In this instance, the resolution of the
court case confirms that entity A had a liability in September 20X4 (when the events occurred that
gave rise to the court case). Therefore, entity A recognizes a provision at December 31, 20X4.
Entity A measures that provision by discounting the CU1 000 paid on July 10, 20X5 to its present
value, using a discount rate that complies with IPSAS 19 and reflects market conditions at
December 31, 20X4.
IG51. Paragraphs 23–26 of the IPSAS 33 do not override requirements in other IPSASs that base
classifications or measurements on circumstances existing at a particular date. Examples include:
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(a) The distinction between finance leases and operating leases (see IPSAS 13, Leases); and
(b) The distinction between financial liabilities and equity instruments (see IPSAS 28, Financial
Instruments: Presentation).
IPSAS 13, Leases
IG52. In accordance with paragraph 95 of IPSAS 33 and paragraph 18 of IPSAS 13, a lessee or lessor
classifies leases as operating leases or finance leases on the basis of circumstances existing at
the inception of the lease, on the date of adoption of accrual basis IPSASs. In some cases, the
lessee and the lessor may agree to change the provisions of the lease, other than by renewing
the lease, in a manner that would have resulted in a different classification in accordance with
IPSAS 13 had the changed terms been in effect at the inception of the lease. If so, the revised
agreement is considered as a new agreement over its term from the date of adoption of accrual
basis IPSASs. However, changes in estimates (for example, changes in estimates of the
economic life or of the residual value of the leased property) or changes in circumstances (for
example, default by the lessee) do not give rise to a new classification of a lease.
IPSAS 17, Property, Plant and Equipment
IG53. If a first-time adopter’s depreciation methods and rates in accordance with its previous basis of
accounting are acceptable in accordance with IPSASs, it accounts for any change in estimated
useful life or depreciation pattern prospectively from when it makes that change in estimate
(paragraphs 22 and 26 of IPSAS 33 and paragraph 76 of IPSAS 17. However, in some cases, a
first-time adopter’s depreciation methods and rates in accordance with its previous basis of
accounting may differ from those that would be acceptable in accordance with IPSASs (for
example, if they do not reflect a reasonable estimate of the asset’s useful life). If those differences
have a material effect on the financial statements, the entity adjusts accumulated depreciation in
its opening statement of financial position retrospectively so that it complies with IPSASs.
IG54. A first-time adopter may elect to use one of the following amounts as the deemed cost of
property, plant and equipment:
(a) Fair value at the date of adoption of IPSASs (paragraph 67 of IPSAS 33), in which case the
first-time adopter provides the disclosures required by paragraph 148 of IPSAS 33 ; or
(b) A revaluation in accordance with its previous basis of accounting that meets the criteria in
paragraph 67 of IPSAS 33.
IG55. Subsequent depreciation is based on that deemed cost and starts from the date for which the
first-time adopter determined the deemed cost, or where the first-time adopter takes advantage of
the exemption that provides a three year transitional relief period to not recognize certain assets,
when the exemptions providing the relief have expired, or the asset has been recognized in
accordance with IPSAS 17 (whichever is earlier).
IG56. If a first-time adopter chooses as its accounting policy the revaluation model in IPSAS 17 for
some or all classes of property, plant and equipment, it presents the cumulative revaluation
surplus as a separate component of net assets/equity. The revaluation surplus at the date of
adoption of IPSASs is based on a comparison of the carrying amount of the asset at that date
with its cost or deemed cost. If the deemed cost is the fair value at the date of adoption of IPSASs
or where the first-time adopter takes advantage of the exemption that provides a three year
transitional relief period to not recognize and/or measure certain assets, when the exemptions
providing the relief have expired, or the asset has been recognized and/or measured in
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accordance with IPSAS 17 (whichever is earlier), the first-time adopter provides the disclosures
required by paragraph 148 of IPSAS 33.
IG57. If revaluations in accordance with the first-time adopter’s previous basis of accounting did not
satisfy the criteria in paragraphs 67 or 69 of IPSAS 33, the first-time adopter measures the
revalued assets in its opening statement of financial position on one of the following bases:
(a) Cost (or deemed cost) less any accumulated depreciation and any accumulated impairment
losses under the cost model in IPSAS 17;
(b) Deemed cost, being the fair value or an alternative when market-based evidence of fair
value is not available, at the date of adoption of IPSASs, or where a first-time adopter takes
advantage of the exemption that provides a three year transitional relief period to not
recognize and/or measure certain assets, the date at which the asset is recognized and/or
measured during the period of transition, or when the transitional exemptions expire
(whichever is earlier); or
(c) A revalued amount, if the entity adopts the revaluation model in IPSAS 17 as its accounting
policy in accordance with IPSASs for all items of property, plant and equipment in the same
class.
IG58. IPSAS 17 requires each part of an item of property, plant and equipment with a cost that is
significant in relation to the total cost of the item to be depreciated separately. However, IPSAS
17 does not prescribe the unit of measurement for recognition of an asset, i.e. what constitutes an
item of property, plant and equipment. Thus, judgment is required in applying the recognition
criteria to an entity’s specific circumstances (paragraphs 18 and 59).
IG59. At the date of adoption of IPSASs, a first-time adopter applies IPSAS 25 in measuring defined
benefits plans and other long-term employee benefits, and recognizes all cumulative actuarial
gains or losses from the inception of the plan until the date of adoption of IPSASs, or where the
first-time adopter takes advantage of the exemption that provides a three year transitional relief
period from the recognition of defined benefit plans and other long-term employee benefits, the
date on which the exemptions expire or when the defined benefits plans and other long-term
employee benefits are recognized and/or measured in accordance with IPSAS 25 (whichever is
earlier), even if its accounting policy in accordance with IPSAS 25 will involve leaving some later
actuarial gains and losses unrecognized (see paragraph 105 of IPSAS 33).
IG60. A first-time adopter’s actuarial assumptions at the date of adoption of IPSASs, or where the first-
time adopter takes advantage of the exemptions that provide relief from the recognition of defined
benefit plans and other long-term employee benefits, the date on which the exemptions expire or
when the defined benefits plans and other long-term employee benefits are recognized and/or
measured in accordance with IPSAS 25 (whichever is earlier), are consistent with actuarial
assumptions made at the end of its comparative period (if the first-time adopter elects to present
comparative information in accordance with paragraph 78 of IPSAS 33) in accordance with its
previous basis of accounting (after adjustments to reflect any difference in accounting policies),
unless there is objective evidence that those assumptions were in error (paragraph 23 of the
IPSAS 33). Any later revisions to those assumptions are an actuarial gain or loss of the period in
which the first-time adopter makes the revisions.
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IG61. A first-time adopter may need to make actuarial assumptions at the date of adoption of IPSASs,
or where the first-time adopter takes advantage of the exemptions that provide relief from the
recognition of defined benefit plans and other long-term employee benefits, the date on which the
exemptions expire or when the defined benefits plans and other long-term employee benefits are
recognized and/or measured in accordance with IPSAS 25 (whichever is earlier), that were not
necessary in accordance with its basis of accounting. Such actuarial assumptions do not reflect
conditions that arose after the date of adoption of IPSASs, or where the first-time adopter takes
advantage of the exemptions that provide relief from the recognition of defined benefit plans and
other long-term employee benefits, the date on which the exemptions expire or when the defined
benefits plans and other long-term employee benefits are recognized and/or measured in
accordance with IPSAS 25 (whichever is earlier). In particular, discount rates and the fair value of
plan assets at the date of adoption of IPSASs, or where the first-time adopter takes advantage of
the exemptions that provide relief from the recognition of defined benefit plans and other long-
term employee benefits, the date on which the exemptions expire or when the liabilities are
recognized and/or measured in accordance with IPSAS 25 (whichever is earlier), reflect market
conditions at that date. Similarly, the first-time adopter’s actuarial assumptions at the date of
adoption of IPSASs, or where the first-time adopter takes advantage of the exemptions that
provide relief from the recognition of defined benefit plans and other long-term employee benefits,
the date on which the exemptions expire or when the defined benefits plans and other long-term
employee benefits are recognized and/or measured in accordance with IPSAS 25 (whichever is
earlier), about future employee turnover rates do not reflect a significant increase in estimated
employee turnover rates as a result of a curtailment of the pension plan that occurred after the
date of adoption of IPSASs, or where the first-time adopter takes advantage of the exemptions
that provide relief from the recognition of defined benefit plans and other long-term employee
benefits, the date on which the exemptions expire or when the defined benefits plans and other
long-term employee benefits are recognized and/or measured in accordance with IPSAS 25
(whichever is earlier) (paragraph 23 of IPSAS 33).
IG62. In many cases, a first-time adopter’s transitional IPSAS financial statements or its first IPSAS
financial statements will reflect measurements of employee benefit obligations at three dates
(where a first-time adopter elects to present comparative information in accordance with
paragraph 78 of IPSAS 33): the end of the first reporting period, the date of the comparative
statement of financial position (where the first-time adopter elects to present comparative
information) and the date of adoption of IPSASs, or where the first-time adopter takes advantages
of the exemptions that provide relief from the recognition of defined benefit plans and other long-
term employee benefits, the date on which the exemptions expire or when the defined benefits
plans and other long-term employee benefits are recognized and/or measured in accordance with
IPSAS 25 (whichever is earlier). IPSAS 25 encourages the first-time adopter to involve a qualified
actuary in the measurement of all material post-employment benefit obligations. To minimize
costs, a first-time adopter may request a qualified actuary to carry out a detailed actuarial
valuation at one or two of these dates and roll the valuation(s) forward or back to the other
date(s). Any such roll forward or roll back reflects any material transactions and other material
events (including changes in market prices and interest rates) between those dates (paragraph
68 of IPSAS 25).
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IPSAS 21, Impairment of Non-Cash-Generating Assets and IPSAS 26, Impairment of Cash-
Generating Assets
IG63. Paragraph 98 and 108 of IPSAS 33 requires a first-time adopter to apply the requirements in
IPSAS 21 and IPSAS 26 prospectively from the date of adoption of accrual basis IPSASs, or
where a first-time adopter takes advantage of the exemptions that provide a three year
transitional relief period to not recognize and/or measure an asset, the date when the exemptions
that provided the relief expire and/or the asset is recognized and/or measured. For example, if an
entity adopts accrual basis IPSASs on January 1, 20X1 and takes advantage of the three year
transitional relief period to not recognize and/or measure an item or property, plant and
equipment, if would not be required to assess the item of property, plant and equipment for
impairment until (a) December 31, 20X3 (i.e. the date on which the transitional exemption expire)
or (b) the date following the recognition of the item of property, plant and equipment if it was
recognized and/or measured during the period of transition (whichever is earlier).
IG64. The estimates used to determine whether a first-time adopter recognizes an impairment loss (and
to measure any such impairment loss) at the date of adoption of IPSASs, or where the first-time
adopter takes advantage of the exemption that provides relief from the recognition of assets, the
date on which the exemptions expire or when the assets are recognized and/or measured in
accordance with the applicable IPSAS (whichever is earlier) are consistent with estimates made
for at the end of its comparative period (if the first-time adopter elects to present comparative
information in accordance with paragraph 78 of IPSAS 33) the first-time adopter’s previous basis
of accounting (after adjustments to reflect any difference in accounting policies), unless there is
objective evidence that those estimates were in error (paragraphs 23 and 24 of IPSAS 33). The
first-time adopter reports any later revisions to those estimates as an event of the period in which
it makes the revisions.
IG65. In assessing whether it needs to recognize an impairment loss (and in measuring any such
impairment loss) at the date of adoption of IPSASs, or where the first-time adopter takes
advantage of the exemption that provides relief from the recognition of assets, the date on which
the exemptions expire or when the assets are recognized and/or measured in accordance with
the applicable IPSAS (whichever is earlier), the first-time adopter may need to make estimates for
that date that were not necessary in accordance with its previous basis of accounting. Such
estimates and assumptions do not reflect conditions that arose after the date of transition, or
where the first-time adopter takes advantage of the exemption that provides relief from the
recognition of assets, the date on which the exemptions expire or when the assets are recognized
and/or measured in accordance with the applicable IPSAS (whichever is earlier) (paragraph 25 of
IPSAS 33).
IG66. In its opening statement of financial position, a first-time adopter applies the criteria in IPSAS 28
to classify financial instruments issued (or components of compound instruments issued) as
either financial liabilities or net asset/equity instruments in accordance with the substance of the
contractual arrangement when the instrument first satisfied the recognition criteria in IPSAS 28
(paragraphs 13 and 35), without considering events after that date (other than changes to the
terms of the instruments).
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Recognition
IG67. A first-time adopter recognizes all financial assets and financial liabilities (including all derivatives)
that qualify for recognition in accordance with IPSAS 29 and have not yet qualified for
derecognition in accordance with IPSAS 29, except non-derivative financial assets and non-
derivative financial liabilities derecognized in accordance with its previous basis of accounting
before the date of adoption of IPSASs, or where the first-time adopter takes advantage of the
exemption that provides relief from the recognition of financial instruments, the date on which the
exemptions expire or when the financial instruments are recognized and/or measured in
accordance with the applicable IPSAS (whichever is earlier), to which the first-time adopter does
not choose to apply paragraph 116 of IPSAS 33 (see paragraphs 115 and 116 of IPSAS 33).
IG68. For example, a first-time adopter that does not apply paragraph 116 of IPSAS 33 does not
recognize assets transferred in a securitization, transfer or other derecognition transaction that
occurred before the date of adoption of IPSASs if those transactions qualified for derecognition in
accordance with its previous basis of accounting. However, if the first-time adopter uses the same
securitization arrangement or other derecognition arrangement for further transfers after the date
of transition to IPSASs, or where the first-time adopter takes advantage of the exemption that
provides relief from the recognition and/or measurement of financial instruments, the date on
which the exemptions expire or when the financial instruments are recognized and/or measured
in accordance with the applicable IPSAS (whichever is earlier), those further transfers qualify for
derecognition only if they meet the derecognition criteria of IPSAS 29.
Embedded Derivatives
IG69. When IPSAS 29 requires a first-time adopter to separate an embedded derivative from a host
contract, the initial carrying amounts of the components at the date when the instrument first
satisfies the recognition criteria in IPSAS 29 reflect circumstances at that date (IPSAS 29
paragraph 12). If the first-time adopter cannot determine the initial carrying amounts of the
embedded derivative and host contract reliably, it measures the entire combined contract as at
fair value through surplus or deficit (IPSAS 29 paragraph 14).
Measurement
IG70. In preparing its opening statement of financial position, a first-time adopter applies the criteria in
IPSAS 29 to identify those financial assets and financial liabilities that are measured at fair value
and those that are measured at amortised cost.
Adjusting the Carrying Amount of Financial Instruments on the Date of Adoption of Accrual Basis IPSASs
or During the Period of Transition
IG71. A first-time adopter shall treat an adjustment to the carrying amount of a financial asset or
financial liability as an adjustment to be recognized in the opening balance of accumulated
surplus or deficit at the date of adoption of IPSASs, or where the first-time adopter takes
advantage of the exemption that provides relief from the recognition and/or measurement of
financial instruments, the date on which the exemptions expire or when the financial instruments
are recognized and/or measured in accordance with the applicable IPSAS (whichever is earlier),
only to the extent that it results from adopting IPSAS 29. Because all derivatives, other than those
that are financial guarantee contracts or are designated and effective hedging instruments, are
classified as held for trading, the differences between the previous carrying amount (which may
90
have been zero) and the fair value of the derivatives are recognized as an adjustment of the
balance of accumulated surplus or deficit at the beginning of the financial year in which IPSAS 29 is
initially applied, or where the first-time adopter takes advantage of the exemption that provides
relief from the recognition and/or measurement of financial instruments, the date on which the
accordance with the applicable IPSAS (whichever is earlier).
Hedge Accounting
IG72. Paragraphs 117 to 119 of IPSAS 33 deal with hedge accounting. The designation and
documentation of a hedge relationship must be completed on or before the date of adoption of
IPSASs, or where the first-time adopter takes advantage of the exemption that provides relief
from the recognition and/or measurement of financial instruments, the date on which the
accordance with the applicable IPSAS (whichever is earlier) if the hedge relationship is to qualify
for hedge accounting from that date. Hedge accounting can be applied prospectively only from
the date that the hedge relationship is fully designated and documented.
IG73. A first-time adopter may, in accordance with its previous basis of accounting, have deferred or not
recognized gains and losses on a fair value hedge of a hedged item that is not measured at fair
value. For such a fair value hedge, a first-time adopter adjusts the carrying amount of the hedged
item at the date of adoption of IPSASs, or where the first-time adopter takes advantage of the
exemption that provides relief from the recognition of financial instruments, the date on which the
accordance with the applicable IPSAS (whichever is earlier). The adjustment is the lower of:
(a) That portion of the cumulative change in the fair value of the hedged item that reflects the
designated hedged risk and was not recognized in accordance with its previous basis of
accounting; and
(b) That portion of the cumulative change in the fair value of the hedging instrument that
reflects the designated hedged risk and, in accordance with its previous basis of
accounting, was either (i) not recognized or (ii) deferred in the statement of financial
position as an asset or liability.
IG74. A first-time adopter may, in accordance with its previous basis of accounting, have deferred gains
and losses on a cash flow hedge of a forecast transaction. If, at the date of adoption of IPSAS, or
where the first-time adopter takes advantage of the exemption that provides relief from the
recognition and/or measurement of financial instruments, the date on which the exemptions
expire or when the financial instruments are recognized and/or measured in accordance with the
applicable IPSAS (whichever is earlier), the hedged forecast transaction is not highly probable,
but is expected to occur, the entire deferred gain or loss is recognized in net assets/equity. Any
net cumulative gain or loss that has been reclassified to net assets/equity on initial application of
IPSAS 29 or where the first-time adopter takes advantage of the exemption that provides relief
from the recognition and/or measurement of financial instruments, the date on which the
accordance with the applicable IPSAS (whichever is earlier) remains in net assets/equity until (a)
the forecast transaction subsequently results in the recognition of a non-financial asset or non-
financial liability, (b) the forecast transaction affects surplus or deficit or (c) subsequently
circumstances change and the forecast transaction is no longer expected to occur, in which case
any related net cumulative gain or loss is reclassified from net assets/equity to surplus or deficit. If
91
the hedging instrument is still held, but the hedge does not qualify as a cash flow hedge in
accordance with IPSAS 29, hedge accounting is no longer appropriate starting from the date of
adoption of IPSASs, or where the first-time adopter takes advantage of the exemption that
provides relief from the recognition and/or measurement of financial instruments, the date on
which the exemptions expire or when the financial instruments are recognized and/or measured
in accordance with the applicable IPSAS (whichever is earlier).
IG75. A first-time adopter’s opening statement of financial position excludes all intangible assets and
other intangible items that do not meet the criteria for recognition in accordance with IPSAS 31 at
the date of adoption of IPSAS, or where the first-time adopter takes advantage of the exemption
that provides relief from the recognition of intangible assets, the date on which the exemptions
expire and/or when the intangible assets are recognized and/or measured in accordance with the
applicable IPSAS (whichever is earlier) and includes all intangible assets that meet the
recognition criteria in IPSAS 31 at that date.
IG76. The criteria in IPSAS 31 require an entity to recognize an intangible asset if, and only if:
(a) It is probable that the future economic benefits that are attributable to the asset will flow to
the entity; and
(b) The cost of the asset can be measured reliably.
IPSAS 31 supplements these two criteria with further, more specific, criteria for internally
generated intangible assets.
IG77. In accordance with paragraphs 63 and 66 of IPSAS 31, an entity capitalises the costs of internally
generated intangible assets prospectively from the date when the recognition criteria are met.
IPSAS 33 allows an entity to recognize previously expensed intangible assets to the extent that
the item meets the definition of an intangible asset, and the recognition criteria in IPSAS 31.
Thus, if an internally generated intangible asset qualifies for recognition at the date of adoption of
IPSASs, or where the first-time adopter takes advantage of the exemption that provides relief
from the recognition of intangible assets, the date on which the exemptions expire and/or when
the intangible assets are recognized and/or measured in accordance with the IPSAS 31
(whichever is earlier) the first-time adopter recognizes and/or measures the asset in its opening
statement of financial position even if it had recognized the related expenditure as an expense in
accordance with its pervious basis of accounting.
IG78. If the asset does not qualify for recognition in accordance with IPSAS 31 until a later date, its cost
is the sum of the expenditure incurred from that later date.
IG79. The criteria in paragraph IG76 also apply to intangible assets acquired separately. In many cases,
contemporaneous documentation prepared to support the decision to acquire the asset will
contain an assessment of the future economic benefits or service potential. Furthermore, as
explained in paragraph 33 of IPSAS 31, the cost of a separately acquired intangible asset can
usually be measured reliably.
IG80. A first-time adopter may elect to use one of the following amounts as the deemed cost of
intangible assets (except for internally generated intangible assets):
(a) Fair value at the date of transition at the date of adoption of IPSASs, or where a first-time
adopter takes advantage of the exemption that provides a three year transitional relief
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period to not recognize and/or measure certain assets, the date at which the asset is
recognized and/or measured during the period of transition, or the date on which the
exemptions expire (whichever is earlier) (paragraph 67 of IPSAS 33), in which case the
entity gives the disclosures required by paragraph 148 of IPSAS 33; or
(b) A revaluation in accordance with its previous basis of accounting that meets the criteria in
paragraph 67of IPSAS 33.
IG81. If a first-time adopter’s amortization methods and rates in accordance with its previous basis of
accounting are acceptable in accordance with IPSASs, it accounts for any change in estimated
useful life or amortization pattern prospectively from when it makes that change in estimate
(paragraphs 23 and 24 of IPSAS 33 and paragraph 103 of IPSAS 31). However, in some cases,
the first-time adopter’s amortization methods and rates in accordance with its previous basis of
accounting may differ from those that would be acceptable in accordance with IPSASs (for
example, if they do not reflect a reasonable estimate of the asset’s useful life). If those differences
have a material effect on the financial statements, the first-time adopter adjusts accumulated
amortization on in its opening statement of financial position retrospectively so that it complies
with IPSASs.
IG82. If a first-time adopter did not consolidate a controlled entity in accordance with its previous basis
of accounting, then, in its consolidated financial statements, the first-time adopter measures the
controlled entity’s assets and liabilities at the same carrying amounts as in the accrual basis
financial statements of the controlled entity following its adoption of IPSASs, after adjusting for
consolidation procedures and for the effects of the entity combination in which it acquired the
controlled entity (paragraph 130 of IPSAS 33). If the controlled entity has not adopted accrual
basis IPSASs in its financial statements, the carrying amounts described in the previous sentence
are those that IPSASs would require in those financial statements.
Controlling Entity Adopts Accrual Basis IPSASs Before the Controlled Entity
Background
IG83. Controlling entity A presents its (consolidated) first IPSAS financial statements in 20X5. Its
controlled entity B, wholly owned by controlling entity A since formation, prepares information in
accordance with accrual basis IPSASs for internal consolidation purposes from that date, but
controlled entity B does not present its first IPSAS financial statements until 20X7.
IG84. If controlled entity B applies paragraph 129(a) of IPSAS 33, the carrying amounts of its assets
and liabilities are the same in both its opening IPSAS statement of financial position at January 1,
20X6 and controlling entity’s A consolidated statement of financial position (except for
adjustments for consolidation procedures) and are based on controlling entity B’s date of adoption
of IPSASs.
IG85. Alternatively, controlled entity B, in accordance with paragraph 129(b) of IPSAS 33, measure all
its assets or liabilities based on its own date of adoption of IPSASs (January 20X6). However, the
fact that controlled entity B becomes a first-time adopter in 20X7 does not change the carrying
amounts of its assets and liabilities in controlling entity A’s consolidated financial statements.
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Controlled Entity Adopts Accrual Basis IPSASs Before the Controlling Entity
Background
IG86. Controlling entity C presents its (consolidated) transitional IPSAS financial statements IPSASs in
20X7. Its controlled entity D, wholly owned by controlling entity C since formation, presented its
transitional IPSAS financial statements in 20X5. Until 20X7, controlled entity D prepared
information for internal consolidation purposes in accordance with controlling entity’s C previous
basis of accounting.
IG87. The carrying amounts of controlled entity D’s assets and liabilities at January 1, 20X6 are the
same in both controlling entity’s C (consolidated) opening accrual basis statement of financial
position and controlled entity D’s financial statements (except for adjustments for consolidation
procedures) and are based on controlled entity D’s date of adoption of IPSASs. The fact that
controlling entity C becomes a first-time adopter in 20X7 does not change those carrying amounts
(paragraph 129 of IPSAS 33).
IG88. Paragraphs 129 and 130 of IPSAS 33 do not override the following requirements:
(a) The rest of IPSAS 33 in measuring all assets and liabilities for which paragraphs 129 and
130 of IPSAS 33 are not relevant.
(b) To give all disclosures required by this IPSAS as of the first-time adopter’s own date of
transition to IPSASs.
IG89. Paragraph 129 of IPSAS 33 applies if a controlled entity becomes a first-time adopter later than
its controlling entity, for example if the controlling entity previously prepared a reporting package
in accordance with accrual basis IPSASs for consolidation purposes but did not present a full set
of financial statements in accordance with IPSASs. This may be relevant not only when a
controlling entity reporting package complies fully with the recognition and measurement
requirements of IPSASs, but also when it is adjusted centrally for matters such as review of
events after the reporting date and central allocation of pension costs. However, paragraph 129 of
IPSAS 33 does not permit a controlled entity to ignore misstatements that are immaterial to the
consolidated financial statements of its controlling entity but material to its own financial
statements.
Presentation and Disclosure
IG90. Paragraphs 135 to 140 in IPSAS 33 require a first-time adopter to disclose certain information
when it has taken advantage of the transitional exemptions and provisions in its adoption of
accrual basis IPSASs.
To illustrate:
Notes to the financial statements for the year ending December 31, 20X2
Note 48 – Adoption of transitional exemptions and provisions in IPSAS 33
Public Sector Entity X adopted accrual basis IPSAS on January 1, 20X1 and elected to adopt the
transitional exemption in IPSAS 33 that allows it to apply a deemed cost and a period of up to
three years in which to measure land and buildings and investment property.
Public Sector Entity X took advantage of these exemptions in determining a deemed cost, and to
measure its land and buildings and investment property. As a result of adopting these transitional
94
exemptions and provisions the entity is not able to make an explicit and unreserved statement
about its compliance with accrual basis IPSASs, as the adoption of these transitional exemptions
affect the fair presentation of Public Sector Entity X’s financial statements and its ability to assert
No other transitional exemptions that affect fair presentation and compliance with accrual basis
IPSASs during the period of transition were adopted or applied to any other assets and/or
liabilities.
During the period under review, Public Sector Entity X restated its opening balance of investment
property with an additional value of CU 1 200 000 after determining the deemed cost on June 30,
20X2 for the investment property under its control.
As at year end, Public Sector Entity X has not yet determined a deemed cost for land and
buildings and has not yet measured these assets in its financial statements. Land and buildings
reflect a closing balance of CU 2 500 000 as at December 31, 20X2. This value was determined
under Public Sector Entity X’s previous basis of accounting.
Public Sector Entity X plans to apply a three year transitional exemption for measuring its land
and buildings and in determining a deemed cost for these asset.
Public Sector Entity X has appointed an appraiser to value the land and has developed a model
for the measurement of buildings. The progress in determining the valuations for land and
buildings is in accordance with its implementation plan.
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Summary of Transitional Exemptions and Provisions Included in IPSAS 33 First-time Adoption of Accrual Basis IPSASs
IG91. The diagram below summarizes the transitional exemptions and provisions included in other accrual basis IPSASs
IPSAS Transitional exemption provided
NO YES
Deemed 3 year 3 year 3 year 3 year Elimination of Other

cost transitional transitional transitional transitional transactions,
relief for relief for relief for relief for balances,
recognition measurement recognition disclosure revenue and
and/or expenses
measurement
IPSAS 1, Presentation of √  Presenting
Financial Statements comparative
To extent that 3 info encouraged
year relief period
was adopted
IPSAS 2, Cash Flow √

Statements
IPSAS 3, Accounting Policies,

Changes in Accounting
Estimates and Errors √
IPSAS 4, The Effects of  Exemption to

Changes in Foreign Exchange comply with
Rates requirements
for cumulative
translation
IPSAS 5, Borrowing Costs √  Encouraged to

apply
When allowed benchmark
alternative is treatment
elected as retrospectively
accounting policy
 Allowed
alternative
must be
applied
retrospectively
96
NO YES

relief for relief for relief for relief for balances, revenue
recognition measurement recognition disclosure and expenses
and/or
measurement
IPSAS 6, Consolidated √ √ √  Provisions when
and Separate Financial controlling and/or
Statements To appropriately controlled entity
classify and adopts IPSAS at
identify interests different time
(IPSAS 35 in other entities
 Exemption to not
Consolidated Financial
prepare financial
Statements)
statements as
consolidated
financial
statements
 (Assess if
investment entity
on date of
adoption and
measure at fair
value at that date)
IPSAS 7, Investments √ √ √  Provisions when

in Associates controlling entity
To appropriately and associate
classify and adopts IPSAS at
(IPSAS 36 Investments identify interests different time
in Associates and Joint in other entities
Ventures)
include investment
in associate in
consolidated
financial
statements
97
NO YES

relief for relief for relief for relief for balances, revenue
recognition measurement recognition disclosure and expenses
and/or
measurement
IPSAS 8, Interests in √ √ √  Provisions when
Joint Venture controlling entity
To appropriately and associate and
classify and jointly controlled
(IPSAS 36 Investments identify interests entities adopt
in Associates and Joint in other entities IPSAS at different
Ventures) time
include interests in
joint venture in
consolidated
financial
statements
(IPSAS 37 Joint  Provision on how

Arrangements) to measure
investment in
joint venture
previously
accounted for
using
proportionate
consolidation
98
NO YES

cost transitional transitional transitional transitional relief transactions,
relief for relief for relief for for disclosure balances, revenue
recognition measurement recognition and expenses
and/or
measurement
IPSAS 9, Revenue √
from Exchange √ To extent that 3
Transactions year relief period
was adopted for
assets and/or
liabilities
IPSAS 10, Financial  Provisions
Reporting In around severe
Hyperinflationary hyperinflation
Economies
IPSAS 11,
Construction √
Contracts
IPSAS 12, Inventories √ √ √
Inventory not Inventory
recognized recognized
under previous under previous
basis of basis of
accounting accounting
IPSAS 13, Leases √ √
Leased assets Leased assets
and/or liabilities and/or liabilities
not recognized recognized
basis of basis of
accounting
99
NO YES

cost transitional transitional transitional transitional relief transactions,
relief for relief for relief for for disclosure balances, revenue
and/or
measurement
IPSAS 14, Events
After the Reporting √
Date
IPSAS, 16 √ √ √
Investment Property Investment Investment
property not property
basis of basis of
IPSAS 17, Property, √ √ √
Plant and Property, plant Property, plant
Equipment and equipment and equipment
not recognized recognized
basis of basis of
IPSAS 18, Segment √
Reporting No segment
report to the
extent that 3
year relief
period was
adopted
100
NO YES
Deemed cost 3 year 3 year 3 year 3 year transitional Elimination of Other

transitional transitional transitional relief for disclosure transactions,
relief for relief for relief for balances, revenue
and/or
measurement
IPSAS 19, √ √
Provisions, Only liabilities Only liabilities
Contingent Liabilities related to related to assets
and Contingent assets not recognized under
Assets recognized previous basis of
under accounting to be
previous basis included initial
of accounting estimate of cost
to be included of dismantling/
initial estimate removing item/
of cost of restoring site
dismantling/
removing
item/ restoring
site
IPSAS 20, Related √
Party Disclosures
IPSAS 21,  Prospective
Impairment of Non- application
Cash-Generating
Assets
IPSAS 22, √
Disclosure of
Information About
the General
Government Sector
IPSAS 23, Revenue √ √ √
from Non-Exchange All non- All non-exchange To extent that 3
Transactions exchange revenue year relief period
revenue not recognized under was adopted for
recognized previous basis of assets and/or
under accounting liabilities
previous basis
of accounting
101
NO YES
Deemed 3 year 3 year 3 year transitional 3 year Elimination of Other

cost transitional transitional relief for transitional relief transactions,
relief for relief for recognition and/or for disclosure balances, revenue
recognition measurement measurement and expenses
IPSAS 24, Presentation √
of Budget Information in
Financial Statements
IPSAS 25, Employee √ √  Provisions on
Benefits defined benefit for defined how to
plans and other benefit and otehr determine initial
long-term long-term liability
employee employee  Provision to not
benefits not benefits separate
recognized recognized cumulative
under previous under previous actuarial gains
basis of basis of and losses
 Prospective
disclosure on
experience
adjustments
IPSAS 26, Impairment of √  Prospective
Cash-Generating Assets application
IPSAS 27, Agriculture √ √
Biological and Biological and
agricultural agricultural
activities not activities
basis of basis of
102
NO YES
Deemed cost 3 year transitional 3 year transitional 3 year 3 year Elimination of Other
relief for recognition relief for transitional transitional transactions,
measurement relief for relief for balances,
recognition disclosure revenue and
and/or expenses
measurement
IPSAS 28, Financial  Provisions not to
Instruments: separate liability
Presentation and net
asset/equity
component under
specific
circumstances
IPSAS 29, Financial √ √ √  Provisions around
Instruments: Recognition For financial instruments For financial designation/
and Measurement not recognized under instruments derecognition/
previous basis of recognized under hedge accounting
accounting previous basis of  Apply impairment
accounting principles
prospectively
IPSAS 30, Financial  No comparative
Instruments: Disclosure info about nature
and extent of risks
IPSAS 31, Intangible √ √ √  Provision to
Assets Intangible Intangible assets not Intangible assets recognise
assets other recognized under recognized under previously
than internally previous basis of previous basis of expensed internally
generated I/A accounting accounting generated
intangible assets
IPSAS 32, Service √ √ √  Provision on how to
Concession Service Service concession Service concession recognize related
Arrangements: Grantor concession asset and related liability asset and related liability
asset not recognized under liability recognized
previous basis of under previous
accounting basis of accounting
103
Appendix A
Differentiation between transitional exemptions and provisions that a first-time adopter is required to apply and/or can elect to apply on
adoption of accrual basis IPSASs
This Appendix summarises how the transitional exemptions and provisions that a first-time adopter is required to apply in terms of this IPSAS, and
those that a first-time adopter may elect to apply on adoption of accrual basis IPSASs.
As the transitional exemptions and provisions that may be elected can also affect the fair presentation and the first-time adopter’s ability to assert
compliance with accrual basis IPSASs as explained in paragraphs 27 to 32 of IPSAS 33, the Appendix makes a distinction between those transitional
exemptions and provisions that affect fair presentation and the ability to assert compliance with accrual basis IPSASs, and those that do not.
Transitional exemption or provision Transitional exemptions or Transitional exemptions or provisions that may be
provisions that have to be applied or elected
applied
Do not affect fair presentation and Do not affect fair Affect fair presentation
compliance with accrual basis presentation and compliance and compliance with
IPSAS with accrual basis IPSAS accrual basis IPSAS
IPSAS 1 √
 Present comparative information
IPSAS 4
 Cumulative transitional differences at the date √
of adoption
IPSAS 5
 Allowed alternative treatment and has taken √
advantage of relief period
 Adopt allowed alternative treatment on date of
adoption – retrospective application √
 Adopt bench mark treatment on the date of
adoption – retrospective application of costs
incurred before and after date of adoption √
104
applied
IPSAS 6 (IPSAS 35)

 Relief to recognize and/or measure interests in √
controlled entity
 Elect to not eliminate inter-entity balances,
√
transactions, revenue and expenses
√
 Controlled entity becomes first-time adopter
later or earlier than its controlling entity
 Not present financial statements as
consolidated financial statements if three year √
relief for recognition and/or measurement
√
and/or elimination option was adopted
 Assess if investment entity on date of adoption
and determine fair value at that date)
IPSAS 7 (IPSAS 36)
 Relief to recognize and/or measure interest in √
associate
 Elect to not eliminate share in associate’s
√
surplus and deficit
 Associate becomes first-time adopter later or
earlier than its controlling entity √
 Not present investment in associates in

consolidated financial statements if three year √
relief for recognition and/or measurement and/or
elimination option was adopted
105
applied
IPSAS 8 (IPSAS 36)
 Relief to recognize and/or measure interest in
√
joint venture
 Elect to not eliminate balances and transactions √
with jointly controlled entities
 Joint venture becomes first-time adopter later or
earlier than its controlling entity √
 Not present interest in joint venture in
consolidated financial statements if three year
relief for recognition and/or measurement √
and/or elimination option was adopted
IPSAS 37
 Measure investment in joint venture previously
√
accounted for using proportionate consolidation
IPSAS 9
 Relief for recognition and/or measurement of
revenue related to adoption of three year relief
period for recognition and/or measurement of √
financial instruments
IPSAS 10
 Determine if hyperinflationary economy is
√
subject to severe hyperinflation at the date of
adoption
 Measure assets and liabilities if date of √
adoption is on or after normalisation date
106
applied
IPSAS 12
 Three year relief for recognition and/or √

measurement of assets and changing the
accounting policy to measure assets
IPSAS 13
 No recognition and/or measurement of finance

lease liability and finance lease asset if relief
√
period for recognition and/or measurement of
assets is adopted
 Classification of lease based on circumstances √
at adoption of accrual basis IPSAS
IPSAS 16

IPSAS 17

107
applied
IPSAS 18
 No preparation of segment report within three √
years of adoption
IPSAS 19
 No recognition and measurement of liability
relating to initial estimate of costs of dismantling
√
and removing item if relief for recognition and/or
measurement of assets are adopted
IPSAS 20
 No disclosure of related party relationships, √
related party transactions and information
about key management personnel
IPSAS 21
 Apply impairment provisions prospectively on √
date of adoption or when assets are recognised
when relief period was applied
108
applied
IPSAS 25
 Three year relief for recognition and/or
measurement of assets and/or liabilities and
√
changing the accounting policy to measure
assets and/or liabilities
 Determine initial liability for defined benefit and √
other long-term employee benefit plans on date
of adoption or when relief period expired
 Recognize increase/decrease on date of
adoption or when relief period expires in √
opening accumulated surplus/deficit
IPSAS 26
 Apply impairment provisions prospectively on
√
date of adoption or when assets are recognised
when relief period was applied
IPSAS 27
√
109
applied
IPSAS 28
 Determine if financial instrument has liability and
net asset/equity component on date of adoption
√
 Do not separate compound financial instrument
if no liability exists on date of adoption
IPSAS 29
measurement of assets and/or liabilities and
√
Designation
 Designate financial asset or liability at fair value
√
through surplus or deficit on date of adoption
Impairment
 Apply impairment provisions prospectively on
date of adoption
√
110
applied
IPSAS 29
Derecognition
 Apply derecognition provisions prospectively on
√
date of adoption
 Apply derecognition provisions retrospectively if
information is available as at the date of initial √
accounting
Hedge accounting
 Measure derivatives at fair value
√
 Eliminate all deferred losses and gains
√
 Only reflect hedges that qualify for hedge
accounting on date of adoption √
 Discontinue hedge transaction if conditions of
hedge accounting on date of adoption are not
met √
IPSAS 30
 No disclosure of information about nature √
and extent of risks
111
applied
IPSAS 31
 Recognize all internally generated intangible
√
assets
IPSAS 32
measurement of assets and/or liabilities and √
 Measure liability either under financial liability
model or grant of a right to the operator model √
on date of adoption or when asset is
recognised if relief period is adopted
Applying deemed cost to assets and/or liabilities √
Applying deemed cost to assets acquired in a √
non-exchange transaction
Using deemed cost for investments in controlled √
entities, jointly controlled entities and associates
Preparing reconciliations during transitional period √
112
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International Public Sector Accounting Standards™, Exposure Drafts, Consultation Papers,

Recommended Practice Guidelines, and other IPSASB® publications are published by, and copyright of,
IFAC®.
The IPSASB and IFAC do not accept responsibility for loss caused to any person who acts or refrains
from acting in reliance on the material in this publication, whether such loss is caused by negligence or
otherwise.
The IPSASB logo, ‘International Public Sector Accounting Standards Board ®’, ‘IPSASB’, ‘International
Public Sector Accounting Standards’ ‘IPSAS™’, ‘Recommended Practice Guidelines,’ the IFAC logo,
‘International Federation of Accountants®’, and ‘IFAC’ are trademarks or registered trademarks and
service marks of IFAC.
Copyright © January 2015 by the International Federation of Accountants (IFAC). All rights reserved.
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document, except as permitted by law. Contact [email protected].
ISBN: 978-1-60815-208-7
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Final Pronouncement

International Public Sector Accounting Standard™

First-time Adoption of Accrual

Date of Adoption of IPSASs ......................................................................................... 10

Previous Basis of Accounting ....................................................................................... 12

Transitional IPSAS Financial Statements .................................................................... 13–14

Recognition and Measurement ............................................................................................. 15–22

Accounting Policies ...................................................................................................... 15

Exceptions to the Retrospective Application of IPSASs ....................................................... 16–22

Fair Presentation and Compliance with IPSASs ................................................................... 23–26

Using Deemed Cost to Measure Assets and/or Liabilities ........................................... 64–70

Using Deemed Cost to Measure Assets Acquired Through a Non-Exchange Transaction 71

Date at which Deemed Cost can be Determined ......................................................... 74–76

IPSAS 1, Presentation of Financial Statements ........................................................... 77–84

IPSAS 4, The Effects of Changes in Foreign Exchange Rates ................................... 85–87

IPSAS 5, Borrowing Costs ........................................................................................... 88–90

IPSAS 13, Leases ........................................................................................................ 95–96

IPSAS 18, Segment Reporting ..................................................................................... 97

IPSAS 25, Employee Benefits ...................................................................................... 101–107

IPSAS 26, Impairment of Cash-Generating Assets ..................................................... 108–110

IPSAS 28, Financial Instruments: Presentation ........................................................... 111–112

IPSAS 29, Financial Instruments: Recognition and Measurement .............................. 113–122

IPSAS 30, Financial Instruments: Disclosures ............................................................. 123–124

IPSAS 31, Intangible Assets ........................................................................................ 125–126

IPSAS 32, Service Concession Arrangements ............................................................ 127–128

IPSAS 34, Separate Financial Statements, IPSAS 35, Consolidated Financial

IPSAS 35, Consolidated Financial Statements ............................................................ 131

IPSAS 37, Joint Arrangements ..................................................................................... 132–134

Disclosures ............................................................................................................................ 135-152

Explanation of Transition to IPSASs............................................................................. 141

Reconciliations ............................................................................................................. 142-147

Disclosures where Deemed Cost is Used for Inventory, Investment Property,

Disclosures Where Deemed Cost is Used for Investments in Controlled Entities,

Transitional Provisions .......................................................................................................... 153

Basis for Conclusions

(a) Requirements on changes in accounting policies in IPSAS 3, Accounting Policies, Changes

Opening statement of financial position is a first-time adopter’s statement of financial

Date of Adoption of IPSASs

First IPSAS Financial Statements

Previous Basis of Accounting

Transitional IPSAS Financial Statements

Recognition and Measurement

Exceptions to the Retrospective Application of IPSASs

Fair Presentation and Compliance with IPSASs

34. Notwithstanding the exemptions provided in paragraphs 36–62 a first-time adopter is

Recognition and/or Measurement of Assets and/or Liabilities

(a) Inventories (see IPSAS 12, Inventories);

(f) Intangible assets (see IPSAS 31, Intangible Assets);

Recognition and/or Measurement of Non-Exchange Revenue

adopter to apply IPSAS 23 incrementally to different classes of revenue from non-exchange

IPSAS 5, Borrowing Costs

IPSAS 13, Leases

IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets

IPSAS 20, Related Party Disclosures

52. Notwithstanding the transitional provision in paragraph 51, a first-time adopter is

IPSAS 35, Consolidated Financial Statements

57. Notwithstanding the transitional exemption in paragraph 55, a first-time adopter is

IPSAS 36, Investments in Associates and Joint Ventures

Using Deemed Cost to Measure Assets and/or Liabilities