The International Public Sector Accounting Standards Board (IPSASB) released IPSAS 41, Financial Instruments in August 2018 to improve financial instruments reporting in public sector. The Standard establishes new requirements for classifying, recognizing and measuring financial instruments to replace those in IPSAS 29, Financial Instruments: Recognition and Measurement.

IPSAS 41 substantially improves the relevance of information for financial assets and financial liabilities. It provides users of financial statements with more useful information than IPSAS 29, by:

• Applying a single classification and measurement model for financial assets that considers the characteristics of the asset's cash flows and the objective for which the asset is held;
• Applying a single forward-looking expected credit loss model that is applicable to all financial instruments subject to impairment testing; and
• Applying an improved hedge accounting model that broadens the hedging arrangements in scope of the guidance. The model develops a strong link between an entity's risk management strategies and the accounting treatment for instruments held as part of the risk management strategy.

It is based on International Financial Reporting Standard (IFRS) 9, Financial Instruments, developed by the International Accounting Standards Board (IASB), but also includes public sector-specific guidance and illustrative examples on:

• Financial guarantees issued through non-exchange transactions;
• Concessionary loans;
• Equity instruments arising from non-exchange transactions; and
• Fair value measurement.

Please visit:  http://www.ifac.org/publications-resources/ipsas-41-financial-instruments to access the standard at a glance/the full standard.

IPSAS 42, SOCIAL BENEFITS

The International Public Sector Accounting Standards Board (IPSASB) issued IPSAS 42, Social Benefits in January 2019, with the objective of defining social benefits, and determining when expenses and liabilities for social benefits are recognized and how they are measured.

IPSAS 42, Social Benefits, provides guidance on accounting for social benefits expenditure. It defines social benefits as cash transfers paid to specific individuals and/or households to mitigate the effect of social risk. Specific examples include state retirement benefits, disability benefits, income support and unemployment benefits. The new standard requires an entity to recognize an expense and a liability for the next social benefit payment.

IPSAS 42 seeks to improve the relevance, faithful representativeness and comparability of the information that a reporting entity provides in its financial statements about social benefits. To accomplish this, the standard establishes principles and requirements for:

• Recognizing expenses and liabilities for social benefits;
• Measuring expenses and liabilities for social benefits;
• Presenting information about social benefits in the financial statements; and
• Determining what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the social benefits provided by the reporting entity.

Please visit http://www.ifac.org/publications-resources/ipsas-42-social-benefits to access the standard at a glance/ full standard.