ED 80 Improvements IPSAS 2021

Exposure Draft 80
July 2021
Comments due: September 30, 2021
Proposed International Public Sector Accounting Standard ®
Improvements to IPSAS, 2021

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 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 © July 2021 by the International Federation of Accountants (IFAC). For copyright, trademark, and
permissions information, please see page 60.
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REQUEST FOR COMMENTS
This Exposure Draft, Improvements to IPSAS, 2021, was developed and approved by the International
Public Sector Accounting Standards Board® (IPSASB®).
The proposals in this Exposure Draft may be modified in light of comments received before being issued in
final form. Comments are requested by September 30, 2021.
Respondents are asked to submit their comments electronically through the IPSASB website, using the
“Submit a Comment” link. Please submit comments in both a PDF and Word file. Also, please note that
first-time users must register to use this feature. All comments will be considered a matter of public record
and will ultimately be posted on the website. This publication may be downloaded from the IPSASB website:
www.ipsasb.org. The approved text is published in the English language.
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EXPOSURE DRAFT 80, IMPROVEMENTS TO IPSAS, 2021
CONTENTS
Introduction.................................................................................................................................................... 5
PART I: General Improvements to IPSAS .................................................................................................... 7
PART II: IFRS Alignment Improvements to IPSAS .................................................................................... 23
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INTRODUCTION
1. Exposure Draft (ED) 80, Improvements to IPSAS, 2021 deals with non-substantive changes to
IPSAS that arise both through:
(a) Comments received from stakeholders—see Part I: General Improvement to IPSAS; and
(b) Publications of the International Accounting Standards Board (IASB)—see Part II: IFRS
Alignment Improvements to IPSAS.
2. Regarding the IASB’s projects, the IPSASB considered several IASB’s publications during the
development of this ED that were issued since the last Improvements to IPSAS cycle and that either
have not been considered in another IPSASB’s project or that have no equivalent IPSAS.
3. Table 1 identifies the IASB’s publications, the subject of the amendment, and the IPSASB’s rationale
for not including them in Part II of this ED.
Table 1: IASB’s Publications not Included in ED 80
Rationale for non-inclusion in

IASB’s Publication Subject of Amendment
ED 80
Amendment to IAS 41, Remove the requirement for entities Amendments included as a
Agriculture to exclude taxation cash flows when consequential amendment
(Issued in May 2020). measuring the fair value of a (Amendments to Other IPSAS) to
biological asset using a present IPSAS 27, Agriculture in ED 77,
value technique to align with Measurement.
IFRS 13, Fair Value Measurement.
Reference to the • Replaces the references to the • IPSAS 40 refers to the IPSASB’s
Conceptual Framework old IASB’s Framework with Conceptual Framework;
(Amendments to references to the 2018 IASB
IFRS 3) Conceptual Framework in IFRS 3;
(Issued in May 2020). • Adds an exception in IFRS 3 to • The definition of liability in the
the recognition principle to IPSASB’s Conceptual Framework
recognize liabilities and is being considered in the Limited
contingent liabilities in terms of Scope Review of the Conceptual
IAS 37 and IFRC 21 on Framework project and afterwards
acquisition date to eliminate will be considered in a narrow
“Day 2 gains”; and scope amendment project to
IPSAS 40; and
• Adds an explicit statement in • The amendment to include an
IFRS 3 that an acquirer does not explicit statement for contingent
recognize contingent assets assets will be considered in a
acquired in a business narrow scope amendment project
combination since this prohibition to IPSAS 40.
for recognition of contingent
assets was implied in IFRS 3.
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Rationale for non-inclusion in

IASB’s Publication Subject of Amendment
ED 80
Amendment to Deletes the reimbursement relating Amendments are included in ED 75,
Illustrative Examples to leasehold improvements from the Leases.
Accompanying IFRS 16, fact pattern of Illustrative Example
Leases (IE) 13 to address the confusion in
(Issued in May 2020). applying IFRS 16.
Covid-19-Related Rent Practical expedient for lessees not Amendments are included in ED 75. 1
Concessions to account for rent concessions
(Amendment to because of the covid-19 pandemic
IFRS 16) as lease modifications.
(Issued in May 2020).
Amendments to IFRS 17 Address implementation challenges There is no equivalent IPSAS for
(Issued in June 2020). identified when applying IFRS 17, IFRS 17.
Insurance Contracts.
Interest Rate • Adds a practical expedient in • Amendments will be reconsidered
Benchmark Reform— IFRS 16, Leases for accounting at a future date after the final
Phase 2 (Amendments for lease modifications that occur IPSAS based on ED 75 is
to IFRS 9, IAS 39, because of the reform; and approved; and
IFRS 7, IFRS 4 and • Adds relief in IFRS 4, Insurance • There is no equivalent IPSAS for
IFRS 16) Contracts for insurers who apply IFRS 4. 2
(Issued in August 2020). IAS 39.
Disclosure of Accounting Requires entities to disclose The subsection on materiality in
Policies, (Amendments “material accounting policy Chapter 3 of the IPSASB’s
to IAS 1 and IFRS information” instead of “significant Conceptual Framework is under
Practice Statement 2) accounting policies because IAS 1 revision in the Limited Scope Review
(Issued in does not define the term of the Conceptual Framework
February 2021). “significant”. project.
Definition of Accounting Introduced the definition of Amendments will be reconsidered at
Estimates (Amendments accounting estimates to distinguish a future date after the final IPSAS
to IAS 8) changes in accounting estimates based on ED 77 is approved as a
(Issued in from changes in accounting pronouncement.
February 2021). policies.
1
Covid 19 amendments issued in March 2021 will be considered after the final IPSAS based on ED 75, Leases is approved as a
pronouncement.
2
Interest Rate Benchmark Reform—Phase 2, amendments to IFRS 9, Financial Instruments, IAS 39, Financial Instruments:
Recognition and Measurement and IFRS 7, Financial Instruments: Disclosures were included in ED 80, Improvements to IPSAS,
2021 and made to corresponding IPSAS 41, Financial Instruments (see Part II-2a), IPSAS 29, Financial Instruments:
Recognition and Measurement (as amended by IPSAS 41 when it was first published in 2018, see Part II-2b) and IPSAS 30,
Financial Instruments: Disclosures (see Part II-2c).
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PART I: GENERAL IMPROVEMENTS TO IPSAS
Objective
1. The objective of Part I of the Exposure Draft (ED) is to propose improvements to IPSAS to address
issues raised by stakeholders.
Request for Comments

2. The IPSASB would welcome comments on all the changes proposed in the ED. Comments are most
helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a
clear rationale and, where applicable, provide a suggestion for alternative wording.
IPSAS Addressed
3. The Improvements project deals with non-substantive changes to IPSAS through a collection of
amendments which are unrelated. Amendments included in Part I arise from comments received from
stakeholders. Table 2 sets out the possible amendments to IPSAS identified by stakeholders,
including the rationale for including the proposed amendments in this ED.
Table 2: General Improvements to IPSAS proposed in ED 80
IPSAS Summary of Proposed Change in ED 80

IPSAS 22, Disclosure of Financial Information Refer to the latest edition of the System of National
About the General Government Sector. Accounts, 2008 (2008 SNA) (see Part I-1).
IPSAS 39, Employee Benefits. Delete the word “composite” from the term
“composite social security programs” 3 because it is
no longer an IPSAS defined term (see Part I-2).
RPG 1, Reporting on the Long-Term Add paragraph BC7A in the Basis for Conclusions
Sustainability of an Entity’s Finances. (BCs) to indicate that the Conceptual Framework
and Social Benefits projects were completed in
October 2014 and January 2019, respectively,
because the BCs mentioned these projects as
ongoing when RPG 1 was issued in July 2013
(see Part I-3).
IPSAS 29, Financial Instruments: Recognition Add in the currently effective IPSAS 29 (as
and Measurement (as applicable prior to the applicable prior to the adoption of IPSAS 41, see
adoption of IPSAS 41, Financial Instruments). Part I-4), the hedging amendments proposed to
IPSAS 29 (as amended by IPSAS 41, see Part II-
1b and Part II-2b) and changes in the contractual
cash flows amendments proposed to IPSAS 41
(see Part II-2a).
3
The IPSASB defined term of “Composite Social Security Programs” and the respective requirements were deleted when finalizing
IPSAS 39, Employee Benefits.
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Amendment: Part I-1
Amendments to IPSAS 22, Disclosure of Financial Information About the General

Government Sector
Paragraphs 5, 18, 28 and BC1 are amended and paragraph 47G is added. New text is underlined and
deleted text is struck through.
Scope
…
5. In some jurisdictions, financial statements and budgets for the government, or sectors thereof, may
also be issued in accordance with statistical bases of financial reporting. These bases reflect
requirements consistent with, and derived from, the System of National Accounts 1993 (SNA 93)
System of National Accounts, 2008 (2008 SNA) prepared by the United Nations and other
international organizations. These statistical bases of financial reporting focus on the provision of
financial information about the GGS. The GGS comprises those non-profit entities that undertake
nonmarket activities and rely primarily on appropriations or allocations from the government budget
to fund their service delivery activities (hereafter referred to as nonmarket entities or activities). The
statistical bases of financial reporting may also provide information about (a) the corporations sector
of government that primarily engages in market activities (usually characterized as the public financial
corporations (PFC) sector and the public nonfinancial corporations (PNFC) sector), and (b) the public
sector as a whole. The major features of the PFC and PNFC sectors are outlined at paragraphs 19
and 20 of this Standard.
Definitions
…
General Government Sector
18. The GGS is defined in the SNA 93 2008 SNA (and updates) as consisting of (a) all resident central,
state, and local government units, (b) social security funds at each level of government, and (c)
nonmarket non-profit institutions controlled by government units. Under statistical bases of financial
reporting, the GGS encompasses the central operations of government, and typically includes all
those resident nonmarket non-profit entities that have their operations funded primarily by the
government and government entities. As such, the financing of these entities is sourced primarily
from appropriation or allocation of the government’s taxes, dividends from government corporations,
other revenues, and borrowings. The GGS typically includes entities such as government
departments, law courts, public educational institutions, public health care units, and other
government agencies. The GGS does not include PFCs or PNFCs. Disclosure of GGS information
will be made in those jurisdictions where strengthening the link between IPSASs and statistical bases
of financial reporting is considered useful and relevant to users of financial statements. Governments
electing to make GGS disclosures will therefore need to ensure that the information about the GGS
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included in the financial statements is consistent with the definition of GGS, and any interpretations
thereof, adopted for statistical bases of financial reporting in their jurisdiction.
Accounting Policies
…
28. Financial statements prepared consistent with statistical bases of financial reporting portray the
impact of the GGS on the public sector as a whole and, in the context of the SNA 93 2008 SNA (and
updates), on a national economy. Consistent with that focus, statistical bases of financial reporting
require the GGS financial statements to present public sector entities outside that sector as
investments in other sectors. In addition, under statistical bases of financial reporting, transactions of
the GGS with entities in other sectors are not eliminated from the statement of government operations
or a similar statement.
Effective Date
…
47G. Paragraphs 5, 18, and 28 were amended by [draft] Improvements to IPSAS, 2021, issued in
[Month] [Year]. An entity shall apply these amendments for annual financial statements
covering periods beginning on or after January 1, [Year]. Earlier application is permitted.
Basis for Conclusions

…
Introduction
BC1. When this Standard was issued, it referred to Tthe System of National Accounts 1993 (SNA 1993)
(and updates), Government Finance Statistics Manual 2001 (GFSM) 2001, and the European
System of Accounts 1995 (ESA 1995), which all required governments to publish financial
information about the GGS. For statistical purposes, the GGS comprises government-controlled
entities primarily engaged in nonmarket activities. The GGS is sometimes described as comprising
those entities that fulfill the core functions of government as their primary activity. The GGS does not
include public corporations, even when all the equity of such corporations is owned by the
government or government entities. In developing [draft] Improvements to IPSAS, 2021, the IPSASB
noted that IPSAS 22 referred to an older edition of the System of National Accounts (SNA). Therefore,
the IPSASB amended the Standard to refer to the latest edition of the SNA. Paragraph BC17 provides
the rationale for including these amendments to IPSAS 22 through [draft] Improvements to
IPSAS, 2021.
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Revision of IPSAS 22 as a result of [draft] Improvements to IPSAS, 2021
BC17. Stakeholders noted that IPSAS 22 still referred to the 1993 edition of the SNA, instead of its most
recent edition, the 2008 SNA. Therefore, the IPSASB agreed to amend paragraphs 5, 18, 28 and
BC1 to refer to the latest edition of the SNA, that is, the 2008 SNA.
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Amendment: Part I-2
Amendments to IPSAS 39, Employee Benefits

Paragraphs 3 and 4 are amended and paragraph 176C is added. Paragraphs BC5 and BC6 have been
included for ease of reference but are not amended. New text is underlined and deleted text is struck
through.
Scope
…
3. This Standard does not deal with reporting by employee retirement benefit plans (see the relevant
international or national accounting standard dealing with employee retirement benefit plans). This
Standard does not deal with benefits provided by composite social security programs that are not
consideration in exchange for service rendered by employees or past employees of public sector
entities.
4. The employee benefits to which this Standard applies include those provided:
(a) Under formal plans or other formal agreements between an entity and individual employees,
groups of employees, or their representatives;
(b) Under legislative requirements, or through industry arrangements, whereby entities are
required to contribute to national, state, industry, or other multi-employer plans, or where
entities are required to contribute to the composite a social security program; or
(c) By those informal practices that give rise to a constructive obligation. Informal practices give
rise to a constructive obligation where the entity has no realistic alternative but to pay employee
benefits. An example of a constructive obligation is where a change in the entity’s informal
practices would cause unacceptable damage to its relationship with employees.
Effective Date
…
176C. Paragraphs 3 and 4 were amended by [draft] Improvements to IPSAS, 2021, issued in
covering periods beginning on or after January 1, [Year]. Earlier application is permitted.

…
Composite Social Security Programs
BC5. ED 59 indicated that the IPSASB was considering the deletion of the section on Composite Social
Security Programs, because the IPSASB was not aware that it had been applied in any jurisdiction.
The IPSASB specifically asked for comments on this issue.
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BC6. No respondent to ED 59 identified a jurisdiction where entities applied these requirements. The
majority of respondents supported the deletion of the section on Composite Social Security
Programs. As the IPSASB did not identify a new and compelling reason to retain the section, the
IPSASB decided not to include it in IPSAS 39.
…
BC24. Stakeholders noted that the word “composite” could be deleted from the term “composite social
security programs” because the IPSAS defined term “composite social security programs” and
related requirements were not included in the final version of IPSAS 39 (see paragraphs BC5-BC6).
The IPSASB agreed with this view and decided to amend paragraphs 3 and 4 of IPSAS 39 in
[draft] Improvements to IPSAS, 2021.
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Amendment: Part I-3
Amendments to RPG 1, Reporting on the Long-Term Sustainability of an Entity’s

Finances
Paragraphs BC7A and BC36 are added. New text is underlined and deleted text is struck through.
…

…
Background
Completion of the Conceptual Framework and the Social Benefits projects
BC7A. The IPSASB recognized linkages between its work in developing RPG 1, the Conceptual
Framework and accounting for social benefits. RPG 1 was published in 2013 when the work on the
Conceptual Framework and Social Benefits projects were ongoing. In October 2014 and
January 2019, the IPSASB finished these projects by publishing the Conceptual Framework and
IPSAS 42, Social Benefits, respectively.
Revision of RPG 1 as a result of [draft] Improvements to IPSAS, 2021
BC36. Stakeholders noted that the Basis for Conclusions (paragraphs BC1-BC7) in RPG 1 provided a
background that highlighted the linkages between RPG 1, the Conceptual Framework and Social
Benefits projects. RPG 1 indicated these projects as ongoing when RPG 1 was issued in July 2013.
Since these projects have been completed, the IPSASB agreed to add paragraph BC7A in
[draft] Improvements to IPSAS, 2021 to indicate that the Conceptual Framework and Social
Benefits projects were completed in October 2014 and January 2019, respectively.
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Amendment: Part I-4
Amendments to IPSAS 29, Financial Instruments: Recognition and Measurement

[Draft] IPSAS 29 as Applicable Prior to the Adoption of IPSAS 41, Financial Instruments
The IPSASB Handbook includes all IPSAS that have been approved by the IPSASB until January 31 of
that year. It omits standards that are being withdrawn or are being replaced by an approved standard,
and reflects amendments as a result of any approved Standard.
In June 2021, the IPSASB approved changes to guidance in IPSAS 29, Financial Instruments:
Recognition and Measurement that is no longer published since the 2018 IPSASB Handbook. While
the recognition and measurement guidance in IPSAS 29 continues to be effective until
January 1, 2023, it is excluded from the 2021 IPSASB Handbook because it is superseded by
IPSAS 41, Financial Instruments.
To provide visibility into the impact of these changes, the amendments below reflect the revisions to
IPSAS 29 for users that have yet to adopt IPSAS 41.
Paragraphs 113A–113ZC, 125I–125M, and AG20A–AG20E are added. New headings are inserted before
paragraphs 113A and 113P. New subheadings are inserted before paragraphs 113D, 113F, 113H, 113J,
113V, 113W, 113Y, 113ZA and AG20A. New text is underlined and deleted text is struck through.
Hedging
…
Temporary Exceptions from Applying Specific Hedge Accounting Requirements
113A. An entity shall apply paragraphs 113D–113N and 125I to all hedging relationships directly affected
by interest rate benchmark reform. These paragraphs apply only to such hedging relationships. A
hedging relationship is directly affected by interest rate benchmark reform only if the reform gives
rise to uncertainties about:
(a) The interest rate benchmark (contractually or non-contractually specified) designated as a
hedged risk; and/or
(b) The timing or the amount of interest rate benchmark-based cash flows of the hedged item or
of the hedging instrument.
113B. For the purpose of applying paragraphs 113D–113N, the term ‘interest rate benchmark reform’
refers to the market-wide reform of an interest rate benchmark, including the replacement of an
interest rate benchmark with an alternative benchmark rate such as that resulting from the
recommendations set out in the Financial Stability Board’s July 2014 report ‘Reforming Major
Interest Rate Benchmarks’. 4
113C. Paragraphs 113D–113N provide exceptions only to the requirements specified in these
paragraphs. An entity shall continue to apply all other hedge accounting requirements to hedging
relationships directly affected by interest rate benchmark reform.
4
The report, 'Reforming Major Interest Rate Benchmarks', is available at http://www.fsb.org/wp-content/uploads/r_140722.pdf.
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Highly Probable Requirement for Cash Flow Hedges
113D. For the purpose of applying the requirement in paragraph 98(c) that a forecast transaction must be
highly probable, an entity shall assume that the interest rate benchmark on which the hedged cash
flows (contractually or non-contractually specified) are based is not altered as a result of interest
rate benchmark reform.
Reclassifying the Cumulative Gain or Loss Recognized in Net Assets/Equity
113E. For the purpose of applying the requirement in paragraph 112(c) in order to determine whether the
forecast transaction is no longer expected to occur, an entity shall assume that the interest rate
benchmark on which the hedged cash flows (contractually or non-contractually specified) are based
is not altered as a result of interest rate benchmark reform.
Effectiveness Assessment
113F. For the purpose of applying the requirements in paragraphs 98(b) and AG145(a), an entity shall
assume that the interest rate benchmark on which the hedged cash flows and/or the hedged risk
(contractually or non-contractually specified) are based, or the interest rate benchmark on which
the cash flows of the hedging instrument are based, is not altered as a result of interest rate
benchmark reform.
113G. For the purpose of applying the requirement in paragraph 98(e), an entity is not required to
discontinue a hedging relationship because the actual results of the hedge do not meet the
requirements in paragraph AG145(b). For the avoidance of doubt, an entity shall apply the other
conditions in paragraph 98, including the prospective assessment in paragraph 98(b), to assess
whether the hedging relationship must be discontinued.
Designating Financial Items as Hedged Items

113H. Unless paragraph 113I applies, for a hedge of a non-contractually specified benchmark portion of
interest rate risk, an entity shall apply the requirement in paragraphs 90 and AG139—that the
designated portion shall be separately identifiable—only at the inception of the hedging
relationship.
113I. When an entity, consistent with its hedge documentation, frequently resets (i.e., discontinues and
restarts) a hedging relationship because both the hedging instrument and the hedged item
frequently change (i.e., the entity uses a dynamic process in which both the hedged items and the
hedging instruments used to manage that exposure do not remain the same for long), the entity
shall apply the requirement in paragraphs 90 and AG139—that the designated portion is separately
identifiable—only when it initially designates a hedged item in that hedging relationship. A hedged
item that has been assessed at the time of its initial designation in the hedging relationship, whether
it was at the time of the hedge inception or subsequently, is not reassessed at any subsequent
redesignation in the same hedging relationship.
End of Application
113J. An entity shall prospectively cease applying paragraph 113D to a hedged item at the earlier of:
(a) When the uncertainty arising from interest rate benchmark reform is no longer present with
respect to the timing and the amount of the interest rate benchmark-based cash flows of the
hedged item; and
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(b) When the hedging relationship that the hedged item is part of is discontinued.
113K. An entity shall prospectively cease applying paragraph 113E at the earlier of:
respect to the timing and the amount of the interest rate benchmark-based future cash flows
of the hedged item; and
(b) When the entire cumulative gain or loss recognized in net assets/equity with respect to that
discontinued hedging relationship has been reclassified to surplus or deficit.
113L. An entity shall prospectively cease applying paragraph 113F:
(a) To a hedged item, when the uncertainty arising from interest rate benchmark reform is no
longer present with respect to the hedged risk or the timing and the amount of the interest
rate benchmark-based cash flows of the hedged item; and
(b) To a hedging instrument, when the uncertainty arising from interest rate benchmark reform
is no longer present with respect to the timing and the amount of the interest rate benchmark-
based cash flows of the hedging instrument.
If the hedging relationship that the hedged item and the hedging instrument are part of is
discontinued earlier than the date specified in paragraph 113L(a) or the date specified in
paragraph 113L(b), the entity shall prospectively cease applying paragraph 113F to that hedging
relationship at the date of discontinuation.
113M. An entity shall prospectively cease applying paragraph 113G to a hedging relationship at the earlier
of:
respect to the hedged risk and the timing and the amount of the interest rate benchmark-
based cash flows of the hedged item and of the hedging instrument; and
(b) When the hedging relationship to which the exception is applied is discontinued.
113N. When designating a group of items as the hedged item, or a combination of financial instruments
as the hedging instrument, an entity shall prospectively cease applying paragraphs 113D–113G to
an individual item or financial instrument in accordance with paragraphs 113J, 113K, 113L, or
113M, as relevant, when the uncertainty arising from interest rate benchmark reform is no longer
present with respect to the hedged risk and/or the timing and the amount of the interest rate
benchmark-based cash flows of that item or financial instrument.
113O. An entity shall prospectively cease applying paragraphs 113H and 113I at the earlier of:
(a) When changes required by interest rate benchmark reform are made to the non-contractually
specified risk portion applying paragraph 113P; or
(b) When the hedging relationship in which the non-contractually specified risk portion is
designated is discontinued.
Additional Temporary Exceptions Arising from Interest Rate Benchmark Reform
Hedge Accounting
113P. As and when the requirements in paragraphs 113D–113I cease to apply to a hedging relationship
(see paragraphs 113J–113O), an entity shall amend the formal designation of that hedging
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relationship as previously documented to reflect the changes required by interest rate benchmark
reform, i.e., the changes are consistent with the requirements in paragraphs AG20B–AG20D. In
this context, the hedge designation shall be amended only to make one or more of these changes:
(a) Designating an alternative benchmark rate (contractually or non-contractually specified) as

a hedged risk;
(b) Amending the description of the hedged item, including the description of the designated
portion of the cash flows or fair value being hedged;
(c) Amending the description of the hedging instrument; or
(d) Amending the description of how the entity will assess hedge effectiveness.
113Q. An entity also shall apply the requirement in paragraph 113P(c) if these three conditions are met:
(a) The entity makes a change required by interest rate benchmark reform using an approach
other than changing the basis for determining the contractual cash flows of the hedging
instrument (as described in paragraph AG20B);
(b) The original hedging instrument is not derecognized; and
(c) The chosen approach is economically equivalent to changing the basis for determining the
contractual cash flows of the original hedging instrument (as described in paragraphs AG20C
and AG20D).
113R. The requirements in paragraphs 113D–113I may cease to apply at different times. Therefore,
applying paragraph 113P, an entity may be required to amend the formal designation of its hedging
relationships at different times, or may be required to amend the formal designation of a hedging
relationship more than once. When, and only when, such a change is made to the hedge
designation, an entity shall apply paragraphs 113V–113ZB as applicable. An entity also shall apply
paragraph 99 (for a fair value hedge) or paragraph 107 (for a cash flow hedge) to account for any
changes in the fair value of the hedged item or the hedging instrument.
113S. An entity shall amend a hedging relationship as required in paragraph 113P by the end of the
reporting period during which a change required by interest rate benchmark reform is made to the
hedged risk, hedged item or hedging instrument. For the avoidance of doubt, such an amendment
to the formal designation of a hedging relationship constitutes neither the discontinuation of the
hedging relationship nor the designation of a new hedging relationship.
113T. If changes are made in addition to those changes required by interest rate benchmark reform to
the financial asset or financial liability designated in a hedging relationship (as described in
paragraphs AG20B–AG20D) or to the designation of the hedging relationship (as required by
paragraph 113P), an entity shall first apply the applicable requirements in this Standard to
determine if those additional changes result in the discontinuation of hedge accounting. If the
additional changes do not result in the discontinuation of hedge accounting, an entity shall amend
the formal designation of the hedging relationship as specified in paragraph 113P.
113U. Paragraphs 113V–113ZC provide exceptions to the requirements specified in those paragraphs
only. An entity shall apply all other hedge accounting requirements in this Standard, including the
qualifying criteria in paragraph 98, to hedging relationships that were directly affected by interest
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Accounting for Qualifying Hedging Relationships
Retrospective Effectiveness Assessment
113V. For the purpose of assessing the retrospective effectiveness of a hedging relationship on a
cumulative basis applying paragraph 98(e) and only for this purpose, an entity may elect to reset
to zero the cumulative fair value changes of the hedged item and hedging instrument when ceasing
to apply paragraph 113G as required by paragraph 113M. This election is made separately for each
hedging relationship (i.e., on an individual hedging relationship basis).
Cash Flow Hedges
113W. For the purpose of applying paragraph 108, at the point when an entity amends the description of
a hedged item as required in paragraph 113P(b), the cumulative gain or loss in net assets/equity
shall be deemed to be based on the alternative benchmark rate on which the hedged future cash
flows are determined.
113X. For a discontinued hedging relationship, when the interest rate benchmark on which the hedged
future cash flows had been based is changed as required by interest rate benchmark reform, for
the purpose of applying paragraph 112(c) in order to determine whether the hedged future cash
flows are expected to occur, the amount accumulated in other comprehensive income for that
hedging relationship shall be deemed to be based on the alternative benchmark rate on which the
hedged future cash flows will be based.
Groups of Items
113Y. When an entity applies paragraph 113P to groups of items designated as hedged items in a fair
value or cash flow hedge, the entity shall allocate the hedged items to subgroups based on the
benchmark rate being hedged and designate the benchmark rate as the hedged risk for each
subgroup. For example, in a hedging relationship in which a group of items is hedged for changes
in an interest rate benchmark subject to interest rate benchmark reform, the hedged cash flows or
fair value of some items in the group could be changed to reference an alternative benchmark rate
before other items in the group are changed. In this example, in applying paragraph 113P, the
entity would designate the alternative benchmark rate as the hedged risk for that relevant subgroup
of hedged items. The entity would continue to designate the existing interest rate benchmark as
the hedged risk for the other subgroup of hedged items until the hedged cash flows or fair value of
those items are changed to reference the alternative benchmark rate or the items expire and are
replaced with hedged items that reference the alternative benchmark rate.
113Z. An entity shall assess separately whether each subgroup meets the requirements in paragraphs 87
and 93 to be an eligible hedged item. If any subgroup fails to meet the requirements in
paragraphs 87 and 93, the entity shall discontinue hedge accounting prospectively for the hedging
relationship in its entirety. An entity also shall apply the requirements in paragraphs 99 or 107 to
account for ineffectiveness related to the hedging relationship in its entirety.
113ZA. An alternative benchmark rate designated as a non-contractually specified risk portion that is not
separately identifiable (see paragraphs 90 and AG139) at the date it is designated shall be deemed
to have met that requirement at that date, if, and only if, the entity reasonably expects the alternative
benchmark rate will be separately identifiable within 24 months. The 24-month period applies to
18
each alternative benchmark rate separately and starts from the date the entity designates the
alternative benchmark rate as a non-contractually specified risk portion for the first time (i.e., the
24-month period applies on a rate-by-rate basis).
113ZB. If subsequently an entity reasonably expects that the alternative benchmark rate will not be
separately identifiable within 24 months from the date the entity designated it as a non-contractually
specified risk portion for the first time, the entity shall cease applying the requirement in
paragraph 113ZA to that alternative benchmark rate and discontinue hedge accounting
prospectively from the date of that reassessment for all hedging relationships in which the
alternative benchmark rate was designated as a non-contractually specified risk portion.
113ZC. In addition to those hedging relationships specified in paragraph 113P, an entity shall apply the
requirements in paragraphs 113ZA and 113ZB to new hedging relationships in which an alternative
benchmark rate is designated as a non-contractually specified risk portion (see paragraphs 90 and
AG139) when, because of interest rate benchmark reform, that risk portion is not separately
identifiable at the date it is designated.
Effective Date and Transition

125I. Paragraphs 113A–113N were added by [draft] Improvements to IPSAS, 2021, issued in
covering periods beginning on or after January 1, 2022. Earlier application is permitted. If
an entity applies these amendments for an earlier period, it shall disclose that fact. An entity
shall apply these amendments retrospectively to those hedging relationships that existed
at the beginning of the reporting period in which an entity first applies these amendments
or were designated thereafter, and to the gain or loss recognized in net assets/equity that
existed at the beginning of the reporting period in which an entity first applies these
amendments.
125J. Paragraphs 113O–113ZC, 125K–125M and AG20A–AG20E were added by
[draft] Improvements to IPSAS, 2021, issued in [Month] [Year]. An entity shall apply these
amendments for annual financial statements covering periods beginning on or after
January 1, 2022. Earlier application is permitted. If an entity applies these amendments for
an earlier period, it shall disclose that fact. An entity shall apply these amendments
retrospectively in accordance with IPSAS 3, except as specified in paragraphs 125K–125M
and AG20A–AG20E.
125K. An entity shall designate a new hedging relationship (for example, as described in
paragraph 113ZC) only prospectively (i.e., an entity is prohibited from designating a new hedge
accounting relationship in prior periods). However, an entity shall reinstate a discontinued hedging
relationship if, and only if, these conditions are met:
(a) The entity had discontinued that hedging relationship solely due to changes required by
interest rate benchmark reform and the entity would not have been required to discontinue
that hedging relationship if these amendments had been applied at that time; and
(b) At the beginning of the reporting period in which an entity first applies these amendments
(date of initial application of these amendments), that discontinued hedging relationship
meets the qualifying criteria for hedge accounting (after taking into account these
amendments).
19
125L. If, in applying paragraph 125K, an entity reinstates a discontinued hedging relationship, the entity
shall read references in paragraphs 113ZA and 113ZB to the date the alternative benchmark rate
is designated as a non-contractually specified risk portion for the first time as referring to the date
of initial application of these amendments (i.e., the 24-month period for that alternative benchmark
rate designated as a non-contractually specified risk portion begins from the date of initial
application of these amendments).
125M. An entity is not required to restate prior periods to reflect the application of these amendments. The
entity may restate prior periods if, and only if, it is possible without the use of hindsight. If an entity
does not restate prior periods, the entity shall recognize any difference between the previous
carrying amount and the carrying amount at the beginning of the annual reporting period that
includes the date of initial application of these amendments in the opening net assets/equity (or
other component of net assets/equity, as appropriate) of the annual reporting period that includes
the date of initial application of these amendments.
Application Guidance
…
Effective Interest Rate
Changes in the Basis for Determining the Contractual Cash Flows as a Result of Interest Rate
Benchmark Reform
AG20A. An entity shall apply paragraphs AG20B‒AG20E to a financial asset or financial liability if, and only
if, the basis for determining the contractual cash flows of that financial asset or financial liability
changes as a result of interest rate benchmark reform. For this purpose, the term ‘interest rate
benchmark reform’ refers to the market-wide reform of an interest rate benchmark as described in
paragraph 113B.
AG20B. The basis for determining the contractual cash flows of a financial asset or financial liability can
change:
(a) By amending the contractual terms specified at the initial recognition of the financial
instrument (for example, the contractual terms are amended to replace the referenced
interest rate benchmark with an alternative benchmark rate);
(b) In a way that was not considered by—or contemplated in—the contractual terms at the initial
recognition of the financial instrument, without amending the contractual terms (for example,
the method for calculating the interest rate benchmark is altered without amending the
contractual terms); and/or
(c) Because of the activation of an existing contractual term (for example, an existing fallback
clause is triggered).
AG20C. As a practical expedient, an entity shall apply paragraph AG19 to account for a change in the basis
for determining the contractual cash flows of a financial asset or financial liability that is required by
interest rate benchmark reform. This practical expedient applies only to such changes and only to
the extent the change is required by interest rate benchmark reform (see also paragraph AG20E).
20
For this purpose, a change in the basis for determining the contractual cash flows is required by
interest rate benchmark reform if, and only if, both these conditions are met:
(a) The change is necessary as a direct consequence of interest rate benchmark reform; and
(b) The new basis for determining the contractual cash flows is economically equivalent to the
previous basis (i.e., the basis immediately preceding the change).
AG20D. Examples of changes that give rise to a new basis for determining the contractual cash flows that
is economically equivalent to the previous basis (i.e., the basis immediately preceding the change)
are:
(a) The replacement of an existing interest rate benchmark used to determine the contractual
cash flows of a financial asset or financial liability with an alternative benchmark rate—or the
implementation of such a reform of an interest rate benchmark by altering the method used
to calculate the interest rate benchmark—with the addition of a fixed spread necessary to
compensate for the basis difference between the existing interest rate benchmark and the
alternative benchmark rate;
(b) Changes to the reset period, reset dates or the number of days between coupon payment
dates in order to implement the reform of an interest rate benchmark; and
(c) The addition of a fallback provision to the contractual terms of a financial asset or financial
liability to enable any change described in (a) and (b) above to be implemented.
AG20E. If changes are made to a financial asset or financial liability in addition to changes to the basis for
determining the contractual cash flows required by interest rate benchmark reform, an entity shall
first apply the practical expedient in paragraph AG20C to the changes required by interest rate
benchmark reform. The entity shall then apply the applicable requirements in this Standard to any
additional changes to which the practical expedient does not apply. If the additional change does
not result in the derecognition of the financial asset or financial liability, the entity shall apply
paragraph AG20, as applicable, to account for that additional change. If the additional change
results in the derecognition of the financial asset or financial liability, the entity shall apply the
derecognition requirements.

…
BC21. The IPSASB reviewed the revisions to IAS 39, Financial Instruments: Recognition and
Measurement, included in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and
IFRS 7) issued by the IASB in September 2019, and the IASB’s rationale for making these
amendments as set out in its Basis for Conclusions and concurred that there was no public sector
specific reason for not adopting these amendments, henceforth labelled as Interest Rate
Benchmark Reform.
Measurement, included in Interest Rate Benchmark Reform—Phase 2 (Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16) issued by the IASB in August 2020, and the IASB’s rationale
for making these amendments as set out in its Basis for Conclusions and concurred that there was
21
no public sector specific reason for not adopting these amendments, henceforth labelled as Interest
Rate Benchmark Reform—Phase 2.
BC23. In addition to the above amendments to IPSAS 29 (as amended by IPSAS 41 when it was first
published in 2018), the IPSASB considered that entities still applying IPSAS 29 (prior to the
adoption of IPSAS 41) could benefit from the amendments to the hedging section included in
paragraphs 113A-113ZC of IPSAS 29 (as amended by IPSAS 41 when it was first published in
2018) and the amendments on the practical expedient for changes in the contractual cash flows of
financial instruments included in paragraphs AG20A-AG20E of IPSAS 41.
BC24. While the amendments in paragraphs AG20A-AG20E of IPSAS 41 were unnecessary in the IASB’s
IPSAS 29 equivalent standard, IAS 39, they are necessary in IPSAS 29 (prior to the adoption of
IPSAS 41) because the sections on contractual cash flows are effective until January 1, 2023.
22
PART II: IFRS ALIGNMENT IMPROVEMENTS TO IPSAS
Objective
1. The objective of Part II of the Exposure Draft (ED) is to propose Improvements to IPSAS to align with
amendments to International Financial Reporting Standards (IFRS) based on the IASB’s
Improvements to IFRSs projects and Narrow Scope Amendments projects.
Request for Comments

2. The IPSASB would welcome comments on all the changes proposed in the ED. Comments are most
helpful if they indicate the specific paragraph or group of paragraphs to which they relate, contain a
clear rationale and, where applicable, provide a suggestion for alternative wording.
IPSAS Addressed
3. The Improvements project deals with non-substantive changes to IPSAS through a collection of
amendments which are unrelated. Amendments included in Part II arise through consideration of the
annual improvements and narrow scope amendments projects of the IASB. 5
4. Table 3 sets out the IFRS alignment improvements to IPSAS, including the summary of proposed
change in ED 80.
Table 3: IFRS Alignment Improvements to IPSAS proposed in ED 80:
Summary of Proposed Change

# IFRS Equivalent IPSAS
in ED 80
Interest Rate Benchmark Reform (Phase One and Phase Two) 6

1(a). Interest Rate IPSAS 41, Financial Amendments to provide:
Benchmark Reform Instruments; IPSAS 29, • Temporary relief not to
(Amendments to Financial Instruments: discontinue hedge accounting in
IFRS 9, IAS 39 and Recognition and Measurement IPSAS 41 (see Part II-1a) and
IFRS 7). (as amended by IPSAS 41 IPSAS 29 (see Part II-1b); and
when it was first published in • Additional disclosure
(Issued in
requirements in IPSAS 30 (see
September 2019). 2018); and IPSAS 30, Financial
Part II-1c).
Instruments: Disclosures.
5
IPSAS do not duplicate the Basis for Conclusions developed by the IASB. The Basis for Conclusion included in IPSAS includes
considerations taken into account and conclusions drawn by the IPSASB when developing the pronouncement.
6
The IASB’s work in this area follows the Financial Stability Board’s decision to introduce new regulatory requirements to replace
interest rate benchmarks (such as LIBOR) with alternative nearly risk-free rates because the financial crisis undermined the
reliability and robustness of these benchmarks. Entities have had to update loan agreements and derivative contracts that
referred to these interest rate benchmarks to refer to the new alternative nearly risk-free rates.
23
Summary of Proposed Change

# IFRS Equivalent IPSAS
in ED 80
1(b). Interest Rate IPSAS 41, Financial Amendments to provide:
Benchmark Reform— Instruments; IPSAS 29, • A practical expedient not to treat
Phase 2 (Amendments Financial Instruments: changes in the contractual cash
to IFRS 9, IAS 39, Recognition and Measurement flows of a financial asset or
IFRS 7, IFRS 4 and (as amended by IPSAS 41 financial liability as a modification
IFRS 16) when it was first published in in IPSAS 41 (see Part II-2a);
(Issued in August 2020). 2018); and IPSAS 30, Financial • Additional relief not to
discontinue hedge accounting in
Instruments: Disclosures.
in IPSAS 41 (see Part II-2a) and
IPSAS 29 (see Part II-2b); and
• Further disclosure requirements
in IPSAS 30 (see Part II-2c).
Annual Improvements to IFRS Standards 2018–2020 Cycle
2(a). Amendment to IFRS 1, IPSAS 33, First-time Adoption of Amendments to extend the
First-time Adoption of Accrual Basis International exemption in IPSAS 33 to include
International Financial Public Sector Accounting components of net assets/equity
Reporting Standards Standards (IPSASs). such as cumulative translation
(Issued in May 2020). differences (see Part II-3a).
2(b). Amendment to IFRS 9, IPSAS 41, Financial Amendments to clarify the fees
Financial Instruments Instruments. that an entity includes when it
(Issued in May 2020). applies the ‘10 percent’ test to
derecognize a financial liability in
IPSAS 41 (see Part II-3b).
Other IFRS Alignment Improvements

3(a). Classification of IPSAS 1, Presentation of Amendments to clarify the
Liabilities as Current or Financial Statements. classification of liabilities as current
Non-current or non-current in IPSAS 1 (see
(Amendments to IAS 1) Part II-4a).
(Issued in
January 2020).
3(b). Onerous Contracts— IPSAS 19, Provisions, Amendments to clarify the costs of
Cost of Fulfilling a Contingent Liabilities and fulfilling a contract that an entity
Contract (Amendments Contingent Assets. includes when assessing whether
to IAS 37) a contract will be loss-making or
(Issued in May 2020). onerous in IPSAS 19 (see Part II-
4b).
3(c). Property, Plant and IPSAS 17, Property, Plant, and Amendments to prohibit proceeds
Equipment—Proceeds Equipment. from selling items produced before
before Intended Use that asset is available for use to be
(Amendments to IAS 16) deducted from the cost of property,
(Issued in May 2020). plant, and equipment (see Part II-
4c).
24
Amendment: Part II-1a
Amendments to IPSAS 41, Financial Instruments

Paragraphs 155A–155L and 156E are added. Paragraph 184 is amended. A new heading is inserted before
paragraph 155A, and new subheadings are inserted before paragraphs 155D, 155E, 155F, 155G, and 155I.
New text is underlined.
Hedge Accounting
…
155A. An entity shall apply paragraphs 155D–155L and paragraphs 156E and 184(d) to all hedging
relationships directly affected by interest rate benchmark reform. These paragraphs apply only to
such hedging relationships. A hedging relationship is directly affected by interest rate benchmark
reform only if the reform gives rise to uncertainties about:
hedged risk; and/or
155B. For the purpose of applying paragraphs 155D–155L, the term ‘interest rate benchmark reform’
recommendations set out in the Financial Stability Board’s July 2014 report, ‘Reforming Major
155C. Paragraphs 155D–155L provide exceptions only to the requirements specified in these paragraphs.
An entity shall continue to apply all other hedge accounting requirements to hedging relationships
directly affected by interest rate benchmark reform.
155D. For the purpose of determining whether a forecast transaction (or a component thereof) is highly
probable as required by paragraph 124, an entity shall assume that the interest rate benchmark on
which the hedged cash flows (contractually or non-contractually specified) are based is not altered
as a result of interest rate benchmark reform.
Reclassifying the Amount Accumulated in the Cash Flow Hedge Reserve
155E. For the purpose of applying the requirement in paragraph 141 in order to determine whether the
hedged future cash flows are expected to occur, an entity shall assume that the interest rate
7
25
Assessing the Economic Relationship between the Hedged Item and the Hedging Instrument
155F. For the purpose of applying the requirements in paragraphs 129(c)(i) and AG278–AG280, an entity
shall assume that the interest rate benchmark on which the hedged cash flows and/or the hedged
risk (contractually or non-contractually specified) are based, or the interest rate benchmark on
which the cash flows of the hedging instrument are based, is not altered as a result of interest rate
benchmark reform.
Designating a Component of an Item as a Hedged Item
155G. Unless paragraph 155H applies, for a hedge of a non-contractually specified benchmark
component of interest rate risk, an entity shall apply the requirement in paragraphs 128(a) and
AG257—that the risk component shall be separately identifiable—only at the inception of the
hedging relationship.
155H. When an entity, consistent with its hedge documentation, frequently resets (i.e., discontinues and
shall apply the requirement in paragraphs 128(a) and AG257—that the risk component is
separately identifiable—only when it initially designates a hedged item in that hedging relationship.
A hedged item that has been assessed at the time of its initial designation in the hedging
relationship, whether it was at the time of the hedge inception or subsequently, is not reassessed
at any subsequent redesignation in the same hedging relationship.
End of Application
155I. An entity shall prospectively cease applying paragraph 155D to a hedged item at the earlier of:
hedged item; and
155J. An entity shall prospectively cease applying paragraph 155E at the earlier of:
(b) When the entire amount accumulated in the cash flow hedge reserve with respect to that
155K. An entity shall prospectively cease applying paragraph 155F:
26
discontinued earlier than the date specified in paragraph 155K(a) or the date specified in
paragraph 155K(b), the entity shall prospectively cease applying paragraph 155F to that hedging
155L. When designating a group of items as the hedged item, or a combination of financial instruments
as the hedging instrument, an entity shall prospectively cease applying paragraphs 155D–155F to
an individual item or financial instrument in accordance with paragraphs 155I, 155J, or 155K, as
relevant, when the uncertainty arising from interest rate benchmark reform is no longer present with
respect to the hedged risk and/or the timing and the amount of the interest rate benchmark-based
cash flows of that item or financial instrument.
Effective Date
156E. Paragraphs 155A–155L were added and paragraph 184 was amended by
an earlier period, it shall disclose that fact.
Transition
…
Transition for Hedge Accounting
184. As an exception to prospective application of the hedge accounting requirements of this Standard,
an entity:
(d) Shall apply the requirements in paragraphs 155A–155L retrospectively. This retrospective
application applies only to those hedging relationships that existed at the beginning of the
reporting period in which an entity first applies those requirements or were designated
thereafter, and to the amount accumulated in the cash flow hedge reserve that existed at the
beginning of the reporting period in which an entity first applies those requirements.

…
BC50. The IPSASB reviewed the revisions to IFRS 9, Financial Instruments, included in Interest Rate
Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) issued by the IASB in
September 2019, and the IASB’s rationale for making these amendments as set out in its Basis for
27
Conclusions and concurred that there was no public sector specific reason for not adopting these
amendments, henceforth labelled as Interest Rate Benchmark Reform.
28
Amendment: Part II-1b

Paragraphs 113A–113N, and 125I are added. A new heading is inserted before paragraph 113A, and new
subheadings are inserted before paragraphs 113D, 113E, 113F, 113H, and 113J. New text is underlined.
Hedging
…
113A. An entity shall apply paragraphs 113D–113N and 125I to all hedging relationships directly affected
by interest rate benchmark reform. These paragraphs apply only to such hedging relationships. A
hedging relationship is directly affected by interest rate benchmark reform only if the reform gives
rise to uncertainties about:

hedged risk; and/or
113B. For the purpose of applying paragraphs 113D–113N, the term ‘interest rate benchmark reform’
recommendations set out in the Financial Stability Board’s July 2014 report ‘Reforming Major
113C. Paragraphs 113D–113N provide exceptions only to the requirements specified in these
paragraphs. An entity shall continue to apply all other hedge accounting requirements to hedging
relationships directly affected by interest rate benchmark reform.
113D. For the purpose of applying the requirement in paragraph 98(c) that a forecast transaction must be
highly probable, an entity shall assume that the interest rate benchmark on which the hedged cash
flows (contractually or non-contractually specified) are based is not altered as a result of interest
Reclassifying the Cumulative Gain or Loss Recognized in Net Assets/Equity
113E. For the purpose of applying the requirement in paragraph 112(c) in order to determine whether the
forecast transaction is no longer expected to occur, an entity shall assume that the interest rate
8
29
Effectiveness Assessment
113F. For the purpose of applying the requirements in paragraphs 98(b) and AG145(a), an entity shall
assume that the interest rate benchmark on which the hedged cash flows and/or the hedged risk
(contractually or non-contractually specified) are based, or the interest rate benchmark on which
the cash flows of the hedging instrument are based, is not altered as a result of interest rate
benchmark reform.
113G. For the purpose of applying the requirement in paragraph 98(e), an entity is not required to
discontinue a hedging relationship because the actual results of the hedge do not meet the
requirements in paragraph AG145(b). For the avoidance of doubt, an entity shall apply the other
conditions in paragraph 98, including the prospective assessment in paragraph 98(b), to assess
whether the hedging relationship must be discontinued.
113H. Unless paragraph 113I applies, for a hedge of a non-contractually specified benchmark portion of
interest rate risk, an entity shall apply the requirement in paragraphs 90 and AG139—that the
designated portion shall be separately identifiable—only at the inception of the hedging
relationship.
113I. When an entity, consistent with its hedge documentation, frequently resets (i.e., discontinues and
shall apply the requirement in paragraphs 90 and AG139—that the designated portion is separately
identifiable—only when it initially designates a hedged item in that hedging relationship. A hedged
item that has been assessed at the time of its initial designation in the hedging relationship, whether
it was at the time of the hedge inception or subsequently, is not reassessed at any subsequent
redesignation in the same hedging relationship.
End of Application
113J. An entity shall prospectively cease applying paragraph 113D to a hedged item at the earlier of:
hedged item; and
113K. An entity shall prospectively cease applying paragraph 113E at the earlier of:
(b) When the entire cumulative gain or loss recognized in net assets/equity with respect to that
113L. An entity shall prospectively cease applying paragraph 113F:
30
discontinued earlier than the date specified in paragraph 113L(a) or the date specified in
paragraph 113L(b), the entity shall prospectively cease applying paragraph 113F to that hedging
113M. An entity shall prospectively cease applying paragraph 113G to a hedging relationship at the earlier
of:
respect to the hedged risk and the timing and the amount of the interest rate benchmark-
based cash flows of the hedged item and of the hedging instrument; and
(b) When the hedging relationship to which the exception is applied is discontinued.
113N. When designating a group of items as the hedged item, or a combination of financial instruments
as the hedging instrument, an entity shall prospectively cease applying paragraphs 113D–113G to
an individual item or financial instrument in accordance with paragraphs 113J, 113K, 113L, or
113M, as relevant, when the uncertainty arising from interest rate benchmark reform is no longer
present with respect to the hedged risk and/or the timing and the amount of the interest rate
benchmark-based cash flows of that item or financial instrument.
…

...
125I. Paragraphs 113A–113N were added by [draft] Improvements to IPSAS, 2021, issued in
covering periods beginning on or after January 1, 2022. Earlier application is permitted. If
an entity applies these amendments for an earlier period, it shall disclose that fact. An entity
shall apply these amendments retrospectively to those hedging relationships that existed
at the beginning of the reporting period in which an entity first applies these amendments
or were designated thereafter, and to the gain or loss recognized in net assets/equity that
existed at the beginning of the reporting period in which an entity first applies these
amendments.

…
31
Measurement, included in Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and
IFRS 7) issued by the IASB in September 2019, and the IASB’s rationale for making these
amendments as set out in its Basis for Conclusions and concurred that there was no public sector
specific reason for not adopting these amendments, henceforth labelled as Interest Rate
Benchmark Reform.
32
Amendment: Part II-1c
Amendments to IPSAS 30, Financial Instruments: Disclosures

Paragraphs 28H, 52K–52L are added. A new subheading is added before paragraph 28H. New text is
underlined.
Other Disclosures
…
Hedge Accounting
...
Uncertainty Arising from Interest Rate Benchmark Reform
28H. For hedging relationships to which an entity applies the exceptions set out in paragraphs 155D–
155L of IPSAS 41 or paragraphs 113D–113N of IPSAS 29, Financial Instruments: Recognition and
Measurement an entity shall disclose:
(a) The significant interest rate benchmarks to which the entity’s hedging relationships are
exposed;
(b) The extent of the risk exposure the entity manages that is directly affected by the interest
rate benchmark reform;
(c) How the entity is managing the process to transition to alternative benchmark rates;
(d) A description of significant assumptions or judgments the entity made in applying these
paragraphs (for example, assumptions or judgments about when the uncertainty arising from
interest rate benchmark reform is no longer present with respect to the timing and the amount
of the interest rate benchmark-based cash flows); and
(e) The nominal amount of the hedging instruments in those hedging relationships.

...
52K. Paragraphs 28H and 52L were added by [draft] Improvements to IPSAS, 2021, issued in
[Month] [Year]. An entity shall apply these amendments when it applies the Interest Rate
Benchmark Reform amendments to IPSAS 29 or IPSAS 41.
52L. In the reporting period in which an entity first applies Interest Rate Benchmark Reform
amendments, an entity is not required to present the quantitative information required by
paragraph 33(f) of IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors.

…
33
BC12. The IPSASB reviewed the revisions to IFRS 7, Financial Instruments: Disclosures, included in
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) issued by the IASB
in September 2019, and the IASB’s rationale for making these amendments as set out in its Basis
for Conclusions and concurred that there was no public sector specific reason for not adopting
these amendments, henceforth labelled as Interest Rate Benchmark Reform.
34
COPYRIGHT, TRADEMARK, AND PERMISSIONS INFORMATION

Paragraphs 72A–72E, 155M–155Z, 156F and 191–194 are added. A new heading is inserted before
paragraph 155N and 191 and new subheadings are inserted before paragraphs 72A, 155T, 155V, and
155X. New text is underlined.
…
Measurement
…
Amortized Cost Measurement
Changes in the Basis for Determining the Contractual Cash Flows as a Result of Interest Rate
Benchmark Reform
72A. An entity shall apply paragraphs 72B‒72E to a financial asset or financial liability if, and only if, the
basis for determining the contractual cash flows of that financial asset or financial liability changes
as a result of interest rate benchmark reform. For this purpose, the term ‘interest rate benchmark
reform’ refers to the market-wide reform of an interest rate benchmark as described in
paragraph 155B.
72B. The basis for determining the contractual cash flows of a financial asset or financial liability can
change:
(a) By amending the contractual terms specified at the initial recognition of the financial
instrument (for example, the contractual terms are amended to replace the referenced
interest rate benchmark with an alternative benchmark rate);
(b) In a way that was not considered by—or contemplated in—the contractual terms at the initial
recognition of the financial instrument, without amending the contractual terms (for example,
the method for calculating the interest rate benchmark is altered without amending the
contractual terms); and/or
(c) Because of the activation of an existing contractual term (for example, an existing fallback
clause is triggered).
72C. As a practical expedient, an entity shall apply paragraph AG160 to account for a change in the
basis for determining the contractual cash flows of a financial asset or financial liability that is
required by interest rate benchmark reform. This practical expedient applies only to such changes
and only to the extent the change is required by interest rate benchmark reform (see also
paragraph 72E). For this purpose, a change in the basis for determining the contractual cash flows
is required by interest rate benchmark reform if, and only if, both these conditions are met:
(a) The change is necessary as a direct consequence of interest rate benchmark reform; and
(b) The new basis for determining the contractual cash flows is economically equivalent to the
previous basis (i.e., the basis immediately preceding the change).
35
72D. Examples of changes that give rise to a new basis for determining the contractual cash flows that
is economically equivalent to the previous basis (i.e., the basis immediately preceding the change)
are:
(a) The replacement of an existing interest rate benchmark used to determine the contractual
cash flows of a financial asset or financial liability with an alternative benchmark rate—or the
implementation of such a reform of an interest rate benchmark by altering the method used
to calculate the interest rate benchmark—with the addition of a fixed spread necessary to
compensate for the basis difference between the existing interest rate benchmark and the
alternative benchmark rate;
(b) Changes to the reset period, reset dates or the number of days between coupon payment
dates in order to implement the reform of an interest rate benchmark; and
(c) The addition of a fallback provision to the contractual terms of a financial asset or financial
liability to enable any change described in (a) and (b) above to be implemented.
72E. If changes are made to a financial asset or financial liability in addition to changes to the basis for
determining the contractual cash flows required by interest rate benchmark reform, an entity shall
first apply the practical expedient in paragraph 72C to the changes required by interest rate
benchmark reform. The entity shall then apply the applicable requirements in this Standard to any
additional changes to which the practical expedient does not apply. If the additional change does
not result in the derecognition of the financial asset or financial liability, the entity shall apply
paragraph 71 or paragraph AG161, as applicable, to account for that additional change. If the
additional change results in the derecognition of the financial asset or financial liability, the entity
shall apply the derecognition requirements.
...

…
End of Application
...
155M. An entity shall prospectively cease applying paragraphs 155G and 155H at the earlier of:
specified risk component applying paragraph 155N; or
(b) When the hedging relationship in which the non-contractually specified risk component is
155N. As and when the requirements in paragraphs 155D–155H cease to apply to a hedging relationship
(see paragraphs 155I–155M), an entity shall amend the formal designation of that hedging
reform, i.e., the changes are consistent with the requirements in paragraphs 72B–72D. In this
context, the hedge designation shall be amended only to make one or more of these changes:

a hedged risk;
36
portion of the cash flows or fair value being hedged; or
(c) Amending the description of the hedging instrument.
155O. An entity also shall apply the requirement in paragraph 155N(c) if these three conditions are met:
instrument (as described in paragraph 72B);
contractual cash flows of the original hedging instrument (as described in paragraphs 72C
and 72D).
155P. The requirements in paragraphs 155D–155H may cease to apply at different times. Therefore, in
applying paragraph 155N, an entity may be required to amend the formal designation of its hedging
designation, an entity shall apply paragraphs 155T–155Y as applicable. An entity also shall apply
155Q. An entity shall amend a hedging relationship as required in paragraph 155N by the end of the
155R. If changes are made in addition to those changes required by interest rate benchmark reform to
paragraphs 72B–72D) or to the designation of the hedging relationship (as required by
paragraph 155N), an entity shall first apply the applicable requirements in this Standard to
the formal designation of the hedging relationship as specified in paragraph 155N.
155S. Paragraphs 155T–155Z provide exceptions to the requirements specified in those paragraphs only.
An entity shall apply all other hedge accounting requirements in this Standard, including the
Cash Flow Hedges
155T. For the purpose of applying paragraph 140, at the point when an entity amends the description of
a hedged item as required in paragraph 155N(b), the amount accumulated in the cash flow hedge
reserve shall be deemed to be based on the alternative benchmark rate on which the hedged future
cash flows are determined.
37
155U. For a discontinued hedging relationship, when the interest rate benchmark on which the hedged
the purpose of applying paragraph 141 in order to determine whether the hedged future cash flows
are expected to occur, the amount accumulated in the cash flow hedge reserve for that hedging
relationship shall be deemed to be based on the alternative benchmark rate on which the hedged
future cash flows will be based.
Groups of Items
155V. When an entity applies paragraph 155N to groups of items designated as hedged items in a fair
before other items in the group are changed. In this example, in applying paragraph 155N, the
155W. An entity shall assess separately whether each subgroup meets the requirements in paragraph 146
to be an eligible hedged item. If any subgroup fails to meet the requirements in paragraph 146, the
entity shall discontinue hedge accounting prospectively for the hedging relationship in its entirety.
An entity also shall apply the requirements in paragraphs 137 and 140 to account for
ineffectiveness related to the hedging relationship in its entirety.
Designation of Risk Components
155X. An alternative benchmark rate designated as a non-contractually specified risk component that is
not separately identifiable (see paragraphs 128(a) and AG257) at the date it is designated shall be
deemed to have met that requirement at that date, if, and only if, the entity reasonably expects the
alternative benchmark rate will be separately identifiable within 24 months. The 24-month period
applies to each alternative benchmark rate separately and starts from the date the entity designates
the alternative benchmark rate as a non-contractually specified risk component for the first time (ie
the 24-month period applies on a rate-by-rate basis).
155Y. If subsequently an entity reasonably expects that the alternative benchmark rate will not be
specified risk component for the first time, the entity shall cease applying the requirement in
paragraph 155X to that alternative benchmark rate and discontinue hedge accounting
alternative benchmark rate was designated as a non-contractually specified risk component.
155Z. In addition to those hedging relationships specified in paragraph 155N, an entity shall apply the
requirements in paragraphs 155X and 155Y to new hedging relationships in which an alternative
benchmark rate is designated as a non-contractually specified risk component (see
paragraphs 128(a) and AG257) when, because of interest rate benchmark reform, that risk
component is not separately identifiable at the date it is designated.
38
Effective Date
…
156F. Paragraphs 72A–72E, 155M–155Z, and 191-194 were added by [draft] Improvements to
IPSAS, 2021, issued in [Month] [Year]. An entity shall apply these amendments for annual
financial statements covering periods beginning on or after January 1, 2023. Earlier
application is permitted. If an entity applies these amendments for an earlier period, it shall
disclose that fact.
Transition
...
Transition for Interest Rate Benchmark Reform—Phase 2
191. An entity shall apply Interest Rate Benchmark Reform—Phase 2 amendments retrospectively in
accordance with IPSAS 3, except as specified in paragraphs 192–194.
192. An entity shall designate a new hedging relationship (for example, as described in paragraph 155Z)
only prospectively (i.e., an entity is prohibited from designating a new hedge accounting relationship
in prior periods). However, an entity shall reinstate a discontinued hedging relationship if, and only
if, these conditions are met:
amendments).
193. If, in applying paragraph 192, an entity reinstates a discontinued hedging relationship, the entity
shall read references in paragraphs 155X and 155Y to the date the alternative benchmark rate is
designated as a non-contractually specified risk component for the first time as referring to the date
rate designated as a non-contractually specified risk component begins from the date of initial
194. An entity is not required to restate prior periods to reflect the application of these amendments. The
39

…
Benchmark Reform—Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
issued by the IASB in August 2020, and the IASB’s rationale for making these amendments as set
out in its Basis for Conclusions and concurred that there was no public sector specific reason for
not adopting these amendments, henceforth labelled as Interest Rate Benchmark Reform—
Phase 2.
40

Paragraphs 113O–113ZC,125J–125M are added. New headings are inserted before paragraph 113P. New
subheadings are inserted before paragraphs 113V, 113W, 113Y, 113ZA and AG20A. New text is underlined
and deleted text is struck through.
…
Hedge Accounting
…
...
End of Application
...
113O. An entity shall prospectively cease applying paragraphs 113H and 113I at the earlier of:
specified risk portion applying paragraph 113P; or
(b) When the hedging relationship in which the non-contractually specified risk portion is
Hedge Accounting
113P. As and when the requirements in paragraphs 113D–113I cease to apply to a hedging relationship
(see paragraphs 113J–113O), an entity shall amend the formal designation of that hedging
reform, i.e., the changes are consistent with the requirements in paragraphs 72B–72D of IPSAS 41.
In this context, the hedge designation shall be amended only to make one or more of these
changes:

a hedged risk;
portion of the cash flows or fair value being hedged;
(c) Amending the description of the hedging instrument; or
(d) Amending the description of how the entity will assess hedge effectiveness.
113Q. An entity also shall apply the requirement in paragraph 113P(c) if these three conditions are met:
instrument (as described in paragraph 72B of IPSAS 41);
41
contractual cash flows of the original hedging instrument (as described in
paragraphs 72Cand 72D of IPSAS 41).
113R. The requirements in paragraphs 113D–113I may cease to apply at different times. Therefore,
applying paragraph 113P, an entity may be required to amend the formal designation of its hedging
designation, an entity shall apply paragraphs 113V–113ZB as applicable. An entity also shall apply
113S. An entity shall amend a hedging relationship as required in paragraph 113P by the end of the
113T. If changes are made in addition to those changes required by interest rate benchmark reform to
paragraphs 72B–72D of IPSAS 41) or to the designation of the hedging relationship (as required
by paragraph 113P), an entity shall first apply the applicable requirements in this Standard to
the formal designation of the hedging relationship as specified in paragraph 113P.
113U. Paragraphs 113V–113ZC provide exceptions to the requirements specified in those paragraphs
only. An entity shall apply all other hedge accounting requirements in this Standard, including the
Retrospective Effectiveness Assessment
113V. For the purpose of assessing the retrospective effectiveness of a hedging relationship on a
cumulative basis applying paragraph 98(e) and only for this purpose, an entity may elect to reset
to zero the cumulative fair value changes of the hedged item and hedging instrument when ceasing
to apply paragraph 113G as required by paragraph 113M. This election is made separately for each
hedging relationship (i.e., on an individual hedging relationship basis).
Cash Flow Hedges
113W. For the purpose of applying paragraph 108, at the point when an entity amends the description of
a hedged item as required in paragraph 113P(b), the cumulative gain or loss in net assets/equity
shall be deemed to be based on the alternative benchmark rate on which the hedged future cash
flows are determined.
113X. For a discontinued hedging relationship, when the interest rate benchmark on which the hedged
42
the purpose of applying paragraph 112(c) in order to determine whether the hedged future cash
flows are expected to occur, the amount accumulated in other comprehensive income for that
hedging relationship shall be deemed to be based on the alternative benchmark rate on which the
hedged future cash flows will be based.
Groups of Items
113Y. When an entity applies paragraph 113P to groups of items designated as hedged items in a fair
before other items in the group are changed. In this example, in applying paragraph 113P, the
113Z. An entity shall assess separately whether each subgroup meets the requirements in paragraphs 87
and 93 to be an eligible hedged item. If any subgroup fails to meet the requirements in
paragraphs 87 and 93, the entity shall discontinue hedge accounting prospectively for the hedging
relationship in its entirety. An entity also shall apply the requirements in paragraphs 99 or 107 to
account for ineffectiveness related to the hedging relationship in its entirety.

113ZA. An alternative benchmark rate designated as a non-contractually specified risk portion that is not
separately identifiable (see paragraphs 90 and AG139) at the date it is designated shall be deemed
to have met that requirement at that date, if, and only if, the entity reasonably expects the alternative
benchmark rate will be separately identifiable within 24 months. The 24-month period applies to
each alternative benchmark rate separately and starts from the date the entity designates the
alternative benchmark rate as a non-contractually specified risk portion for the first time (i.e., the
24-month period applies on a rate-by-rate basis).
113ZB. If subsequently an entity reasonably expects that the alternative benchmark rate will not be
specified risk portion for the first time, the entity shall cease applying the requirement in
paragraph 113ZA to that alternative benchmark rate and discontinue hedge accounting
alternative benchmark rate was designated as a non-contractually specified risk portion.
113ZC. In addition to those hedging relationships specified in paragraph 113P, an entity shall apply the
requirements in paragraphs 113ZA and 113ZB to new hedging relationships in which an alternative
benchmark rate is designated as a non-contractually specified risk portion (see paragraphs 90 and
AG139) when, because of interest rate benchmark reform, that risk portion is not separately
identifiable at the date it is designated.
43

...
125J. Paragraphs 113O–113ZC, 125K–125M were added by [draft] Improvements to IPSAS, 2021,
issued in [Month] [Year]. An entity shall apply these amendments for annual financial
statements covering periods beginning on or after January 1, 2022. Earlier application is
permitted. If an entity applies these amendments for an earlier period, it shall disclose that
fact. An entity shall apply these amendments retrospectively in accordance with IPSAS 3,
except as specified in paragraphs 125K–125M.
125K. An entity shall designate a new hedging relationship (for example, as described in
paragraph 113ZC) only prospectively (i.e., an entity is prohibited from designating a new hedge
accounting relationship in prior periods). However, an entity shall reinstate a discontinued hedging
relationship if, and only if, these conditions are met:
amendments).
125L. If, in applying paragraph 125K, an entity reinstates a discontinued hedging relationship, the entity
shall read references in paragraphs 113ZA and 113ZB to the date the alternative benchmark rate
is designated as a non-contractually specified risk portion for the first time as referring to the date
rate designated as a non-contractually specified risk portion begins from the date of initial
125M. An entity is not required to restate prior periods to reflect the application of these amendments. The

…
Measurement, included in Interest Rate Benchmark Reform—Phase 2 (Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16) issued by the IASB in August 2020, and the IASB’s rationale
44
for making these amendments as set out in its Basis for Conclusions and concurred that there was
no public sector specific reason for not adopting these amendments, henceforth labelled as Interest
Rate Benchmark Reform—Phase 2.
BC23. In addition to the above amendments to IPSAS 29 (as amended by IPSAS 41 when it was first
published in 2018), the IPSASB considered that entities still applying IPSAS 29 (prior to the
adoption of IPSAS 41) could benefit from the amendments to the hedging section included in
paragraphs 113A-113ZC of IPSAS 29 (as amended by IPSAS 41 when it was first published in
2018) and the amendments on the practical expedient for changes in the contractual cash flows of
financial instruments included in paragraphs 72A-72E of IPSAS 41.
BC24. While the amendments in paragraphs 72A-72E of IPSAS 41 were unnecessary in the IASB’s
IPSAS 29 equivalent standard, IAS 39, they are necessary in IPSAS 29 (prior to the adoption of
IPSAS 41) because the sections on contractual cash flows are effective until January 1, 2023.
45
Amendments to IPSAS 30, Financial Instruments: Disclosures

Paragraphs 28I–28J and 52M–52N are added. A new subheading is inserted before paragraph 28I. New
text is underlined.
Other Disclosures
…
Hedge Accounting
...
Additional Disclosures Related to Interest Rate Benchmark Reform
28I. To enable users of financial statements to understand the effect of interest rate benchmark reform
on an entity’s financial instruments and risk management strategy, an entity shall disclose
information about:
(a) The nature and extent of risks to which the entity is exposed arising from financial instruments
subject to interest rate benchmark reform, and how the entity manages these risks; and
(b) The entity’s progress in completing the transition to alternative benchmark rates, and how
the entity is managing the transition.
28J. To meet the objectives in paragraph 28I, an entity shall disclose:
(a) How the entity is managing the transition to alternative benchmark rates, its progress at the
reporting date and the risks to which it is exposed arising from financial instruments because
of the transition;
(b) Disaggregated by significant interest rate benchmark subject to interest rate benchmark
reform, quantitative information about financial instruments that have yet to transition to an
alternative benchmark rate as at the end of the reporting period, showing separately:
(i) Non-derivative financial assets;
(ii) Non-derivative financial liabilities; and
(iii) Derivatives; and
(c) If the risks identified in paragraph 28J(a) have resulted in changes to an entity’s risk
management strategy (see paragraph 26A), a description of these changes.

...
52M. Paragraphs 28I–28J and 52N were added by [draft] Improvements to IPSAS, 2021, issued in
[Month] [Year]. An entity shall apply these amendments when it applies the Interest Rate
Benchmark Reform—Phase 2 amendments to IPSAS 29 or IPSAS 41.
46
52N. In the reporting period in which an entity first applies Interest Rate Benchmark Reform—Phase 2
amendments an entity is not required to present the quantitative information required by
paragraph 33(f) of IPSAS 3.

…
Benchmark Reform—Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
issued by the IASB in August 2020, and the IASB’s rationale for making these amendments as set
not adopting these amendments, henceforth labelled as Interest Rate Benchmark Reform—
Phase 2.
47
Amendments to IPSAS 33, First-time Adoption of Accrual Basis International

Public Sector Accounting Standards (IPSASs)
Paragraphs 85B and 154P are added. New text is underlined.
Exemptions that Do Not Affect Fair Presentation and Compliance with Accrual
Basis IPSASs During the Period of Adoption
…
IPSAS 4, The Effects of Changes in Foreign Exchange Rates
85B. Instead of applying paragraph 85, a controlled entity that uses the exemption in
paragraph 129(a) may elect, in its financial statements, to measure cumulative translation
differences for all foreign operations at the carrying amount that would be included in the
controlling entity’s consolidated financial statements, based on the controlling entity’s date
of adoption of IPSASs, if no adjustments were made for consolidation procedures and for
the effects of the public sector combination in which the controlling entity acquired the
controlled entity. A similar election is available to an associate or joint venture that uses the
exemption in paragraph 129(a).

...
154P. Paragraph 85B was added by [draft] Improvements to IPSAS, 2021, issued in [Month] [Year].
An entity shall apply these amendments for annual financial statements covering periods
beginning on or after January 1, [Year]. Earlier application is permitted. If an entity applies
these amendments for an earlier period, it shall disclose that fact.

…
BC126. The IPSASB reviewed the revisions to IFRS 1, First-time Adoption of International Financial
Reporting Standards, included in Annual Improvements to IFRS® Standards (2018-2020) issued
by the IASB in May 2020, and the IASB’s rationale for making these amendments as set out in its
Basis for Conclusions and concurred that there was no public sector specific reason for not
adopting these amendments.
48

Paragraph AG46 is amended and paragraphs AG46A, 154G and 195 are added. A new heading is inserted
above paragraph 195. New text is underlined and deleted text is struck through.
Effective Date
…
154G. Paragraph AG46 was amended and paragraphs AG46A and 195 were added by
Transition
...
Transition for [draft] Improvements to IPSAS, 2021

195. An entity shall apply [draft] Improvements to IPSAS, 2021 to financial liabilities that are modified or
exchanged on or after the beginning of the annual reporting period in which the entity first applies
the amendment.
…
Application Guidance
This Appendix is an integral part of IPSAS 41.
Recognition and Derecognition

…
Derecognition of Financial Liabilities
AG46. For the purpose of paragraph 36, the terms are substantially different if the discounted present
value of the cash flows under the new terms, including any fees paid net of any fees received and
discounted using the original effective interest rate, is at least 10 percent different from the
discounted present value of the remaining cash flows of the original financial liability. If an exchange
of debt instruments or modification of terms is accounted for as an extinguishment, any costs or
fees incurred are recognized as part of the gain or loss on the extinguishment. If the exchange or
49
modification is not accounted for as an extinguishment, any costs or fees incurred adjust the
carrying amount of the liability and are amortized over the remaining term of the modified liability.
In determining those fees paid net of fees received, a borrower includes only fees paid or received
between the borrower and the lender, including fees paid or received by either the borrower or
lender on the other’s behalf.
AG46A.If an exchange of debt instruments or modification of terms is accounted for as an extinguishment,

any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the
exchange or modification is not accounted for as an extinguishment, any costs or fees incurred
adjust the carrying amount of the liability and are amortized over the remaining term of the modified
liability.
...

…

BC52. The IPSASB reviewed the revisions to IFRS 9, Financial Instruments, included in Annual
Improvements to IFRS® Standards (2018-2020) issued by the IASB in May 2020, and the IASB’s
rationale for making these amendments as set out in its Basis for Conclusions and concurred that
there was no public sector specific reason for not adopting these amendments.
50
Amendments to IPSAS 1, Presentation of Financial Statements

Paragraphs 80, 84, 85 and 87 are amended and paragraphs 83A, 86A, 87A, 87B and 153T are added.
Paragraphs 81, 82, 83 and 86 have been included for ease of reference but are not amended. New
subheadings are inserted before paragraphs 81, 82, 83A and 87A. New text is underlined and deleted text
is struck through.
Structure and Content

…
Statement of Financial Position
Current Liabilities
80. A liability shall be classified as current when it satisfies any of the following criteria:
(a) It is expected to be settled in the entity’s normal operating cycle;
(b) It is held primarily for the purpose of being traded;
(c) It is due to be settled within twelve months after the reporting date; or
(d) The entity does not have an unconditional the right at the end of the reporting period
to defer settlement of the liability for at least twelve months after the reporting date
(see paragraph 84). Terms of a liability that could, at the option of the counterparty,
result in its settlement by the issue of equity instruments do not affect its
classification.
All other liabilities shall be classified as non-current.
Normal Operating Cycle (paragraph 80(a))
81. Some current liabilities, such as government transfers payable and some accruals for employee
and other operating costs, are part of the working capital used in the entity’s normal operating cycle.
Such operating items are classified as current liabilities even if they are due to be settled more than
twelve months after the reporting date. The same normal operating cycle applies to the
classification of an entity’s assets and liabilities. When the entity’s normal operating cycle is not
clearly identifiable, its duration is assumed to be twelve months.
Held Primarily for the Purpose of Trading (paragraph 80(b)) or Due to be Settled within Twelve Months
(paragraph 80(c))
82. Other current liabilities are not settled as part of the normal operating cycle, but are due for
settlement within twelve months after the reporting date or held primarily for the purpose of being
traded. Examples are some financial liabilities that meet the definition of held for trading in
IPSAS 41, bank overdrafts, and the current portion of non-current financial liabilities, dividends or
51
similar distributions payable, income taxes and other non-trade payables. Financial liabilities that
provide financing on a long-term basis (i.e., are not part of the working capital used in the entity’s
normal operating cycle) and are not due for settlement within twelve months after the reporting date
are non-current liabilities, subject to paragraphs 85 and 86.
83. An entity classifies its financial liabilities as current when they are due to be settled within twelve
months after the reporting date, even if:
(a) The original term was for a period longer than twelve months; and
(b) An agreement to refinance, or to reschedule payments, on a long-term basis is completed

after the reporting date and before the financial statements are authorized for issue.
Right to Defer Settlement for at Least Twelve months (paragraph 80(d))
83A. An entity’s right to defer settlement of a liability for at least twelve months after the reporting period
must have substance and, as illustrated in paragraphs 84–86, must exist at the end of the reporting
period. If the right to defer settlement is subject to the entity complying with specified conditions,
the right exists at the end of the reporting period only if the entity complies with those conditions at
the end of the reporting period. The entity must comply with the conditions at the end of the
reporting period even if the lender does not test compliance until a later date.
84. If an entity expects, and has the discretion, right, at the end of the reporting period, to refinance or
roll over an obligation for at least twelve months after the reporting date under an existing loan
facility, it classifies the obligation as non-current, even if it would otherwise be due within a shorter
period. However, when refinancing or rolling over the obligation is not at the discretion of the entity
(for example, there is no agreement to refinance), If the entity has no such right the potential to
refinance is not considered and the obligation is classified as current.
85. When an entity breaches an undertaking a condition under a long-term loan agreement on or before
the reporting date, with the effect that the liability becomes payable on demand, the liability is
classified as current, even if the lender has agreed, after the reporting date and before the
authorization of the financial statements for issue, not to demand payment as a consequence of
the breach. The liability is classified as current because, at the reporting date, the entity does not
have an unconditional the right to defer its settlement for at least twelve months after that date.
86. However, the liability is classified as non-current if the lender agreed by the reporting date to provide
a period of grace ending at least twelve months after the reporting date, within which the entity can
rectify the breach and during which the lender cannot demand immediate repayment.
86A. Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer
settlement of the liability for at least twelve months after the reporting period. If a liability meets the
criteria in paragraph 80 for classification as non-current, it is classified as non-current even if
management intends or expects the entity to settle the liability within twelve months after the
reporting period, or even if the entity settles the liability between the end of the reporting period and
the date the financial statements are authorized for issue. However, in either of those
circumstances, the entity may need to disclose information about the timing of settlement to enable
users of its financial statements to understand the impact of the liability on the entity’s financial
position (see paragraphs 29(c) and 87(d)).
87. In respect of loans classified as current liabilities, if If the following events occur between the
reporting date and the date the financial statements are authorized for issue, those events qualify
52
for disclosure as non-adjusting events in accordance with IPSAS 14, Events after the Reporting
Date:
(a) Refinancing on a long-term basis of a liability classified as current (see paragraph 83);
(b) Rectification of a breach of a long-term loan agreement classified as current (see

paragraph 85); and
(c) The receipt from the lender of a period of grace to rectify a breach of a long-term loan
agreement ending at least twelve months after the reporting date. classified as current (see
paragraph 86); and
(d) Settlement of a liability classified as non-current (see paragraph 86A).
Settlement (Paragraphs 80(a), 80(c) and 80(d))
87A. For the purpose of classifying a liability as current or non-current, settlement refers to a
transfer to the counterparty that results in the extinguishment of the liability. The transfer
could be of:
(a) Cash or other economic resources—for example, goods or services; or

(b) The entity’s own equity instruments, unless paragraph 87B applies.
87B. Terms of a liability that could, at the option of the counterparty, result in its settlement by
the transfer of the entity’s own equity instruments do not affect its classification as current
or non-current if, applying IPSAS 28, Financial Instruments: Presentation, the entity
classifies the option as an equity instrument, recognizing it separately from the liability as
an equity component of a compound financial instrument.
…
Effective Date
…
153T. Paragraphs 80, 84, 85 and 87 were amended and paragraphs 83A, 86A, 87A and 87B were
added by [draft] Improvements to IPSAS, 2021, issued in [Month] [Year]. An entity shall
apply these amendments for annual financial statements covering periods beginning on or
after January 1, [Year] retrospectively in accordance with IPSAS 3. Earlier application is
permitted. If an entity applies these amendments for an earlier period, it shall disclose that
fact.

…
BC39. The IPSASB reviewed the revisions to IAS 1, Presentation of Financial Statements, included in
Classification of Liabilities as Current or Non-current (Amendments to IAS 1) issued by the IASB in
January 2020, and the IASB’s rationale for making these amendments as set out in its Basis for
53
amendments.
54
Amendments to IPSAS 19, Provisions, Contingent Liabilities and Contingent

Assets
Paragraphs 79A, 110A and 111P are added and paragraph 80 is amended. Paragraph 79 has been
included for ease of reference but is not amended. New text is underlined and deleted text is struck through.
Application of the Recognition and Measurement Rules

…
Onerous Contracts
79. This Standard defines an onerous contract as a contract in which the unavoidable costs of meeting
the obligations under the contract exceed the economic benefits or service potential expected to
be received under it, which includes amounts recoverable. Therefore, it is the present obligation
net of recoveries that is recognized as a provision under paragraph 76. The unavoidable costs
under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost
of fulfilling it and any compensation or penalties arising from failure to fulfill it.
79A. The cost of fulfilling a contract comprises the costs that relate directly to the contract. Costs that
relate directly to a contract consist of both:
(a) The incremental costs of fulfilling that contract—for example, direct labor and materials; and
(b) An allocation of other costs that relate directly to fulfilling contracts—for example, an
allocation of the depreciation charge for an item of property, plant, and equipment used in
fulfilling that contract among others.
80. Before a separate provision for an onerous contract is established, an entity recognizes any
impairment loss that has occurred on assets dedicated to that used in fulfilling the contract (see
IPSAS 21 and IPSAS 26).
Transitional Provision
…
110A. [Draft] Improvements to IPSAS, 2021, issued in [Month] [Year] added paragraph 79A and amended
paragraph 80. An entity shall apply those amendments to contracts for which it has not yet fulfilled
all its obligations at the beginning of the annual reporting period in which it first applies the
amendments (the date of initial application). The entity shall not restate comparative information.
Instead, the entity shall recognize the cumulative effect of initially applying the amendments as an
adjustment to the opening balance of net assets/equity or other component of net assets/equity, as
appropriate, at the date of initial application.
55
Effective Date
…
111P. Paragraphs 79A and 110A were added and paragraph 80 was amended by
January 1, [Year]. Earlier application is permitted. If an entity applies these amendments for

…
BC26. The IPSASB reviewed the revisions to IAS 37, Provisions, Contingent Liabilities and Contingent
Assets, included in Onerous Contracts—Cost of Fulfilling a Contract (Amendments to IAS 37)
issued by the IASB in May 2020, and the IASB’s rationale for making these amendments as set
not adopting these amendments.
56
Amendments to IPSAS 17, Property, Plant, and Equipment

Paragraphs 31 and 89 are amended, paragraphs 34A, 89A, 106B and 107U are added. New text is
underlined and deleted text is struck through.
Measurement at Recognition
…
Elements of Cost
…
31. Examples of directly attributable costs are:
(a) Costs of employee benefits (as defined in IPSAS 39, Employee Benefits) arising directly from
the construction or acquisition of the item of property, plant, and equipment;
(b) Costs of site preparation;
(c) Initial delivery and handling costs;
(d) Installation and assembly costs;
(e) Costs of testing whether the asset is functioning properly (i.e., assessing whether the
technical and physical performance of the asset is such that it is capable of being used in the
production or supply of goods or services, for rental to others, or for administrative purposes),
after deducting the net proceeds from selling any items produced while bringing the asset to
that location and condition (such as samples produced when testing equipment); and
(f) Professional fees.
34A. Items may be produced while bringing an item of property, plant, and equipment to the location and
condition necessary for it to be capable of operating in the manner intended by management (such
as samples produced when testing whether the asset is functioning properly). An entity recognizes
the proceeds from selling any such items, and the cost of those items, in surplus or deficit in
accordance with applicable Standards. The entity measures the cost of those items applying the
measurement requirements of IPSAS 12.
Disclosure
…
89. The financial statements shall also disclose for each class of property, plant, and equipment
recognized in the financial statements:
(a) The existence and amounts of restrictions on title, and property, plant, and equipment
pledged as securities for liabilities;
57
(b) The amount of expenditures recognized in the carrying amount of an item of property,
plant, and equipment in the course of its construction; and
(c) The amount of contractual commitments for the acquisition of property, plant, and
equipment; and
(d) If it is not disclosed separately on the face of the statement of financial performance,
the amount of compensation from third parties for items of property, plant, and
equipment that were impaired, lost or given up that is included in surplus or deficit.
[Deleted]
89A. If not presented separately in the statement of financial performance, the financial
statements shall also disclose:
(a) The amount of compensation from third parties for items of property, plant, and
equipment that were impaired, lost or given up that is included in surplus or deficit;
and
(b) The amounts of proceeds and cost included in surplus or deficit in accordance with
paragraph 34A that relate to items produced that are not an output of the entity’s
ordinary activities, and which line item(s) in the statement of financial performance
include(s) such proceeds and cost.
…
Transitional Provisions
…
106B. [Draft] Improvements to IPSAS, 2021, issued in [Month] [Year] amended paragraphs 31 and 89
and added paragraphs 34A and 89A. An entity shall apply those amendments retrospectively, but
only to items of property, plant, and equipment that are brought to the location and condition
necessary for them to be capable of operating in the manner intended by management on or after
the beginning of the earliest period presented in the financial statements in which the entity first
applies the amendments. The entity shall recognize the cumulative effect of initially applying the
amendments as an adjustment to the opening balance of net assets/equity (or other component of
equity, as appropriate) at the beginning of that earliest period presented.
Effective Date
…
107U. Paragraphs 31 and 89 were amended and paragraphs 34A, 89A and 106B were added by
January 1, [Year]. Earlier application is permitted. If an entity applies these amendments for

…
58
BC17. The IPSASB reviewed the revisions to IAS 16, Property, Plant and Equipment, included in Property,
Plant and Equipment—Proceeds before Intended Use (Amendments to IAS 16) issued by the IASB
in May 2020, and the IASB’s rationale for making these amendments as set out in its Basis for
amendments.
59
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 ‘International Public Sector Accounting Standards Board’, ‘International Public Sector Accounting
Standards’, ‘Recommended Practice Guidelines’, ‘International Federation of Accountants’, ‘IPSASB’,
‘IPSAS’, ‘RPG’, ‘IFAC’, the IPSASB logo, and IFAC logo are trademarks of IFAC, or registered trademarks
and service marks of IFAC in the US and other countries.
Copyright © July 2021 by the International Federation of Accountants (IFAC). All rights reserved.
Permission is granted to make copies of this work to achieve maximum exposure and feedback provided
that each copy bears the following credit line: “Copyright © July 2021 by the International Federation of
Accountants (IFAC). All rights reserved. Used with permission of IFAC. Permission is granted to make
copies of this work to achieve maximum exposure and feedback.”
60
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Exposure Draft 80

Proposed International Public Sector Accounting Standard ®

Improvements to IPSAS, 2021

Table 1: IASB’s Publications not Included in ED 80

Rationale for non-inclusion in

Rationale for non-inclusion in

PART I: GENERAL IMPROVEMENTS TO IPSAS

Request for Comments

Table 2: General Improvements to IPSAS proposed in ED 80

IPSAS Summary of Proposed Change in ED 80

Amendment: Part I-1

Amendments to IPSAS 22, Disclosure of Financial Information About the General

General Government Sector

Basis for Conclusions

Revision of IPSAS 22 as a result of [draft] Improvements to IPSAS, 2021

Amendment: Part I-2

Amendments to IPSAS 39, Employee Benefits

Basis for Conclusions

Composite Social Security Programs

Revision of IPSAS 39 as a result of [draft] Improvements to IPSAS, 2021

Amendment: Part I-3

Amendments to RPG 1, Reporting on the Long-Term Sustainability of an Entity’s

Basis for Conclusions

Completion of the Conceptual Framework and the Social Benefits projects

Revision of RPG 1 as a result of [draft] Improvements to IPSAS, 2021

Amendment: Part I-4

Amendments to IPSAS 29, Financial Instruments: Recognition and Measurement

Temporary Exceptions from Applying Specific Hedge Accounting Requirements

Highly Probable Requirement for Cash Flow Hedges

Reclassifying the Cumulative Gain or Loss Recognized in Net Assets/Equity

Designating Financial Items as Hedged Items

113L. An entity shall prospectively cease applying paragraph 113F:

Additional Temporary Exceptions Arising from Interest Rate Benchmark Reform

(a) Designating an alternative benchmark rate (contractually or non-contractually specified) as

(c) Amending the description of the hedging instrument; or

(b) The original hedging instrument is not derecognized; and

Accounting for Qualifying Hedging Relationships

Retrospective Effectiveness Assessment

Cash Flow Hedges

Designating Financial Items as Hedged Items

Effective Date and Transition

Effective Interest Rate

Basis for Conclusions

Revision of IPSAS 29 as a result of [draft] Improvements to IPSAS, 2021

PART II: IFRS ALIGNMENT IMPROVEMENTS TO IPSAS

Request for Comments

Table 3: IFRS Alignment Improvements to IPSAS proposed in ED 80:

Summary of Proposed Change

Interest Rate Benchmark Reform (Phase One and Phase Two) 6

Summary of Proposed Change

Other IFRS Alignment Improvements

Amendment: Part II-1a

Amendments to IPSAS 41, Financial Instruments

Temporary Exceptions from Applying Specific Hedge Accounting Requirements

Highly Probable Requirement for Cash Flow Hedges

Reclassifying the Amount Accumulated in the Cash Flow Hedge Reserve

Designating a Component of an Item as a Hedged Item

155K. An entity shall prospectively cease applying paragraph 155F:

Effective Date and Transition