PUBLIC SECTOR ACCOUNTING

STANDARDS VOLUME I -
2009
VOLUME II - 2012
VOLUME III - 2018

By
Prof. A.A.C Abeysinghe
International Federation of Accountants (IFA)

■ Mission
– “to serve the public interest, strengthen the accountancy
profession worldwide and contribute to the development of
strong international economies by establishing and
promoting adherence to high quality professional
standards, furthering the international convergence of such
standards, and speaking out on public interest issues where
the profession’s expertise is most relevant.” (Constitution,
IFA)
International Public Sector Accounting
Standard Board (IPSASB)

■ IFAC has established the International Public Sector

Accounting Standards Board (IPSASB) to develop high
quality global financial reporting for use by public sector
entities around the world other than Government Business
Enterprises (GBEs) in the preparation of general purpose
financial statements.

■ IPSASB believes that the issue of such standards will help to

improve the degree of uniformity of accounting throughout the
world.
Sri Lanka Public Sector Accounting
Standard Committee (PSASC)
■ ICASL, as a member of the International Federation of
Accountants (IFAC) is committed to the IFAC mission of
development and enhancement of accounting standards. As a
condition of its membership of IFAC, ICASL is obliged to
support the work of IPSASB by informing its members of
IPSAS to work towards implementation to the extent possible
of IPSAS, for this purpose ICASL has established a Public
Sector Accounting Standards Committee (PSASC) including
nominees from the Ministry of Finance and Planning,
specifically to adopt IPSAS in Sri Lanka Public Sector
Accounting Standards (SLPSASs).
Objective of PSAC and SLPSASs
■ The objectives of PSASC of the ICASL are to serve the public interest by
developing high quality public sector financial reporting standards and by
facilitating the convergence of international and national standards,
thereby enhancing the quality and uniformity of financial reporting in
conformity with global standards
■ This is achieved by: ·
– Issuing Sri Lanka Public Sector Accounting Standards (SLPSASs); ·
– Promoting acceptance of these standards by the public sector in Sri
Lanka ; and
– Publishing other documents which provide guidance on issues and
experiences in financial reporting in the public sector.
SLPSASs
■ The SLPSASs are designed to apply to the general purpose
financial statements of all public sector entities that adopt
accrual basis of accounting. Public sector entities include
– government,
– provincial councils,
– local authorities,
– non profit making statutory authorities and,
– universities, unless otherwise stated.

■ The Standards do not apply to GBEs which apply Sri Lanka

Accounting Standards (SLASs) issued by the ICASL. SLPSASs
include a definition of GBEs
Government Business Enterprises
(GBEs)
■ Include both trading enterprises, such as utilities, and financial
enterprises, such as financial institutions.
■ In substance, no different from entities conducting similar
activities in the private sector.
■ Generally operate to make a profit, although some may have
limited community service obligations under which they are
required to provide some individuals and organizations in the
community with goods and services at either no charge or a
significantly reduced charge.
Characteristics of a GBE
■ (a) Is an entity with the power to contract in its own
name;
■ (b) Has been assigned the financial and operational
authority to carry on a business;
■ (c) Sells goods and services, in the normal course of
its business, to other entities at a profit or full cost
recovery;
■ (d) Is not reliant on continuing government funding to
be a going concern (other than purchases of outputs at
arm’s length); and
■ (e) Is controlled by a public sector entity.
General Purpose Financial Statements
■ Financial statements issued for users that are unable to
demand financial information to meet their specific
information needs are general purpose financial
statements.
– Examples of such users are citizens, voters, their
representatives and other members of the public.
■ The term “financial statements” covers all statements
and explanatory material which are identified as being
part of the general purpose financial statements.
Contents of Financial Statements
(When the accrual basis is applied)
■ the financial statements will include
– the statement of financial position,
– the statement of financial performance,
– the cash flow statement and
– the statement of changes in net assets/equity.
Special Purpose Financial Statements
■ In addition to preparing general purpose financial statements,
an entity may prepare financial statements for other parties
– (such as governing bodies, the legislature and other parties
who perform an oversight function) who can demand
financial statements tailored to meet their specific
information needs.
■ Such statements are referred to as special purpose financial
statements. The ICASL encourages the use of SLPSASs in the
preparation of special purpose financial statements where
appropriate.
SLAS and SLPSAS
■ The PSASC of the ICASL develops accrual based SLPSASs
that: ·
■ are converged with SLAS issued by ICASL by adapting them
to a public sector context when appropriate.
■ In undertaking that process, the ICASL attempts, wherever
possible, to maintain the accounting treatment and original text
of the SLASs unless there is a significant public sector issue
which warrants a departure; and
■ SLPSASs deal with public sector financial reporting issues that
are either not comprehensively dealt with in existing SLASs or
for which SLASs have not been developed by the ICASL
Adoption of SLPSASs
■ “Framework for the Preparation and Presentation of
Financial Statements” is a relevant reference for users
of SLPSASs
■ An entity whose financial statements comply with Sri
Lanka Public Sector Accounting Standards should
disclose that fact.
■ Financial statements should not be described as
complying with Sri Lanka Public Sector Accounting
Standards unless they comply with all the requirements
of each applicable Sri Lanka Public Sector Accounting
Standard.
Governing regulations over public sector
General Purpose Financial Statements
■ Financial Regulations,
■ Finance Act No 38 of 1971 and
■ Enabling Acts of Parliament
Role of SLPSASs
■ The ICASL believes that the adoption of
SLPSASs, together with disclosure of
compliance with them will lead to
– a significant improvement in the quality of
general purpose financial reporting by public
sector entities.
– This, in turn, is likely to lead to better informed
assessments of the resource allocation decisions
made by governments, thereby increasing
transparency and accountability.
SLPSAS – Volume I
■ SLPSAS 1 - PRESENTATION OF FINANCIAL STATEMENTS
– to prescribe the manner in which general purpose financial statements should be
presented to ensure comparability both with the entity’s financial statements of
previous periods and with the financial statements of other entities.
■ SLPSAS 2 - CASH FLOW STATEMENTS
– To identify the sources of cash inflows, the items on which cash was expended
during the reporting period, and the cash balance as at the reporting date
■ SLPSAS 3 - ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES
AND ERRORS
– to prescribe the criteria for selecting and changing accounting policies, together
with the accounting treatment and disclosure of changes in accounting policies,
changes in accounting estimates and the corrections of errors.
■ SLPSAS 4 - BORROWING COSTS
– To prescribe the accounting treatment for borrowing costs.
SLPSAS – Volume II
SLPSAS – Volume III
■ SLPSAS 11― REVENUE FROM NON-EXCHANGE
TRANSACTIONS (TAXES AND TRANSFERS) 1 - 47
■ SLPSAS 12 — LEASES 48 - 71
■ SLPSAS 13 — INVESTMENT PROPERTY 72 - 98
■ SLPSAS 14 — RELATED PARTY DISCLOSURES 99 – 117
■ SLPSAS 15 — PRESENTATION OF BUDGET INFORMATION IN FINANCIAL
STATEMENTS 118 - 139
■ SLPSAS 16 — CONSTRUCTION CONTRACTS 140 – 165
■ SLPSAS 17 — SEGMENT REPORTING 166 - 197
■ SLPSAS 18 — AGRICULTURE 198 – 217
■ SLPSAS 19 ― EMPLOYEE BENEFITS 218 – 288
■ SLPSAS 20 — INTANGIBLE ASSETS 299 – 331