International Public Sector Accounting Standards Board releases leases standard

The International Public Sector Accounting Standards Board has issued its own leasing standard for the public sector.

International Public Sector Accounting Standard (IPSAS) 43, Leases is based on International Financial Reporting Standard (IFRS) 16, Leases, which was developed by the International Accounting Standards Board. For lessees, IPSAS 43 introduces a right-of-use model that replaces the risks and rewards incidental to ownership model in IPSAS 13, Leases. For lessors, IPSAS 43 mostly carries forward the risks and rewards incidental to ownership model in IPSAS 13. The new standard has an effective date of Jan. 1, 2025, but earlier application is allowed under certain circumstances.

“IPSAS 43, Leases will improve the transparency of lease accounting in the public sector, while maintaining alignment with IFRS,” said IPSASB chair Ian Carruthers in a statement. “Having a three-year period to apply IPSAS 43 provides public sector entities time to prepare for the new requirements and allows for learning to be drawn from the private sector experience in applying IFRS 16.”

In addition to the full standard, the IPSASB is also offering a summary At-a-Glance document, and webcast here.

In recent years, a number of standard-setters have been introducing lease accounting standards. In addition to the IASB’s IFRS 16, the Financial Accounting Standards Board has its standard, ASC 842, which requires companies to put operating leases on their balance sheet for the first time. FASB’s sister organization, the Governmental Accounting Standards Board, or GASB, also has its own new leasing standard, GASB Statement No. 87.

The IPSASB is affiliated with the International Federation of Accountants and is encouraging IFAC members, associates and network partners to promote the availability of IPSAS 43, Leases to their members and employees.

Courtesy of IFAC