Proposed accounting for revenue and non-exchange expenses

These proposals are relevant for Tier 1 and Tier 2 public benefit entities (PBEs)—both not-for-profit and public sector entities.


The International Public Sector Accounting Standards Board (IPSASB) has published a Consultation Paper, Accounting for Revenue and Non-Exchange Expenses (the Consultation Paper), for comment.

PBEs often enter into transactions that require determining the appropriate accounting period for revenue and non-exchange expenses recognition—especially for funding arrangements that cover multiple accounting periods.

A key objective of this Consultation Paper is to seek views on potential recognition and measurement approaches for these often-significant transactions.  

The Consultation Paper:

  • proposes to replace current standards IPSAS 9 Revenue from Exchange Transactions and IPSAS 11 Construction Contracts with a new IPSAS standard based on IFRS 15 Revenue from Contracts with Customers;
  • proposes to update IPSAS 23 Revenue from Non-Exchange Transactions (Taxes and Transfers) to address issues identified by users;
  • discusses two potential revenue recognition approaches;
  • discusses two potential non-exchange expenses recognition approaches;
  • highlights implementation issues with revenue recognition from capital grants and services in-kind; and
  • explores approaches for the initial and subsequent measurement of non-contractual receivables (such as tax receivables, fines and penalties) and non-contractual payables (such as tax payables, appropriations and grants).

The IPSASB initiated this project to address:

  • the challenges experienced by preparers of financial statements when determining whether revenue transactions are exchange or non-exchange and the value of this distinction for users of the financial statements;
  • the gap in the current IPSASB literature on non-exchange expenses, which may lead to ambiguity and inconsistency of accounting policies in a highly significant area of expenditure;
  • application issues with IPSAS 23 — the primary concern being that IPSAS 23 is too restrictive in not allowing revenue to be recognised over time when funding is received for a specific purpose, but there are no return obligations; and
  • convergence with International Accounting Standards Board literature, which has diminished with the publication of IFRS 15.

We encourage you to read the Consultation Paper and provide your comments on the proposals.

How to comment

You can send your comments in an email or letter and these can be formal or informal.

Comments are due to the NZASB by 22 November 2017 and to the IPSASB by 15 January 2018.

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