May 25, 2022
IPSASB launches consultation paper on accounting for natural resources

Consultation Paper (CP), Natural Resources has been launched by the International Public Sector Accounting Standards Board® (IPSASB®), detailing the public sector entities’ issues relating to the recognition, measurement, and presentation of natural resources.

Sunlight, air, water and land are commonly recognised as natural resources that exist without the actions of humankind. A significant proportion count towards the economic resources in many jurisdictions. Notwithstanding, governments often experience a deficit in sufficient information on the monetary value of such resources thus, issue rights to these resources without focusing on financial and environmental sustainability, or intergenerational fairness.

International Public Sector Accounting Standard (IPSAS™) lacks guidance on accounting for natural resources in their original state. The IPSASB is now working to address this gap. Primary work will focus on the financial reporting of tangible, naturally occurring resources, including subsoil resources, water, and living resources, which are in their natural state. An unprecedented consultation paper which will weigh up whether natural resources can be recognized as assets in general purpose financial statements or disclosed in broader financial reports.

“The issue of accounting for natural resources is important for the public sector in most jurisdictions. The recognition and measurement of natural resources impacts not only on financial reporting, but also potentially for many governments on policy decisions and public financial management.” said IPSASB Chair Ian Carruthers. “This consultation paper is the IPSASB’s first step in developing guidance for this important area.”

October 17, of this year is the date set by the IPSASB in accepting welcome comments on all the matters discussed in this Consultation Paper. Feedback will guide the IPSASB in determining the approach to developing an Exposure Draft on the topic which subsequently form a final IPSAS related to Natural Resources.

How to Comment

IFAC members, associates, and Network Partners are encouraged to promote the availability of this Consultation Paper to their members and employees. To access the Consultation Paper, Natural Resources, or to submit a comment, visit the IPSASB website.

Source: IPSASB