the cash basis ipsas.pptx

8/19/2019 The Cash Basis IPSAS.pptx

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The Cash Basis IPSAS


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Structure of theStandard

Part 1 is Mandatory

Part 1 of this Standard sets out the

requirements for reporting under the cashbasis of accounting.

Part 2 is Non Mandatory


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Objective

The purpose of this Standard is to prescribethe manner in which general purposenancial statements should be presentedunder the cash basis of accounting.


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Objective

Information about the cash receipts, cashpayments and cash balances of an entityis necessary for accountability purposesand provides input useful for assessmentsof the ability of the entity to generateadequate cash in the future and the liely

sources and uses of cash.


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Objective

In maing and evaluating decisions aboutthe allocation of cash resources and the

sustainability of the entity!s activities,users require an understanding of thetiming and certainty of cash receipts andcash payments.


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Objective

"ompliance with the requirements andencouragements of this Standard will

enhance comprehensive and transparentnancial reporting of the cash receipts,cash payments and cash balances of theentity.


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Objective

It will also enhance comparability with theentity!s own nancial statements of

previous periods and with the nancialstatements of other entities which adoptthe cash basis of accounting.


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Scope of the e!uire"ents

#n entity which prepares and presentsnancial statements under the cash basis

of accounting, as dened in this Standard,should apply the requirements of Part 1 ofthis Standard in the presentation of itsgeneral purpose annual nancial

statements.


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#n entity whose nancial statementscomply with the requirements of Part 1 of

this Standard should disclose that fact.$inancial statements should not bedescribed as complying with thisStandard unless they comply with all the

requirements in Part 1 of the Standard.


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This Standard applies to all public sectorentities other than %overnment &usiness

'nterprises.


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The Cash Basis


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#e$nitions

"ash comprises cash on hand, demanddeposits and cash equivalents.


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#e$nitions

Cash e!uiva%ents are short(term, highlyliquid investments that are readily

convertible to nown amounts of cashand which are sub)ect to an insignicantris of changes in value.


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#e$nitions

.

Cash &o's are in*ows and out*ows of

cash.

Cash pay"ents are cash out*ows.

Cash receipts are cash in*ows.


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#e$nitions

.

"ontrol of cash arises when the entity can

use or otherwise benet from the cash inpursuit of its ob)ectives and can e+cludeor regulate the access of others to thatbenet.


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#e$nitions

(overn"ent Business )nterprise means anentity that has all the following characteristics


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#e$nitions

-a Is an entity with the power to contract in its own name/

-b 0as been assigned the nancial and operationalauthority to carry on a business/

-c Sells goods and services, in the normal course of itsbusiness, to other entities at a prot or full cost recovery/

-d Is not reliant on continuing government funding to be agoing concern -other than purchases of outputs at arm!slength/ and

-e Is controlled by a public sector entity.


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Cash Basis ofAccountin*

The cash basis of accounting recognies transactions and eventsonly when cash -including cash equivalents is received or paidby the entity


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$inancial statements prepared under the cash basis providereaders with information about the sources of cash raised duringthe period, the purposes for which cash was used and the cashbalances at the reporting date. The measurement focus in the

nancial statements is balances of cash and changes therein.


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2otes to the nancial statements may provideadditional information about liabilities, such aspayables and borrowings, and some non(cash

assets, such as receivables, investments andproperty, plant and equipment.


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Cash )!uiva%entsCash e!uiva%ents are held for the purpose of meeting short(term cash commitments rather than for investment or otherpurposes.

$or an investment to qualify as a cash equivalent it must bereadily convertible to a nown amount of cash and be sub)ect toan insignicant ris of changes in value.

Therefore, an investment normally qualies as a cash equivalentonly when it has a short maturity of, say, three months or less

from the date of acquisition.'quity investments are e+cluded from cash equivalents unless

they are, in substance, cash equivalents.


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Presentation and #isc%osuree!uire"ents


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#e$nitions

Accountin* po%icies are the specic principles,bases, conventions, rules and practices adoptedby an entity in preparing and presenting

nancial statements.


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#e$nitionsMateria%ity+

information is material if its omission or misstatement could

in*uence the decisions or assessments of users made on thebasis of the nancial statements.

3ateriality depends on the nature or sie of the item

or error )udged in the particular circumstances of omission or

misstatement.


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#e$nitions

eportin* date means the date of the last dayof the reporting period to which nancialstatements relate.


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#e$nitions)cono"ic entity means a group of entities comprising acontrolling entity and one or more controlled entities.


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,inancia% State"ents

#n entity should prepare and present general purposenancial statements which include the followingcomponents

-a # statement of cash receipts and payments which

-i 4ecognies all cash receipts, cash payments andcash balances controlled by the entity/ and

-ii Separately identies payments made by third

parties on behalf of the entity in accordance withparagraph 1.5.67 of

this Standard/


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,inancia% State"ents-b #ccounting policies and e+planatory notes/ and


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,inancia% State"ents-c 8hen the entity maes publicly available its approvedbudget, a

comparison of budget and actual amounts either as a separateadditional nancial statement or as a budget column in the

statement of cash receipts and payments in accordance withparagraph 1.9.: of this Standard.


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,inancia% State"ents

8hen an entity elects to disclose informationprepared on a di;erent basis from the cash basisof accounting as dened in this Standard or

otherwise required by paragraphs 1.5.7-a or1.5.7-c, such information should be disclosed inthe notes to the nancial statements.


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Infor"ation to be Presented in theState"ent of Cash eceipts and Pay"ents

The statement of cash receipts and payments shouldpresent the following amounts for the reporting period

-a Total cash receipts of the entity showing separately asubclassication of total cash receipts using aclassication basis appropriate to the entity!s operations/

-b Total cash payments of the entity showing separately asubclassication of total cash payments using aclassication basis appropriate to the entity!s operations/and

-c &eginning and closing cash balances of the entity.


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Total cash receipts and total cash payments, and cashreceipts and cash payments for each sub(classication ofcash receipt and payment, should be reported on a grossbasis, e+cept that cash receipts and payments may be

reported on a net basis when

-a They arise from transactions which the entityadministers on behalf

of other parties and which are recognied in the statementof cash receipts and payments/ or

-b They are for items in which the turnover is quic, theamounts are large, and the maturities are short.


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Pay"ents by third parties onbeha%f of the entity

8here, during a reporting period, a third party directly settles the

obligations of an entity or purchases goods and services for thebenet of the entity, the entity should disclose in separatecolumns on the face of the statement of cash receipts and

payments


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-a Total payments made by third parties which are part of the

economic entity to which the reporting entity belongs, showing

separately a sub(classication of the sources and uses of total

payments using a classication basis appropriate to the entity!s

operations/ and

-b Total payments made by third parties which are not part ofthe

economic entity to which the reporting entity belongs, showing

separately a sub(classication of the sources and uses of total

payments using a classication basis appropriate to the entity!s

operation.


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Such disclosure should only be made whenduring the reporting period the entity has beenformally advised by the third party or the

recipient that such payment has been made orhas otherwise veried the payment.


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Accountin* Po%icies and)-p%anatory Notes


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Structure of the Notes

The notes to the nancial statements of anentity should

-a Present information about the basis ofpreparation of the nancial statements and thespecic accounting policies selected and appliedfor signicant transactions and other events/ and

-b Provide additional information which is notpresented on the face of the nancialstatements but is necessary for a fairpresentation of the entity!s cash receipts, cash

payments and cash balances.


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Structure of the Notes

2otes to the nancial statements should bepresented in a systematic manner.

'ach item on the face of the statement of cash

receipts and payments and other nancialstatements should be cross referenced to anyrelated information in the notes.


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Se%ection and #isc%osure ofAccountin* Po%icies

%eneral purpose nancial statements should presentinformation that is

-a =nderstandable/


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-b 4elevant to the decision(maing and accountabilityneeds of users/ and


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4eliable in that it

-i 4epresents faithfully the cash receipts, cashpayments and cash balances of the entity and

the other information disclosed/-ii Is neutral, that is, free from bias/ and

-iii Is complete in all material respects.


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(enera% Considerations


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eportin* Period

The general purpose nancial statements should be presented atleast annually.

8hen, in e+ceptional circumstances, an entity!s reporting date

changes and the annual nancial statements are presented for a

period longer or shorter than one year, an entity should disclosein addition to the period covered by the nancial statements

-a The reason-s for a period other than one year being used/and

-b the fact that comparative amounts may not be comparable..


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Authori.ation #ate

#n entity should disclose the date when thenancial statements were authoried for issueand who gave that authoriation.

If another body has the power to amend thenancial statements after issuance, the entityshould disclose that fact.


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Infor"ation about the )ntity

#n entity should disclose the following if not disclosedelsewhere in information published with the nancialstatements

-a The domicile and legal form of the entity, and the )urisdiction within which it operates/

-b # description of the nature of the entity!s operationsand principal activities/

-c # reference to the relevant legislation governing theentity!s operations, if any/ and

-d The name of the controlling entity and the ultimatecontrolling entity of the economic entity -where applicable,if any..


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estrictions on Cash Ba%ances andAccess to Borro'in*s

#n entity should disclose in the notes to the nancialstatements together with a commentary, the nature andamount of

-a Signicant cash balances that are not available for useby the entity/

-b Signicant cash balances that are sub)ect to e+ternalrestrictions/ and

-c =ndrawn borrowing facilities that may be available forfuture operating activities and to settle capitalcommitments, indicating any restrictions on the use ofthese facilities.


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Consistency of Presentation

The presentation and classication of items in the nancialstatements should be retained from one period to the ne+tunless

-a # signicant change in the nature of the operations ofthe entity or a review of its nancial statementspresentation demonstrates that the change will resultin a more appropriate presentation of events ortransactions/ or

-b # change in presentation is required by a futureamendment to this Standard


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Co"parative Infor"ation

=nless a provision of this Standard permits or requires otherwise,

comparative information should be disclosed in respect of theprevious period for all numerical information required by thisStandard to be disclosed in the nancial statements, e+cept in

respect of the nancial statements for the reporting period towhich this Standard is rst applied.

"omparative information should be included in narrative anddescriptive information when it is relevant to an understanding ofthe current period!s nancial statements.


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Identi$cation of ,inancia%State"ents

The nancial statements should be clearly identied anddistinguished from other information in the same publisheddocument..


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'ach component of the nancial statements should beclearly identied.

In addition, the following information should beprominently displayed and repeated when it is necessary

for a proper understanding of the information presented

-a The name of the reporting entity or other means ofidentication/

-b 8hether the nancial statements cover the individualentity or the economic entity/


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-c The reporting date or the period covered by thenancial

statements, whichever is appropriate to the relatedcomponent of the nancial statements/

-d The reporting currency/ and

-e The level of precision used in the presentation of

gures in the nancial statements.


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Correction of )rrors

8hen an error arises in relation to a cash balance reportedin the nancial statements, the amount of the error thatrelates to prior periods should be reported by ad)ustingthe cash at the beginning of the period.

"omparative information should be restated, unless it isimpracticable to do so.


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Correction of )rrors

#n entity should disclose in the notes to thenancial statements the

following

-a The nature of the error/-b The amount of the correction/ and

-c The fact that comparative information hasbeen restated or that it is impracticable to do so.


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Conso%idated ,inancia%State"ents


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Scope of Conso%idated ,inancia%State"ents

# controlling entity, other than a controlling entityidentied in paragraphs 1.>.? and 1.>.:, should issueconsolidated nancial statements which consolidates allcontrolled entities, foreign and domestic, other than those

referred to in paragraph 1.>.>.


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# controlling entity that is a wholly ownedcontrolled entity need not present consolidatednancial statements provided users of such

nancial statements are unliely to e+ist or theirinformation needs are met by the controllingentity!s consolidated nancial statements.


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# controlled entity should be e+cluded fromconsolidation when it operates under severee+ternal long(term restrictions which prevent the

controlling entity from beneting from itsactivities.


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# controlling entity that is virtually wholly ownedneed not present consolidated nancialstatements provided the controlling entity

obtains the approval of the owners of theminority interest.


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Conso%idation Procedures

"onsolidated nancial statements should beprepared using uniform accounting policies forlie cash transactions.

If it is not practicable to use uniform accountingpolicies in preparing the consolidated nancialstatements, that fact should be disclosedtogether with the proportions of the items in the

consolidated nancial statements to which thedi;erent accounting policies have been applied.


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Conso%idation #isc%osures

The following disclosures should be made inconsolidated nancial statements

-a # listing of signicant controlled entities

including the name, the )urisdiction in which thecontrolled entity operates -when it is di;erentfrom that of the controlling entity/ and

-b The reasons for not consolidating a controlled

entity.


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#e$nitions

C%osin* rate is the spot e+change rate at thereporting date.

)-chan*e di/erence is the di;erence resulting

from reporting the same number of units of aforeign currency in the reporting currency atdi;erent e+change rates.

)-chan*e rate is the ratio for e+change of two

currencies.


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#e$nitions

,orei*n currency is a currency other than thereporting currency of an entity.

eportin* currency is the currency used in

presenting the nancial statements.


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#e$nitions

,orei*n currency is a currency other than thereporting currency of an entity.

eportin* currency is the currency used inpresenting the nancial statements.


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Treat"ent of ,orei*n Currency Casheceipts0 Pay"ents and Ba%ances

"ash receipts and payments arising fromtransactions in a foreign currency should berecorded in an entity!s reporting currency by

applying to the foreign currency amount thee+change rate between the reporting currencyand the foreign currency at the date of thereceipts and payments.


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"ash balances held in a foreign currency shouldbe reported using the closing rate.


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The cash receipts and cash payments of aforeign controlled entity should be translated atthe e+change rates between the reporting

currency and the foreign currency at the dates ofthe receipts and payments.


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#n entity should disclose the amount ofe+change di;erences included as reconcilingitems between opening and closing cash

balances for the period.


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8hen the reporting currency is di;erent from thecurrency of the country in which the entity isdomiciled, the reason for using a di;erent

currency should be disclosed.

The reason for any change in the reportingcurrency should also be disclosed.


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Presentation of Bud*et Infor"ation in,inancia% State"ents

#ccounting basis means the accrual or cash basis ofaccounting as dened in the accrual basis InternationalPublic Sector #ccounting Standards and the "ash &asisInternational Public Sector #ccounting Standard.


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#nnual budget means an approved budget for one year. Itdoes not include published forward estimates orpro)ections for periods beyond the budget period.


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#ppropriation is an authoriation granted by a legislativebody to allocate funds for purposes specied by thelegislature or similar authority.

#pproved budget means the e+penditure authority derivedfrom laws, appropriation bills, government ordinances andother decisions related to the anticipated revenue orreceipts for the budgetary period.

.


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&udgetary basis means the accrual, cash or other basis ofaccounting adopted in the budget that has been approvedby the legislative body.


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Bud*etary basis means the accrual, cash or other basisof accounting adopted in the budget that has beenapproved by the legislative body.


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Co"parab%e basis means the actual amounts presentedon the same accounting basis, same classication basis,for the same entities and for the same period as theapproved budget.

,ina% bud*et is the original budget ad)usted for allreserves, carry over amounts, transfers, allocations,supplemental appropriations, and other authoriedlegislative or similar authority, changes applicable to the

budget period.


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Co"parab%e basis means the actual amounts presentedon the same accounting basis, same classication basis,for the same entities and for the same period as theapproved budget.

,ina% bud*et is the original budget ad)usted for allreserves, carry over amounts, transfers, allocations,supplemental appropriations, and otherauthoriedlegislative or similar authority, changes applicable to thebudget period.


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Mu%tiyear bud*et is an approved budget for more thanone year. It does not include published forward estimatesor pro)ections for periods beyond the budget period.

Ori*ina% bud*et is the initial approved budget for thebudget period.


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Presentation of a Co"parison of Bud*etand Actua% A"ounts

Sub)ect to the requirements of paragraph 1.9.1?, an entitythat maes publicly available its approved budget-s shallpresent a comparison of the budget amounts for which itis held publicly accountable and actual amounts either as

a separate additional nancial statement or as additionalbudget columns in the statement of cash receipts andpayments currently presented in accordance with thisStandard.

The comparison of budget and actual amounts shall

present separately for each level of legislative oversight:.

Ch f O i i % t ,i %


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Chan*es fro" Ori*ina% to ,ina%Bud*et

#n entity shall present an e+planation of whether changesbetween the original and nal budget are a consequenceof reallocations within the budget, or of other factors,either

-a &y way of note disclosure in the nancial statements/or

-b In a report issued before, at the same time as, or incon)unction with the nancial statements, and shall

include a cross reference to the report in the notes to thenancial statements.

i i t f ) t %


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ecipients of )-terna%Assistance

.


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#e$nitions

Assi*ned )-terna% Assistance means any e+ternalassistance, including e+ternal assistance grants, technicalassistance, guarantees or other assistance, received by anentity that is assigned by the recipient to another entity.

Bi%atera% )-terna% Assistance A*encies are agenciesestablished under national law, regulation or otherauthority of a nation for the purpose of, or including thepurpose of, providing some or all of that nation!s e+ternal

assistance.


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#e$nitions

Ocia% esources means all loans, grants, technicalassistance, guarantees or other assistance provided orcommitted under a binding agreement by multilateral orbilateral e+ternal assistance agencies or by a government,

or agencies of a government, other than to a recipient ofthe same nation as the government or governmentagency providing, or committing to provide, theassistance.

e3ent )-terna% Assistance 3oans means e+ternalassistance loans received by an entity that are lent by therecipient to another entity.


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)-terna% Assistance eceived

The entity should disclose separately on the face of theStatement of "ash 4eceipts and Payments, total e+ternalassistance received in cash during the period.


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-a Total payments made by third parties which are part ofthe economic entity to which the reporting entity belongs/and

-b Total payments made by third parties which are notpart of the economic entity to which the reporting entitybelongs.


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(a) Total payments made by third parties which are part ofthe economic entity to which the reporting entitybelongs; and

(b) Total payments made by third parties which are not part of the economic entity to which the reportingentity belongs.

the cash basis ipsas.pptx

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