How the AASB Sets Accounting Standards for the Australian Public Sector

[PDF 371KB]

Prepared by the Financial Reporting Council (FRC)

Brief history

APS brief history

Costing of services

  • It reported government employee costs (eg pensions) when incurred rather than when paid
  • Benefits from accrual accounting
    Asset management
    • It encouraged better asset management, eg:
      • it removed incentive to defer asset maintenance (by reporting depreciation)
      • it removed cash accounting's bias against capital expenditure
    Comprehensive information
    • It consolidated all controlled entities into the financial reports

    Transaction neutrality

    • Irrespective of whether an entity is for-profit or not-for-profit
    • And whether it is in the private or public sector
    • Similar transactions should be accounted for in the same way
    • Unless there is a good reason to account for them differently


    • Entities in different sectors can be compared
    • Provides a rigour for the AASB's decisions, based on high-quality global Standards
    • Accountants are mobile between sectors
    • Users can understand government accounts without specialist public sector knowledge


    • IFRSs are written for for-profit entities
    • IFRSs do not deal well with
      • Non-exchange transactions (eg grants, donations, taxes)
      • Non-cash generating activities (eg heritage assets, infrastructure assets)
    • Consolidating GBEs into the Government's financial statements might entail aligning accounting policies

    Backing for adoption of AASB Standards

    • Legal requirements
      • Commonwealth Government
    • Finance Minister's Orders
      • States and Territories
    • issue orders/regulations requiring compliance
      • Local governments
    • are subject to State and Territory requirements to comply
    • Professional requirements
    AASB's approach
    IFRS Topics
    • Adopt IFRSs word-for-word
    • Add 'Aus' paragraphs for the public/NFP sector where necessary
    Other topics
    • Issue Australian standards for public sector topics
    • eg administered items; budgetary reporting
    IPSASB topics
    • Consider as basis for 'Aus' paragraphs or separate standards
    • eg service concession arrangements
    IPSASB topics
    • Sometimes not suitable for Australia, if too different from IFRS
    • eg control; revenue recognition

    AASB's relationship with IPSASB

    • An AASB staff member is Technical Advisor to Australia's representative
    • An AASB staff member attends all IPSASB meetings
    • AASB invites constituent comments on IPSASB proposals
    • AASB comments on all IPSASB Consultative Documents
    • Participant in Conceptual Framework Standard Setters Advisory Panel

    Some current public sector issues

    • Control (adding public sector guidance to AASB 10, which incorporates IFRS 10)
    • Revenue recognition  (adding public sector guidance to IASB draft Standard)
    • Service concession arrangements – Grantor (adapting IPSAS 32 to Australian circumstances)
    • Related party disclosures (adding public sector guidance to AASB 124, which incorporates IAS 24)
    • Emission trading schemes – Government perspective (consider need for public sector guidance)
    • Disaggregated disclosures (consider nature of government departments relative to whole of government)
    • Service performance reporting (consider users' need for non-financial information)