Cash Basis IPSAS is principles-based fair presentation cash basis accounting framework that is developed and maintained by the International Public Sector Accounting Standards Board (IPSASB).
Cash basis IPSAS is separated into two parts.
Part 1
Part 1 is mandatory. It sets out the requirements which are applicable to all public sector entities preparing general purpose financial statements under the cash basis of accounting. It defines the cash basis of accounting, establishes requirements for the disclosure of information in the financial statements and supporting notes, and deals with a number of specific reporting issues. Compliance with the Part 1 requirements and disclosure of additional information when necessary to achieve fair presentation is mandatory to report that the financial statements have been prepared in accordance with Cash Basis IPSAS.
Part 1 requires an entity to prepare and present financial statements which include the following components:
A statement of cash receipts and payments which recognizes all cash receipts, cash payments, and cash balances controlled by the entity;
Note disclosures including:
Information about the entity:
Restrictions on cash balances and access to borrowings:
Budgetary basis, period and scope:
When the entity makes publicly available it’s approved budget, a comparison of budget and actual amounts either as a separate additional financial statement or as a budget column in the statement of cash receipts and payments. When the financial statements and the budget are not prepared on a comparable basis, the budget must be reconciled to total cash receipts and total cash payments, identifying separately any basis, timing and entity differences. The reconciliation shall be disclosed on the face of the statement of comparison of budget and actual amounts or in the notes to the financial statements.
Financial statements may be described as complying with Cash Basis IPSAS if they comply with all the relevant requirements and if they include additional disclosures when necessary to achieve a fair presentation.
Here is an illustrative financial statement that demonstrates the result of the application of Part 1 of IPSAS Cash Basis.
Part 2
Part 2 is not mandatory. It identifies additional accounting policies and disclosures that a public sector entity is encouraged to adopt to enhance the usefulness of its financial statements for accountability and decision-making purposes and to support its transition to the accrual basis of financial reporting and adoption of Accrual Basis IPSAS.
Cash Basis IPSAS may be obtained free of charge from IPSASB. You must sign up for an account on the IPSASB website which grants you access to the IPSAS handbook that contains this information. The IPSAS handbook is published in three volumes that include all IPSASB pronouncements. Cash Basis IPSAS is presented in Volume 3.
Cash basis IPSAS is separated into two parts.
Part 1
Part 1 is mandatory. It sets out the requirements which are applicable to all public sector entities preparing general purpose financial statements under the cash basis of accounting. It defines the cash basis of accounting, establishes requirements for the disclosure of information in the financial statements and supporting notes, and deals with a number of specific reporting issues. Compliance with the Part 1 requirements and disclosure of additional information when necessary to achieve fair presentation is mandatory to report that the financial statements have been prepared in accordance with Cash Basis IPSAS.
Part 1 requires an entity to prepare and present financial statements which include the following components:
A statement of cash receipts and payments which recognizes all cash receipts, cash payments, and cash balances controlled by the entity;
Note disclosures including:
Information about the entity:
- Information on the accounting policies being applied
- Information on the domicile and legal form of the entity, and the jurisdiction(s) within which it operates
- A description of the nature of the entity’s operations and principal activities
- A reference to the relevant legislation governing the entity’s operations, if any
- The significant entities or sectors of government that are presented in the financial statements, and changes in the significant entities or sectors that comprise the reporting entity and were presented in the previous periods financial statements
Restrictions on cash balances and access to borrowings:
- Significant cash balances that are not available for use by the entity
- Significant cash balances that are subject to external restrictions
- Undrawn borrowing facilities that may be available for future operating activities and to settle capital commitments, indicating any restrictions on the use of these facilities
Budgetary basis, period and scope:
- Explanation of the budgetary basis and classification basis adopted in the approved budget
- Explanation of the period of the approved budget
- Explanation of the entities included in the approved budget
When the entity makes publicly available it’s approved budget, a comparison of budget and actual amounts either as a separate additional financial statement or as a budget column in the statement of cash receipts and payments. When the financial statements and the budget are not prepared on a comparable basis, the budget must be reconciled to total cash receipts and total cash payments, identifying separately any basis, timing and entity differences. The reconciliation shall be disclosed on the face of the statement of comparison of budget and actual amounts or in the notes to the financial statements.
Financial statements may be described as complying with Cash Basis IPSAS if they comply with all the relevant requirements and if they include additional disclosures when necessary to achieve a fair presentation.
Here is an illustrative financial statement that demonstrates the result of the application of Part 1 of IPSAS Cash Basis.
Part 2
Part 2 is not mandatory. It identifies additional accounting policies and disclosures that a public sector entity is encouraged to adopt to enhance the usefulness of its financial statements for accountability and decision-making purposes and to support its transition to the accrual basis of financial reporting and adoption of Accrual Basis IPSAS.
Cash Basis IPSAS may be obtained free of charge from IPSASB. You must sign up for an account on the IPSASB website which grants you access to the IPSAS handbook that contains this information. The IPSAS handbook is published in three volumes that include all IPSASB pronouncements. Cash Basis IPSAS is presented in Volume 3.