Public Sector and Not-for-Profit Accounting: IPSAS and Public Financial Management
Public Sector and Not-for-Profit Accounting applies IPSAS and public financial management rules to governments, agencies and NGOs, where accountability for public funds is central.
Core rules
- IPSAS accrual accounting recognises assets, liabilities, revenue and expenses when the definition and recognition criteria are met, not merely when cash moves.
- IPSAS 1 governs presentation; IPSAS 17 governs PPE; IPSAS 23 governs non-exchange revenue; IPSAS 24 requires budget-versus-actual reporting.
- Conditional grants are recognised as revenue only as conditions are met; until then, a liability is recognised.
- Public financial management in Nigeria includes the Fiscal Responsibility Act 2007, Public Procurement Act 2007, Treasury Single Account, GIFMIS and IPPIS.
- Oversight involves the Auditor-General, public accounts committees and internal audit; performance is assessed against service delivery, not profit.
Worked example
A state receives a NGN 50m grant to build a primary health centre, conditional on completing the building. At receipt, recognise cash and a liability (deferred income), because the condition is unmet. As construction is completed, recognise revenue to the extent conditions are satisfied. Capitalise the health centre under IPSAS 17 and depreciate it. Recognising the full NGN 50m as revenue on receipt overstates performance and understates obligations.
Traps
Treating budget cash releases as accrual revenue; valuing donated assets at zero; recognising conditional grants immediately; omitting depreciation on public assets; and assuming commercial profit measures apply to not-for-profits.