This IPSASB Consultation Paper, Presentation of Financial Statements (CP) aims to improve the communication effectiveness of information reported in public sector financial statements by developing a new IPSAS Standard to replace IPSAS 1, Presentation of Financial Statements (IPSAS 1) based on IFRS 18 Presentation and Disclosure in Financial Statements (IFRS 18) adapted for the public sector.

We support the revision of the extant IPSAS 1 to incorporate certain aspects of IFRS 18, adapted for the public sector. However, we do not support the development of a new IPSAS Standard to replace IPSAS 1. This is because we are concerned that the key proposal from IFRS 18, requiring revenue and expenses to be categorised into operating, financing and investing categories with related subtotals, is not well suited to the public sector.

While presentation of information in this way was requested by users of for-profit sector financial statements, we have not heard from primary users of public sector financial statements that the same problems exist. Preparers have also indicated that it is likely to be complicated to adapt the categorisation requirements consistently across public sector entities for user needs, therefore we cannot see how it would apply effectively to the public sector.

We therefore recommend that this project be undertaken in two parts:

1. An update to the existing IPSAS 1, for the improvements in presentation and disclosure, should be progressed as soon as possible.
2. The development of a new IPSAS Standard to replace IPSAS 1, addressing revenue and expense classification and related subtotals, should be deferred until after the for-profit sector has completed its implementation of IFRS 18.

This would allow the IPSASB to draw on implementation experience from the for-profit sector and undertake further research to determine whether there is a clear user need for these changes and whether the benefits would justify the costs before further progressing this aspect of the project.