CA ANZ and CPA Australia have lodged a joint submission to the IPSASB on its Exposure Draft (ED 92) that proposes to create a new standard for accounting for tangible natural resources in the public sector.

Our key points are as follows:

• As the proposals in the ED remain largely unchanged from the preceding consultation paper, the concerns in our previous joint submission remain unaddressed.
• We do not support the development of a new separate accounting standard for tangible natural resources as proposed in the ED.
• We are concerned that very few tangible natural resources would be within the scope of the ED, invalidating the need for an accounting standard on this topic. In limited circumstances where a tangible natural resource was within the scope, we believe it is unlikely that the proposed recognition criteria would be met.
• We are not comfortable with the development of a new standard for tangible natural resources that are essentially unknown.
• We are concerned that the subjectivity of the recognition criteria could lead to inconsistency in its application. Furthermore, this degree of subjectivity could exacerbate the risk of financial mismanagement, where natural resource assets are brought on balance sheet offsetting a problematic overall and medium-term net liability position.
• In the long term, we believe the reporting of information on natural resources would be better addressed as part of IPSASB’s public sector sustainability reporting project.
• In the short term, we recommend the development of financial reporting guidance on applying the Conceptual Framework and existing IPSAS to tangible natural resources.