IPSAS
IPSAS is the set of accounting standards designed specifically for governments and public sector entities - because government finances work differently from corporate finances.
What You'll Learn
- What IPSAS is and who publishes it
- Why government accounting needs separate standards
- Accrual vs cash basis accounting in the public sector
- Key differences between IPSAS and IFRS
- Which countries use IPSAS
- IPSAS vs national government accounting standards
- The role of IPSASB
First: What Is This?
International Public Sector Accounting Standards (IPSAS) are issued by the International Public Sector Accounting Standards Board (IPSASB), part of the International Federation of Accountants (IFAC). They provide accounting standards specifically designed for governments, municipalities, state-owned enterprises, and other public sector entities.
Governments are fundamentally different from corporations: they do not exist to make profit, they collect taxes rather than earn revenue from customers, they provide services without market prices, and they manage public resources on behalf of citizens. IPSAS addresses these unique characteristics while promoting transparency and accountability in public finances.
Who Does It Apply To?
Is It Mandatory?
IPSAS adoption is voluntary at the international level - there is no equivalent of the EU mandate that requires IFRS for listed companies. However, many countries and international organizations have adopted IPSAS or IPSAS-based standards. The UN system, NATO, and EU institutions use IPSAS. Countries including New Zealand, Switzerland, and many developing nations have adopted IPSAS directly or used it as a basis for national standards.
Why Government Accounting Is Different
Public sector entities differ from private sector entities in several fundamental ways: they operate primarily to deliver services rather than generate profit; their revenue comes largely from non-exchange transactions (taxes, grants, fines) rather than contracts with customers; they manage public resources under legislative authority; and their accountability is to citizens and legislators rather than shareholders.
A government is not a business. It does not sell products to make profit. It collects taxes and uses them to provide services (roads, schools, defense, healthcare). There are no shareholders expecting dividends - there are citizens expecting services. This means the accounting rules need to measure different things: not 'how much profit did we make?' but 'did we use public money responsibly and deliver the services we promised?'
Imagine the difference between a lemonade stand (a business) and a class treasury (a government). The lemonade stand wants to know: did we make money? The class treasury wants to know: did we spend the money on what we said we would (pizza party, field trip), and do we have enough left for next month? They need different rules because they have different goals.
A city government collects $500 million in property taxes. Under IPSAS, this is recognized as revenue when the taxable event occurs (the assessment date), not when cash is received. If $50 million is expected to be uncollectible, the city recognizes $450 million in tax revenue and a $50 million impairment. This differs from IFRS 15 (which deals with contracts with customers) because taxes are non-exchange transactions - citizens do not receive services proportional to their tax payment.
For decades, many governments used cash accounting (only recording when money moved in or out). This hid enormous liabilities - pension obligations, infrastructure maintenance backlogs, and long-term debts were invisible. IPSAS promotes accrual accounting to reveal the full picture of government financial health.
Assuming IPSAS is just IFRS applied to governments. While many IPSAS standards are based on IFRS equivalents, IPSAS includes standards with no IFRS equivalent (e.g., IPSAS 23 on non-exchange revenue, IPSAS 32 on service concessions from the grantor's perspective) and modifies IFRS concepts where government context requires it.
Frequently Asked Questions
What is the difference between accrual and cash basis IPSAS?
Accrual IPSAS (the full standards) records transactions when they occur economically, regardless of cash movement. Cash basis IPSAS is a simplified framework for governments transitioning from pure cash accounting - it only records cash receipts and payments but requires more disclosure than traditional cash accounting. Most IPSASB efforts focus on accrual standards.
How many IPSAS standards exist?
As of 2026, there are over 40 accrual-basis IPSAS standards, plus the Cash Basis IPSAS. New standards continue to be issued. Many are based on equivalent IFRS/IAS standards but adapted for public sector context.
Do the United States or UK use IPSAS?
No. The U.S. uses GASB (Governmental Accounting Standards Board) standards for state/local governments and FASAB standards for the federal government. The UK uses its own government financial reporting framework. However, both countries' standards share many concepts with IPSAS.