Exposure Draft (ED) 19 Investment Property Proposed International Public Sector Accounting Standard (IPSAS)
Comments from the Association of Chartered Certified
Accountants
May 2001
ACCA welcomes IFAC's proposal to publish an IPSAS for the accounting treatment of investment property and related disclosure requirements. In general ACCA is supportive of the proposed standard which, if adopted, should help to harmonise the existing diverse range of financial reporting practices which have evolved world-wide and hence aid comparability of general purpose financial reports. We respond to the specific matters raised for comment as follows.
Specific Matters for Comment
(a) ACCA agrees that land currently held for an undetermined future should be classified as investment property.
(b) We do not strongly object to the proposal, which allows measurement on initial recognition of investment property either at cost or where the item's cost cannot be determined reliably or is irrelevant (due to inadequate records or it was acquired many years prior to initial recognition or it was gifted, by way of examples) at fair value as at the date of initial recognition, although, we would prefer the standard to encourage public sector entities to adopt a fair value model for determining the carrying value of its assets. We agree that any difference between cost and fair value, as at the date of initial recognition, should be treated as an adjustment to the opening balance of accumulated surpluses or deficits to ensure consistency in the treatment of gains and losses arising from changes in fair value.
(c) We agree that, on adoption of the standard, the effects of initial recognition of the investment property should be immediately recognised as an adjustment to the opening balance of accumulated surpluses or deficits in the period in which the standard is first adopted.
(d) We do not see any reason why, in circumstances other than initial adoption of the standard, the resulting adjustment from a change in accounting policies should not be accounted for in accordance with IPSAS 3 Net Surplus or Deficits for the Period, Fundamental Errors and Changes in Accounting Policies (i.e. taken to the opening balance of accumulated surplus or deficit (benchmark treatment) or to the net surplus/deficit for the period (alternative treatment)).