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FOR IMMEDIATE RELEASE 8 MAY 2002

‘GOVERNMENT USE OF INTERNATIONAL VALUATION STANDARDS ENCOURAGED’

Governments and other public sector entities throughout the world are referred to the use of the International Valuation Standards for the valuation of fixed assets in a new study published by the International Federation of Accountants, Public Sector Committee (PSC) entitled ‘Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities’. The Study has been produced to assist many of the PSC’s constituents who are moving from the cash to the accrual basis of accounting.

The following statement appears in the chapter ‘Property, Plant and Equipment – Valuing Assets’: “The International Valuation Committee issues internationally accepted valuation standards. These standards seek compatibility with International Financial Reporting Standards (IFRSs) (formerly International Accounting Standards (IASs) and include references to relevant IFRSs.”

The Public Sector Committee is developing a set of International Public Sector Accounting Standards (IPSASs) based on International Financial Reporting Standards. IPSAS 16, Investment Property, and IPSAS 17, Property, Plant and Equipment were published in December 2001. The IPSAS are based on the accrual basis accounting that requires organizations to maintain complete records of assets and liabilities. Accrual accounting facilitates better management of assets, including better maintenance, more appropriate replacement policies, identification and disposal of surplus assets, and better management of risks such as loss due to theft or damage.

IVSC Chairman Elect, John Edge, said, “At present, governments and other public sector entities follow widely diverse financial reporting practices and, in many countries, there are no authoritative standards for the public sector. Among the prime users of government financial reports are financial institutions, international development institutions and credit-rating agencies. As with the development of International Financial Reporting Standards for private sector financial reporting, these users are driving the demand for an authoritative set of independent international financial reporting standards for governments and others in the public sector organizations.”

The Study also contains guidance for those countries seeking membership of the European Union who are having to adopted their budgetary and financial control systems to meet the requirements of EU membership.

In a separate development, the (IVSC) is to be represented on an advisory committee of the US Governmental Accounting Standards Board (GASB) to provide input to its project on impairment of assets. Current GASB pronouncements do not address how the impairment of assets held by public sector entities should be recognised and measured in their financial statements.

END

NOTES TO EDITORS

1. For further details, please contact:
   Marianne Tissier - Executive Director, IVSC.
   Tel: +44 1442 879306
   John Rich - IVSC Technical Consultant
   Tel: +44 1825 790450

2. FAC is the worldwide organization for the accountancy profession. Its mission is to develop and enhance the profession to enable it to provide services of consistently high quality in the public interest. Its current membership consists of 156 professional accountancy bodies in 114 countries representing more than two million accountants in public practice, education, government service, industry and commerce. Copies of the Study may be downloaded at the IFAC website – www.ifac.org

3. The IVSC is an unincorporated association comprising professional valuation associations from some 50 countries. It has published International Valuation Standards (IVS) since 1985. The IVSC is an NGO (Non Government Organisation) member of the United Nations. IVSC maintains liaison with international agencies, such as the Organisation for Economic Co-operation and Development (OECD), the World Bank, the International Monetary Fund, the World Trade Organisation, the European Commission, and the Bank for International Settlements. IVSC also maintains a close relationship with standard-setting bodies such as the International Accounting Standards Board, the International Federation of Accountants, and the International Organisation of Securities Commissions. For further details on the IVSC or to obtain a copy of the 2001 edition of International Valuation Standards, please contact the IVSC Executive Director (see above) or visit the IVSC web site – www.ivsc.org

4. The Governmental Accounting Standards Board (GASB) was organized in 1984 by the Financial Accounting Foundation (FAF) to establish standards of financial accounting and reporting for state and local governmental entities in the US. Its standards guide the preparation of external financial reports of those entities.

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