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- 4 Marks
Question
Public sector entities are required to present financial reports in compliance with the International Public Sector Accounting Standards (IPSAS). However, Government Business Enterprises (GBEs) are to present the financial reports using IFRS due to their peculiar characteristics that separate them from other public sector entities.
In determining whether an entity is a GBE for financial report purposes, one must examine their nature and characteristic rather than the legal form. In the entity you work for, there is controversy among top management about whether to use IPSAS or IFRS.
Required: Identify FOUR characteristics of GBEs in accordance with IPSAS 1, Presentation of Financial Statements. (4 marks)
Answer
Characteristics of Government Business Enterprises (GBEs) according to IPSAS 1:
- Power to Contract in its Own Name: GBEs have the legal capacity to enter into contracts independently.
- Financial and Operational Authority: GBEs are granted financial and operational autonomy to conduct business activities.
- Profit or Full Cost Recovery: GBEs sell goods and services with the objective of making a profit or recovering full costs.
- Not Reliant on Government Funding: GBEs operate as going concerns without continuous government funding, except for arm’s length transactions.
- Tags: GBEs, Government Business Enterprises, IFRS, IPSAS, Public Sector Reporting
- Level: Level 2
- Topic: General purpose financial reporting framework
- Series: MAY 2017
- Uploader: Joseph