IPSASB Proposes Amendments to IPSAS 40 (ED 96)

Posted 19 May 2026 Written by Acts Online
Category Financial and Accounting

Brought to you by SA Accounting Academy: The International Public Sector Accounting Standards Board (IPSASB) has released Exposure Draft 96 (ED 96), which proposes key amendments to IPSAS 40, Public Sector Combinations. These amendments focus on the definition of an operation and the recognition of acquired liabilities and contingent liabilities.

In terms of the proposed amendments, ED 96 seeks to align IPSAS 40 with recent updates made by the International Accounting Standards Board (IASB) to IFRS 3, Business Combinations. Specifically, the proposals incorporate changes arising from Definition of a Business (Amendments to IFRS 3) and Reference to the Conceptual Framework (Amendments to IFRS 3).

The exposure draft addresses the acquisition or amalgamation of public sector operations, with a specific focus on the recognition of acquired liabilities and contingent liabilities that fall within the scope of IPSAS 19, Provisions, Contingent Liabilities and Contingent Assets. Because IPSAS standards govern the preparation of general-purpose financial statements for public sector entities, these amendments will have authoritative status once finalized.

Key Areas of Amendment

  • Definition of an Operation: Aligning the public sector definition of an “operation” with the private sector definition of a “business” under IFRS 3 to ensure consistency in determining whether an acquisition is a combination or an asset purchase.
  • Recognition of Liabilities: Clarifying the criteria for recognizing acquired liabilities and contingent liabilities at the acquisition date, specifically aligning them with the principles in IPSAS 19.
  • Conceptual Framework Alignment: Updating references within IPSAS 40 to refer to the updated Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities.

Click here to download the 26-page Exposure Draft: IPSASB ED 96 - Definition of an Operation and Recognition of Acquired Liabilities and Contingent Liabilities (Amendments to IPSAS 40).

What this means for you, your business, or your clients

  • For yourself: You must review the proposed definitions and recognition criteria in ED 96 to ensure your advisory or auditing knowledge remains current with evolving public sector standards.
  • For your business: Professional practices serving public sector entities should update their internal training materials and audit templates to prepare for these changes in combination accounting.
  • For your clients: Public sector entities and municipal departments planning mergers or reorganizations must assess how the revised definition of an operation will impact whether their transactions are classified as combinations or asset acquisitions.

Originally published at https://accountingacademy.co.za/news/read/ipsasb-ed-96-definition-of-an-operation-and-recognition-of-acquired-liabilities-and-contingent-liabilities-amendments-to-ipsas-40

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