By Jim McFie, a Fellow of ICPAK
The International Federation of Accountants (IFAC), headquartered in New York, is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. Through its Boards it sets international standards on Audit and Assurance, the Code of Ethics for Accountants, Education and Public Sector Accounting. The Institute of Certified Public Accountants of Kenya (ICPAK) is one of over 180 member and associate institutes in more than 135 countries and jurisdictions. These institutes represent over 3 million accountants. IFAC institute members must comply with the Statements of Membership Obligations (SMOs), which ensure the adoption of these international standards. IFAC’s work includes promoting quality assurance for accountants worldwide.
The International Public Sector Accounting Standards Board (IPSASB), which is supported by IFAC, has recently initiated updates to IPSAS 22, Disclosure of Financial Information About the General Government Sector. In early 2026, IPSASB issued Exposure Draft (ED) 94, Linkages Between IPSAS Standards and the Government Finance Statistics Manual 2014 (Amendments to IPSAS 22). The proposed changes aim to strengthen the link between IPSAS accounting standards and the Government Finance Statistics Manual 2014 (GFSM 2014), helping governments use audited accounting data to create statistical reports.
The Government Finance Statistics Manual 2014 (GFSM 2014) is a comprehensive framework published by the International Monetary Fund (IMF) designed to compile, report, and analyze fiscal data for the general government and public sectors. It provides international standards for recording revenue, expense, assets, and liabilities on an accrual basis to enhance fiscal transparency, policy evaluation, and international comparability. The purpose of GFSM 2014 is to provide accurate data for evaluating government fiscal health, monitoring debt, and conducting economic surveillance, particularly in response to the 2007–09 financial crisis. GFSM 2014 is aligned with the 2008 System of National Accounts (2008 SNA), ensuring consistency with other macroeconomic statistics. The System of National Accounts, 2008 (2008 SNA) is a statistical framework that provides a comprehensive, consistent and flexible set of macroeconomic accounts for policymaking, analysis and research purposes. It was produced and released under the auspices of the United Nations, the European Commission, the Organisation for Economic Co-operation and Development, the International Monetary Fund and the World Bank Group. It represented an update, mandated by the United Nations Statistical Commission in 2003, of the System of National Accounts, 1993, which was produced under the joint responsibility of the same five organizations. Like earlier editions, the 2008 SNA reflects the evolving needs of its users, new developments in the economic environment and advances in methodological research. The GFSM 2014 is recognized as the global standard for public sector reporting, encouraging transparency and aiding in the development of sound fiscal programs.
The proposed improvements to IPSAS 22 over the 2001 edition include updated guidance on recording public-private partnerships (PPPs), recognizing military weapon systems as capital assets rather than expenses (when one sees how easily military assets can be turned in scrap-metal in the ongoing wars around the world, one can question the advisability of this change in accounting policy) , and improved methods for recording tax credits. The new IPSAS 22 outlines a complete accounting system including a Statement of Government Operations, a Statement of Sources and Uses of Cash, and a Balance Sheet. Comments on these proposed amendments to IPSAS 22 are requested by June 22, 2026. While the final amended standard is part of the 2026 work plan, the current IPSAS 22, as included in the 2025 Handbook (which has just been published), includes previous amendments
IPSAS 22 is a unique standard. Its primary objective is to provide a bridge between two different ways of looking at government finances: General Purpose Financial Statements (GPFS), which follow accrual accounting, and Government Finance Statistics (GFS)which are used for macro-economic analysis and policy-making.
The Core Objective of IPSAS 22 is transparency. In many jurisdictions, the “General Government Sector” (GGS) is the primary focus of political and economic debate. However, a full set of consolidated financial statements often includes Government Business Enterprises (GBEs), which can cloud the view of the government’s core service-delivery activities. IPSAS 22 allows an entity to disclose GGS information within its GPFS to enhance transparency.
The General Government Sector (GGS) consists of all government units and non-profit institutions that are controlled and mainly financed by government. Key characteristics include: (i) They provide services for free or at prices that are not economically significant; (ii) They are primarily funded by taxes or other compulsory transfers; (iii) Public corporations (like a state-owned power supplier, airline or other utility) that operate on a commercial basis are generally excluded from the GGS. If an entity elects to disclose GGS information, IPSAS 22 mandates specific requirements to ensure consistency: (i) Accounting Policies: The GGS disclosures must be prepared using the same accounting policies as the consolidated financial statements, with one major exception: the treatment of GBEs; (ii) Investment in GBEs: Under IPSAS 22, the GGS’s investment in GBEs is presented as an asset and accounted for as a net investment; (iii) Reconciliation: The entity must provide a reconciliation between the GGS disclosures and the consolidated financial statements for: (a) the surplus or deficit; and (b) the assets and liabilities (the financial position).
Crucially, IPSAS 22 does not require a separate set of financial statements. It requires disclosures within the existing statements. This is usually achieved through additional columns in the primary statements or detailed notes.
Implementing IPSAS 22 is rarely a “walk in the park” for two reasons: (i) Data Alignment: Gathering data that satisfies both the accrual-based IPSAS requirements and the classification requirements of GFS (like the IMF’s GFS Manual) can be a significant administrative burden; (ii) Eliminations: Standard consolidation requires eliminating all intra-group transactions. When separating the GGS, accountants must carefully identify which transactions were with GBEs (which stay) and which were within the GGS (which are eliminated).
It is important to note that IPSAS 22 is optional. An entity is not required to provide these disclosures unless it chooses to do so to improve the relevance and understandability of its financial reports. But like many other regulations that, at one time were optional, they tend to become mandatory.
