IPSAS 24 requires an entity that makes its approved budget publicly available to include in its financial statements a comparison of budget amounts and actual amounts, together with a disclosed explanation of material differences between them. The Standard applies to annual periods beginning on or after January 1, 2009.

What Does IPSAS 24 Require?

The Standard states that "this Standard requires a comparison of budget amounts and the actual amounts arising from execution of the budget to be included in the financial statements of entities that are required to, or elect to, make publicly available their approved budget(s), and for which they are, therefore, held publicly accountable."

Who Must Apply the Standard?

The Standard states that "an entity that prepares and presents financial statements under the accrual basis of accounting shall apply this Standard," and that "this Standard applies to public sector entities which are required or elect to make their approved budget(s) publicly available." The Standard therefore does not apply to an entity that has not made its budget publicly available in the first place.

How Does the Standard Define "Approved Budget" and "Appropriation"?

The Standard defines "approved budget" as "the expenditure authority derived from laws, appropriation bills, government ordinances, and other decisions related to the anticipated revenue or receipts for the budgetary period." It defines "appropriation" as "an authorization granted by a legislative body to allocate funds for purposes specified by the legislature or similar authority." These two concepts are the legal basis underlying the budget-to-actual comparison the Standard requires. The Standard defines "annual budget" as "an approved budget for one year. It does not include published forward estimates or projections for periods beyond the budget period," which sets the time horizon over which actual amounts are compared with the budget.

How Is the Budget-to-Actual Comparison Presented?

The Standard states that "subject to the requirements of paragraph 21, an entity shall present a comparison of the budget amounts for which it is held publicly accountable and actual amounts, either as a separate additional financial statement or as additional budget columns in the financial statements currently presented in accordance with IPSAS." The Standard explains the purpose of this, stating that "presentation in the financial statements of the original and final budget amounts and actual amounts on a comparable basis with the budget that is made publicly available will complete the accountability cycle by enabling users of the financial statements to identify whether resources were obtained and used in accordance with the approved budget."

Is It Enough to Present the Figures Without Explaining the Differences?

No; the Standard states that the comparison must include "(c) By way of note disclosure, an explanation of material differences between the budget for which the entity is held publicly accountable and actual amounts, unless such explanation is included in other public documents issued in conjunction with the financial statements, and a cross reference to those documents is made in the notes." Disclosing the reason for a material difference is therefore not optional; it is an integral requirement of the Standard.

When Does IPSAS 24 Become Mandatory?

The Standard states that "an entity shall apply this Standard for annual financial statements covering periods beginning on or after January 1, 2009. Earlier application is encouraged."

Legal References

For questions about your specific situation, you can ask the Public Sector Accounting Helper on Helpers, or consult a licensed chartered accountant.