Sustainability reporting standards for the public sector are very much a work in progress but are gaining global momentum.

The International Public Sector Accounting Standards Board (IPSASB) released the exposure draft of the world’s first climate-related disclosures standard for the public sector last October, and the period for comments and submissions closed at the end of February 2025.

Ian Carruthers, chair of the IPSASB, visited New Zealand in February to meet with organisations and stakeholders, and discuss the standards and their implementation – not only by the public sector in New Zealand, but also potentially by not-for-profit organisations and charities.

“I think getting the exposure draft out was an important milestone for us, because if you actually have put stakes in the ground through issuing draft guidance, then people can respond to that,” says Carruthers.

Adapting standards for the public sector

Taking a broader view of IPSASB standards, while referencing some that were developed for the private sector, there were some significant differences in the public sector that the IPSASB has addressed.

“If there is a relevant IFRS pronouncement, then we’ll have a look at that and see how it might be used,” says Carruthers. “It may be just as simple as changing the terminology, but there might be particular differences where you might need to adapt the private sector guidance or even create a new public sector standard.

Carruthers says New Zealand organisations have traditionally been strong supporters of the work of the IPSASB. In particular, Professor Ian Ball, now at Victoria University of Wellington, kicked off the IPSASB’s standards development program and contributed to the development of integrated reporting through his work with the International Integrated Reporting Council.

While in New Zealand, Carruthers met officials from Treasury and the Office of the Auditor-General, representatives from CA ANZ, as well as the Sustainability Reporting Board, which has authority from the External Reporting Board (XRB) to prepare and issue climate reporting standards.

“On the accounting side, the XRB is also about to go into a consultative period on introducing our recent revenue and transfer expenses standards in New Zealand, so we have also been able to help them and support them in those discussions,” says Carruthers.

Welcoming change

It has been a busy few years for the IPSASB, as it has refined its conceptual framework for public sector reporting and approved five new standards in 2023 that are now coming into effect.

“We’ve got some important new standards coming into effect, such as the new measurement standard articulating the concept of fair value in the public sector and introducing the new current operational value measurement basis,” says Carruthers.

“Coming down the line is the new standard on leases, which takes the approach from the private sector and adapts it for the public sector.”

The introduction of new IPSASB standards could pose initial challenges in New Zealand, where public sector organisations have been reporting using the existing IPSASB standards for about 20 years.

“The implementation timeframe in New Zealand is determined by the XRB. They’ll work through the issues in the local context, add guidance where appropriate and consult with stakeholders as they finalise the content and timetable for implementation,” says Carruthers.

“They’ll also determine if there needs to be additional guidance for not-for-profits and charities, because they can face their own particular challenges.”

Carruthers sees a “rising curve of adoption” of IPSASB standards by governments around the world as the sector sees a “stable and complete suite of standards going forwards”.

This also applies to the area of sustainability reporting, as governments’ implement programs to transition to net zero carbon emissions.

“Governments are being asked questions on how they are making the transition, and how they are managing and addressing the risks,” says Carruthers.

“People are saying ‘well, if you’re asking the private sector to report on its activities, what is government doing?”

“Governments are really being put under the spotlight, and this is the landscape we are responding to.”

And in Australia…

Across the Tasman, the Australian Accounting Standards Board has issued the Australian Sustainability Reporting Standards, including climate-related disclosures, plus there is the work the Department of Finance has been doing on the Commonwealth Climate Disclosure Requirements.

Carruthers says it is up to all jurisdictions including Australia whether to use IPSASB standards “either directly or indirectly”.

“While the IPSASB standards can inspire the way in which Australia approaches an issue, the extent of their use is very clearly a matter for Australia to decide in due course,” he says.

“In creating a separate series of sustainability reporting standards, we’ve obviously opened up an opportunity for jurisdictions like Australia that don’t use IPSAS for financial reporting, so the extent of their use [in this context] will be a matter for discussion in due course for the Australian Accounting Standards Board.”