New proposals for revenue and transfer expenses

  • Not-for-profit
  • Public Sector

Tier 1 and Tier 2

The International Public Sector Accounting Standards Board (IPSASB) has published three related exposure drafts (EDs) dealing with revenue and transfer expenses.

  • ED 70 Revenue with Performance Obligations
  • ED 71 Revenue without Performance Obligations
  • ED 72 Transfer Expenses

The proposals in the EDs are relevant for Tier 1 and Tier 2 public benefit entities (PBEs)—both not-for-profit and public sector entities.

Accounting for revenue has been a hot topic since PBE Standards were introduced, particularly the requirements for non-exchange revenue. The IPSASB has issued proposals for two new revenue standards which would replace three existing revenue standards.

The IPSASB is also proposing a new standard on accounting for transfer expenses such as grants made to other parties. At present there is no IPSAS, and no PBE Standard, explicitly dealing with transfer expenses. In the absence of clear guidance on transfer expenses there have been debates about accounting for multi-year funding arrangements.

Once the IPSASB completes these projects the NZASB would look to develop new PBE Standards. We therefore encourage all Tier 1and Tier 2 PBEs to consider the proposals and provide feedback.

More detailed information about these EDs

ED 70 Revenue with Performance Obligations

ED 70 contains proposals for a new revenue standard that would supersede IPSAS 9 Revenue from Exchange Transactions and IPSAS 11 Construction Contracts.

ED 70 is based on IFRS 15 Revenue from Contracts with Customers, including the five-step revenue recognition approach in IFRS 15. The IPSASB has modified some of the requirements in IFRS 15. In particular, the IPSASB is proposing to extend the revenue recognition approach in IFRS 15 to transactions with performance obligations where the ultimate beneficiary is a third party. As a result, some transactions that currently fall within the scope of IPSAS 23 would fall within the scope of ED 70.

ED 70 defines a performance obligation as a promise in a binding arrangement with a purchaser to transfer to the purchaser or third-party beneficiary either:

  1. A good or service (or a bundle of goods or services) that is distinct; or
  2. A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the purchaser or third-party beneficiary.

Revenue from transactions with performance obligations is recognised as the entity satisfies the performance obligations – this may be at a point in time or over time.

ED 71 Revenue without Performance Obligations

ED 71 is described as an update of IPSAS 23 Revenue from Non-Exchange Transactions (Taxes and Transfers). The proposed new standard would supersede IPSAS 23.

The proposals in ED 71 aim to address some of the issues encountered in applying IPSAS 23, including the difficulty of making the distinctions between exchange and non-exchange transactions, and between conditions and restrictions (with this distinction dependent on whether there is a return obligation), and the lack of guidance on multi-year funding arrangements.

Current revenue standards are based on an exchange/non-exchange distinction. In contrast, ED 70 and ED 71 are based on a performance obligation/no performance obligation distinction.

ED 71 contains proposals for accounting for revenue from:

  • transfers with present obligations. Even if a transaction does not give rise to performance obligations (as defined in ED 70), ED 71 allows for the possibility that obligations to perform a specified activity or spend money in a certain way could give rise to present obligations. An entity would recognise revenue as it satisfies the present obligations in the binding arrangement;
  • transfers without present obligations. An entity would recognise revenue when it obtains control of the resources; and
  • taxes. The proposals carry forward many of the current requirements in IPSAS 23.

ED 71 also contains guidance on revenue from capital transfers (commonly referred to as capital grants). The proposed accounting depends on whether the transaction creates present obligations.

ED 72 Transfer Expenses

ED 72 sets out proposals for a new standard on transfer expenses such as grants made to other parties.

The proposed requirements for transfer expenses depend on whether the transaction gives rise to performance obligations or not.  

If a transfer expense transaction gives rise to performance obligations and meets certain criteria, the transfer provider recognises an expense when (or as) the transfer recipient satisfies the performance obligations. This approach, referred to as the public sector performance obligation approach, is used when there is a performance obligation arising from a binding arrangement, and the transfer provider monitors the transfer recipient’s satisfaction of the performance obligation.

If these conditions are not met the transfer provider recognises an expense when it:

  1. has a present obligation to transfer resources; or
  2. transfers the resources

– whichever comes first.

We encourage you to read the EDs and comment on the proposals.

Consultation Documents


Exposure Draft

At a Glance

IPSASB webinar

ED 70

Revenue with Performance Obligations

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ED 70


ED 71

Revenue without Performance Obligations

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ED 71


ED 72

Transfer Expenses

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ED 72

IPSASB: Overview of ED 70, ED 71 and ED 72




Commenting on the proposals

Please send your comments to the NZASB by 23 September 2020, using the secure upload form below, or directly to the IPSASB (with a copy to the NZASB) by 1 November 2020. Please indicate which ED(s) your comments refer to.

You can make comments directly to the IPSASB website at and  using the “Submit a Comment” link. First-time users must register with IFAC to submit electronically.

Upload your submission here

Please use this secure online form.

It has been designed to make your upload safe, quick and easy. 

You can:

  • Upload an MS Word document (and a PDF file, if you wish); or
  • Write your comments below in the space provided.

You can upload up to TWO documents. 

Please note:

  • We would appreciate receiving a copy of your comments in electronic form (preferably Microsoft Word format).  This helps us to more efficiently collate and analyse comments. Please also specify the exposure draft number and title in your electronic file. 

  • Tell us on whose behalf you are making the comments (for example on behalf of a group or an entity).

  • We intend publishing all comments on the XRB website, unless they may be defamatory. If you have any objection to this, we will not publish them. However, they will remain subject to the Official Information Act 1982 and, therefore, may be released in part or in full. The Privacy Act 1993 also applies.

  • If you have an objection to the release of any information contained in your comments, we would appreciate you identifying the parts of your comments to be withheld, and the grounds under the Official Information Act 1982 for doing so (for example, that it would be likely to unfairly prejudice the commercial position of the person providing the information).