IPSASB: 2 Pronouncements on Mineral Resources – IPSAS 50 and IPSAS 12 Amendments

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IPSASB: 2 Pronouncements on Mineral Resources – IPSAS 50 and IPSAS 12 Amendments

• 10 January 2025
• Financial Reporting
• South African Accounting Academy

Summary:

The International Public Sector Accounting Standards Board (IPSASB®) has issued International Public Sector Accounting Standard (IPSAS®) 50, Exploration for and Evaluation of Mineral Resources, and Stripping Costs in the Production Phase of a Surface Mine (Amendments to IPSAS 12).

Article:

Minerals can account for a significant proportion of the economic resources in many jurisdictions, and the activities to explore for and extract these minerals require significant investment by mining entities. Up to now, public sector mining entities, reporting under IPSAS Standards, had lacked guidance to produce sufficient information on their investments to pursue the economic benefits of these mineral resources.

The new IPSAS 50 and the Amendments to IPSAS 12 will help public sector entities to provide useful financial information and improved accountability in the important area of mineral resources.

IPSAS 50 provides guidance on accounting for the costs incurred in the exploration and evaluation of mineral resources, based on the selection of an accounting policy specifying which expenditure should be recognized as exploration and evaluation assets. IPSAS 50 is aligned with the private sector requirements in IFRS 6, Exploration for and Evaluation of Mineral Resources, with limited changes for the public sector context.

Stripping Costs in the Production Phase of a Surface Mine (Amendments to IPSAS 12) adds an authoritative appendix to IPSAS 12, Inventories. The guidance clarifies when to capitalize costs incurred to remove waste material in surface mining operations as inventory or a non-current asset or both. The pronouncement is aligned with the guidance in IFRIC 20, Stripping costs in the Production Phase of a Surface Mine, with limited changes for the public sector context.  Appendix A in IPSAS 12, Inventories, provides interpretive guidance on accounting for waste removal costs that are incurred in surface mining activities during the production phase of the mine.

The effective date for both IPSAS 50, Exploration for and Evaluation of Mineral Resources, and Stripping Costs in the Production Phase of a Surface Mine (Amendments to IPSAS 12) is 1 January 2027, with earlier application permitted.

Access the 4-page summary At-a-Glance document, and the webcast using the links on https://www.ipsasb.org/news-events/2024-11/ipsasb-issues-two-pronouncements-mineral-resources

Click here to download the Pronouncements:

• IPSAS 50 https://ifacweb.blob.core.windows.net/publicfiles/2024-11/IPSAS-50-Exploration-Evaluation-Mineral-Resources.pdf
• Amendments to IPSAS 12 https://ifacweb.blob.core.windows.net/publicfiles/2024-11/Stripping-Costs-Amendments-IPSAS-12.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• As an auditor and independent reviewer, you need to evaluate your public sector clients’ compliance with International Public Sector Accounting Standards (IPSAS), and thus you need knowledge of newly revised standards that are approved as well as when they become effective.
• Auditors, Independent Reviewers and Accountants should be aware of the latest versions of handbooks containing standards issued by regulators and standard-setting boards, such as the IPSASB Handbook.
• It is important to stay informed on publications issued by the regulators and standard-setters, e.g. IFAC & IPSASB.

Relevance to Your Clients:

• Public Sector entities must prepare their financial information in accordance with IPSAS.
• It is important to stay informed on publications issued by the regulators and standard-setters, e.g. IFAC & IPSASB.

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