Application of the International Financial Reporting Standards (IFRS) in the public sector of Russian economy

Internationalization of business and complication of the mechanisms of interaction with investors and consumers established in the 1970 in different countries spurred the creation of the system of international standards. The world practice employs two IFRS systems. One is designated for the commercial sector and the other is for the public sector. The choice of the system of international standards depends on the purpose of an economic entity in the course of its activity. The IFRS Advisory Council develops and promotes standards that are intended for use in the preparation of general-purpose external financial statements and other financial statements in all commercial organizations. International Public Sector Accounting Standards (IPSAS) are designed for use in general-purpose financial statements in all public sector organizations. The IPSAS do not contain the definition of the public sector. The only disclose this concept by listing institutional units attributed to it. The author outlines and analyzes views on the definition of "public sector". Subsequently, the following distinctive features of the public sector of economy are poposed: - predominance of non-market methods of organization and coordination; - production, distribution and consumption of public goods; - ensuring economic equilibrium between the supply and demand of social (collective) goods through appropriate social institutions using fiscal policy. Based on the economic content, the public sector is regarded as consisting of three sub-sectors: public, voluntary-public and mixed. Thus, the IFRS intended for public sector entities are oriented towards the representatives of the public sub-sector. One of the main distinguishing features the public sector entities is the nature of economic goods provided by them. Non-profit state-owned enterprises are public institutions that are intended to provide pure and mixed public goods including: - organization of public administration; - border security; - law and order enforcement services; - customs services. "A significant proportion of services in the entire amount of public institutions services is represented by socially important goods, which comprise education services, health care, culture, et cetera." Within the framework of the System of National Accounts (SNA), state-owned enterprises do not have an individual identification because the grouping by economy sectors is performed according to the types of economic behavior based on the way of acquisition of income. In addition to the public sub-sector, the public sector of economy comprises voluntary-public and mixed sub-sectors.

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