FOUR-QUADRANT_BALANCE_SHEET_MATRIX/docs/IPSAS_COMPLIANCE.md

IPSAS Compliance Assessment — FQBM Framework

This document assesses the Four-Quadrant Balance Sheet Matrix (FQBM) against International Public Sector Accounting Standards (IPSAS) issued by the IPSASB. The FQBM is a macroeconomic and institutional simulation framework; IPSAS applies to entity-level general purpose financial reporting by public sector entities. The assessment clarifies scope, alignment, and gaps.

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1. Scope and applicability

Aspect	FQBM	IPSAS
Primary purpose	Monetary/fiscal simulation, stress testing, open-economy dynamics	Entity financial statements (audit-ready, general purpose)
Unit of account	Sectoral balance sheets (CB, banks, sovereign), state vector X	Single public sector entity or consolidated government
Basis	Identities (A = L + E), differentials, stochastic shocks	Accrual (or cash) basis, recognition, measurement, presentation
Output	Time paths, ratios, stress tables, Monte Carlo distributions	Statement of financial position, statement of financial performance, cash flow statement, budget comparison

Conclusion: FQBM supports analysis that can feed into IPSAS-consistent reporting (e.g. central bank or government balance sheet layout, budget vs actual structure). It is not a substitute for full IPSAS-compliant financial statements. Compliance is assessed for presentation and disclosure structures that can be derived from or aligned with FQBM outputs.

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2. IPSAS standards relevant to FQBM

Standard	Relevance	FQBM alignment / gap
IPSAS 1 — Presentation of Financial Statements	Statement of financial position (balance sheet) structure, current/non-current classification, minimum line items	Partial: We provide an IPSAS 1-style layout (current/non-current) for central bank and commercial bank from state X. Minimum line items satisfied where FQBM has data (financial assets, cash/reserves, liabilities, net assets).
IPSAS 2 — Cash Flow Statements	Operating, investing, financing cash flows	Gap: FQBM does not model cash flows by activity. Cash flows can be inferred from balance sheet changes (e.g. ΔR, ΔC) but not classified by IPSAS 2 categories.
IPSAS 4 — Effects of Changes in Foreign Exchange Rates	FX translation, functional currency, presentation of FX differences	Partial: FQBM has exchange rate S and FX pass-through; no explicit translation of foreign-currency assets/liabilities or disclosure of FX gains/losses.
IPSAS 15 / 28 / 29 / 41 — Financial Instruments	Classification, measurement, disclosure of financial assets/liabilities	Partial: State variables (B, R, Loans, Deposits) map to financial instruments; no classification (amortised cost vs FVOCI etc.) or impairment model.
IPSAS 22 — Disclosure of Financial Information About the General Government Sector	Sectoral disaggregation (e.g. general government)	Partial: FQBM distinguishes CB, banks, sovereign; can support GGS-style disclosure structure if sector definitions are aligned.
IPSAS 24 — Presentation of Budget Information in Financial Statements	Budget vs actual comparison, material variances, comparable basis	Gap: No budget or appropriation model in FQBM. We provide a structure (budget, actual, variance) for users to populate from external budget data.
Conceptual Framework	Definitions of assets, liabilities, net assets, revenue, expense	Partial: A = L + E and four-quadrant identity align with “assets” and “liabilities”; no revenue/expense or surplus/deficit from operations.

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3. Current/non-current classification (IPSAS 1)

IPSAS 1 requires current and non-current classification for assets and liabilities unless a liquidity presentation is more appropriate.

Central bank (from FQBM state):

IPSAS 1-style line item	FQBM variable	Suggested classification	Notes
Financial assets (at amortised cost / FV)	B (government bonds), L_cb (loans)	Non-current (hold-to-maturity / policy portfolio) or split by maturity	L_cb is in state (FQBMState.L_cb).
Cash and cash equivalents / Reserves	R	Current
Currency in circulation	C	Liability (current)
Liabilities (reserve accounts)	R (bank reserves)	Current
Net assets / Equity	E_cb	—

Commercial bank:

IPSAS 1-style line item	FQBM variable	Suggested classification
Loans and receivables	Loans	Current / non-current by behavioural maturity if available
Cash and balances at central bank	R (if attributed to bank)	Current
Deposits from customers	Deposits	Current
Net assets / Equity	E_b	—

The module fqbm.ipsas.presentation produces statement-of-financial-position layouts with these classifications where applicable.

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4. Budget vs actual (IPSAS 24)

IPSAS 24 requires comparison of approved budget (original/final) with actual amounts on a comparable basis, with explanations of material variances.

FQBM: No budget or appropriation data. We provide:

• A template for budget vs actual: line item, original budget, final budget, actual, variance, material (e.g. >10%).
• Actual amounts can be filled from FQBM state (e.g. total assets, total liabilities, key aggregates). Budget columns must be supplied by the reporting entity.

See fqbm.ipsas.presentation.budget_vs_actual_structure().

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5. Financial instruments (IPSAS 15, 28, 29, 41)

• Presentation: Financial assets vs liabilities, and (where applicable) current vs non-current — supported by the IPSAS 1-style layout.
• Recognition and measurement: FQBM does not implement measurement bases (amortised cost, FVOCI, FVPL) or impairment (e.g. ECL). Gap for full IPSAS 41 compliance.
• Disclosure: Maturity and risk templates in maturity_risk_disclosure_structure(); extend with user-supplied data for full interest rate sensitivity and credit risk/ECL disclosure.

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6. Foreign exchange (IPSAS 4)

• FQBM has S (exchange rate) and FX pass-through (e.g. π_import = β ΔS). Useful for analysis of FX effects on inflation and balance sheets.
• Gap: No explicit translation of foreign-currency-denominated assets/liabilities, or separate disclosure of FX gains/losses in a performance statement.

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7. Consolidation and general government (IPSAS 6, 22, 35)

• FQBM A_dom + A_ext = L_dom + L_ext + E and sectoral breakdown (CB, banks, sovereign) support consolidation logic and sectoral views.
• IPSAS 22 (general government sector disclosure): FQBM can feed sectoral totals; exact GGS boundary and entity list must be defined by the reporting jurisdiction.

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8. Compliance checklist (summary)

Requirement	Status	Notes
Statement of financial position (IPSAS 1) structure	Supported	Via fqbm.ipsas.presentation.statement_of_financial_position()
Current/non-current classification	Supported	Applied in presentation layer for CB and bank
Minimum line items (IPSAS 1)	Partial	Satisfied for items present in FQBM; no PP&E, inventories, etc.
Cash flow statement (IPSAS 2)	Not supported	No activity classification of cash flows
Budget vs actual (IPSAS 24)	Structure only	Template provided; budget data external
Financial instrument measurement (IPSAS 41)	Not supported	No measurement basis or ECL
FX translation (IPSAS 4)	Partial	Exchange rate and pass-through only
Disclosure of GGS (IPSAS 22)	Partial	Sectoral structure supported
Reporting period / reporting date	Supported	FQBMState.reporting_date; statement_of_financial_position(..., reporting_date=)
Comparative period (prior/current)	Supported	statement_of_financial_position_comparative()
Notes and maturity/risk disclosure	Structure	notes_to_financial_statements_structure(), maturity_risk_disclosure_structure()
Cash flow from balance sheet changes	Supported	cash_flow_from_state_changes(); FX: fx_translate()
Additional IPSAS structures (3, 5, 9, 10, 14, 19, 20, 23, 29/41, 38, 46, 48, cash basis, RPG 2, functional/presentation currency)	Structure	Templates in fqbm.ipsas.presentation; budget vs actual from state: budget_actual_from_state()

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9. How to use the IPSAS layer in this codebase

1. Run the workbook (or differential model) to obtain state (and optional stress, MC).
2. Call fqbm.ipsas.presentation.statement_of_financial_position(state, entity="central_bank") (or "commercial_bank", "consolidated") to get an IPSAS 1-style layout.
3. Call fqbm.ipsas.presentation.budget_vs_actual_structure() to get an empty DataFrame/template for IPSAS 24; fill budget from external source, actual from state where applicable.
4. Export presentation outputs to Excel or include in reports alongside FQBM dashboards.

For full IPSAS compliance at entity level, the reporting entity must:

• Maintain recognition and measurement in line with IPSAS (e.g. IPSAS 41, 46).
• Prepare cash flow statement (IPSAS 2) and statement of financial performance.
• Populate budget information (IPSAS 24) and provide variance analysis.
• Apply IPSAS 4 for FX and other standards as applicable.

The FQBM IPSAS layer supports presentation consistency and structural alignment with IPSAS 1 and IPSAS 24, not end-to-end compliance by itself. For a consolidated list of recommendations (e.g. full CCP balance sheet, FX disclosure, white paper), see RECOMMENDATIONS.md.

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10. References

• IPSASB (2025). Handbook of International Public Sector Accounting Pronouncements. IFAC.
• IPSAS 1, Presentation of Financial Statements.
• IPSAS 2, Cash Flow Statements.
• IPSAS 4, The Effects of Changes in Foreign Exchange Rates.
• IPSAS 24, Presentation of Budget Information in Financial Statements.
• IPSAS 22, Disclosure of Financial Information About the General Government Sector.
• IPSASB Conceptual Framework, General Purpose Financial Reporting by Public Sector Entities.

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11. Complete IPSAS and Matrix gaps

For a full list of all remaining IPSAS standards (1–50, cash basis, RPGs, Conceptual Framework) with status (supported / partial / missing) and all FQBM/Matrix gaps (L_cb, open-economy split, Parts VII–IX, reporting period, etc.), see GAPS_AND_MISSING.md.