Immediately include mineral leases in IPSASB-13 Leases
This petition made change with 149 supporters!
In most sovereign nations, sub-soil minerals are owned by the state. The minerals are a part of the “commons” – assets owned ultimately by the citizens. The problem we face is that the IMF, UN & IPSASB (International Public Sectior Acccounting Standards Board) standards for government accounting, statistics and disclosure treat receipts from minerals as “windfall revenues” rather than “capital receipts on account of the sale of a non-renewable natural resource asset.” Specifically, IPSAS-13 - Leases, is currently being reviewed. This standard currently excludes mineral leases. Our campaign is to include mineral leases within IPSAS-13, and if necessary, converge with IFRS 6, Exploration for and Evaluation of Mineral Resources
This is a major accounting anomaly, similar to the funding of pension liabilities on a pay-as-you-go basis, but with even bigger and more dangerous implications. The World Development Indicators show that the total energy and mineral depletion that occurred between 1970 and 2013 amounts to $27 trillion. Much of the receipts from this has been already spent or consumed, aided in part by government accounting for mineral receipts as revenues instead of their actual status – sale of an asset.
In this note prepared by Goa Foundation, they explain how a) there are two competing metaphors for mineral receipts in those contexts where governments own the minerals – “windfall revenue” and “sale of common trust assets”; b) the origins of these metaphors; c) how “windfall revenue” drives many resource curse and broader global issues; d) how the use of the “common trust asset” metaphor would alleviate a whole range of resource curse issues while enabling the clinching of SDGs, and even perhaps create a path towards solving the environmental crisis. The note discusses the incredible scale of real world negative outcomes, compares government with private sector accounting, the relationship with natural capital accounting, and concludes with a set of recommendations.
In the light of the issues raised in the note, we feel it is necessary to petition the IPSASB to urgently move to adopt a common trust asset approach towards the accounting, statistical and disclosure standards for minerals. In particular, it is our moral duty to take the opportunity provided by the current review of IPSAS-13 - Leases.
It is clear – given the $27 trillion of public funds involved – that the Resource Curse is possibly the single largest issue facing resource-rich states and nations. This is more than an accounting issue. Properly speaking, it is an ethical and moral issue. It is deeply linked to whether we can as human beings change our current mindset for a better way of handling these assets. It is also directly connected to the persistent extreme poverty and growing inequality the world has experienced in the past half century.
We therefore earnestly request the IPSASB to reconsider and review your standards and guidance for mineral receipts to help resource-rich countries and their people to break/dispel the curse, which has its origins, at least in part, in faulty government accounting. The problem is huge – billions of people suffer from the resource curse – and the suggested change is tiny in comparison. Lives are at stake.
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