Building Competence. Crossing Borders. PEMPAL Workshop Istanbul; Feburary 25, 2008 The Value Added...

Building Competence. Crossing Borders.

PEMPAL WorkshopIstanbul; Feburary 25, 2008

The Value Added of IPSAS

Prof Andreas [email protected]

Robin [email protected]

PEMPAL; The Value Added of IPSAS 2

The Value Added of IPSAS

Content

Overview on IPSAS

Implementation of IPSAS

REPF-Toolkit and Report

Conclusion: Sequencing of Reforms

Appendix: List of Accrual IPSAS


Overview on IPSAS

Mission

Establish and promote adherence to high quality professional standards

Further the international convergence of such standards

With the intention of the public organizations of the whole world

In the optics of the financial statements of general use

Speak out on public interest issues where the profession’s voice is most relevant


Overview on IPSAS (2)

Rationale of Accounting Reforms

Accounting = Basis of decisions

Development decisions in particular

- Infrastructure

- Networks

- Public services

Judgment by decision makers requires identical standards

Credibility increase

Education facilitated



Value added of Cash based IPSAS

1 Standard Cash Basis

Advantages:

Full coverage of all cash transactions

Consolidation

Disadvantages:

Too basic for countries which are on modified accrual

Scope of consolidation is controversial



Value added of Accrual based IPSAS

26 Standards Accrual Basis

Advantages:

Economic situation and flows

Resource allocation

Similar to GFS

Risks

Disadvantage:

Leap for many countries



Cash based IPSAS

Accrual based IPSAS

Country B

Step 1 Step 2 Step 3

Country A


Questionnaire (Russian)Анкета

Пожалуйста заполните форму

Ст

рана A

IPS

AS

по

кассовом

у

мет

оду

Ст

рана B

IPS

AS

по

мет

оду

начисления

Ваша страна:

Кассовы

й м

ето

д.

Ста

нд

арты

отс

утс

твую

т /

но

им

ею

тся

национал

ьны

е

правил

а-и

нстр

укц

ии

IPS

AS

по к

ассовом

у

мето

ду в

процессе

внед

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AS

по к

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мето

ду в

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IPS

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по п

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в п

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внед

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IPS

AS

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(прод

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ста

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IPS

AS

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IPSAS - International Public Sector Accounting Standards / Международные стандарты бухгалтерского учета в государственном секторе

2-й этап 3-й этап

Фамилия

Имя

Страна

Адрес E-mail

1-й этап

PEMPAL Treasury CoP Workshop

Должность / Звание



Structure of IPSAS

Recognition

Measurement

Disclosure



Organization of the IPSAS-Board

18 members

President M. Mike Hathorne (Scottish/GB)

3 meetings of 4 days per year, English language

At least one phase of consultation („Exposure Draft“)

Qualified majorities required (2/3, 3/4)


Two ways to implement IPSAS

Direct or indirect implementationIPSAS

Legislation referring to IPSAS

National accounting standards

Legislation referring to national accounting

standards

Accounting Manual

Implementation


REPF Report on the Enhancement of Public Sector Financial Reporting - Toolkit

Diagnostic Tool 1 – Assessment of the Public Sector Accounting Environment

Diagnostic Tool 2 – Assessment of the Accounting Standards as Designed

Diagnostic Tool 3 – Assessment of Actual Accounting Practices

Diagnostic Tool 4 – Assessment of potential in-country value added of adopting the various concepts underlying and specific standards that comprise IPSAS to the extent that they are not already incorporated into the national standards


REPF Report on the Enhancement of Public Sector Financial Reporting - Toolkit

How to use the tools

Four different, qualitative questionnaires

To be used in interviews conducted by the prepares of the report

Necessary: knowledge of public sector accounting and reporting

Advantage: knowledge of IPSAS

Recommendation: use of local consultant

Interviews with responsible persons


REPF - Diagnostic Tool 1

Content Diagnostic Tool 1

I Statutory Framework

II Academic Education, Professional Education, Training

III Setting Accounting Standards

IV Budget System

V Government Financial Statistics (GFS)

VI Monitoring and Enforcement

VII Quality and Availability of Financial Reporting

VIII Information Technology

IX Country Data




Comparison of the existing National Standards to the IPSAS

IPSAS as a benchmark




No purpose-built questionnaire

Instead, diagnostic tool 2 may be used, if IPSAS like situation is to be assessed

• Tool based on local standards needs to be devised otherwise

Assessment should include organizations other than the one responsible for public sector financial accounting and reporting

Analysis of financial reports even if they are audited!




I Relevant Gaps in Accounting between IPSAS‘ and NPSAS – Value added due to Accounting Effects

II Value Added due to Reputation Effects

III Value Added due to Training Effects


REPF Report – Content

Content

I Introduction

II Institutional Framework

III Accounting Standards as Designed

IV Accounting Standards as Practiced

V In-country value added

VI Recommendations

A Appendix



Countries are at different stages of development

There is NO uniform pattern of development

Accrual IPSAS widely accepted as „Gold Standard“, but too challenging in the short run

thus

Sequencing of reforms in Public Sector Accounting



Sequencing of reforms in Public Sector Accounting

REPF to analyse gaps and decide on milestones/steps

• Not just about accounting, enablers (education, IT etc.) also need to be addressed

There is more than one step towards Accrual Basis IPSAS

• Either from Cash Basis IPSAS, but not necessarily;

• Or from Modified Accrual.

Tentatively sequencing order

• Enablers

• Groups of Standards on similar issues


AppendixOverview on IPSAS - Current Standards

Accrual Accounting Standards (2007)

IPSAS 1 – Presentation of Financial Statements

IPSAS 2 – Cash Flow Statements

IPSAS 3 – Accounting Policies, Changes in Accounting Estimates and Errors

IPSAS 4 – The Effects of Changes in Foreign Exchange Rates

IPSAS 5 – Borrowing Costs

IPSAS 6 – Consolidated and Separate Financial Statements


AppendixOverview on IPSAS - Current Standards (2)

IPSAS 7 – Investments in Associates

IPSAS 8 – Interests in Joint Ventures

IPSAS 9 – Revenue from Exchange Transactions

IPSAS 10 – Financial Reporting in Hyperinflationary Economies

IPSAS 11 – Construction Contracts

IPSAS 12 – Inventories

IPSAS 13 – Leases

IPSAS 14 – Events After the Reporting Date

IPSAS 15 – Financial Instruments: Disclosure and Presentation


AppendixOverview on IPSAS - Current Standards (3)

IPSAS 16 – Investment Property

IPSAS 17 – Property, Plant and Equipment

IPSAS 18 – Segment Reporting

IPSAS 19 – Provisions, Contingent Liabilities and Contingent Assets

IPSAS 20 – Related Party Disclosures

IPSAS 21 – Impairment of Non-Cash Generating Assets

IPSAS 22 – Disclosure of Information About the General Government Sector

IPSAS 23 – Revenue from Non-Exchange Transactions(Taxes and Transfers)

IPSAS 24 – Presentation of Budget Information in Financial Statements

IPSAS 25 - Employee Benefits

IPSAS 26 - Impairment of Cash-generating assets

Building Competence. Crossing Borders. PEMPAL Workshop Istanbul; Feburary 25, 2008 The Value Added...

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