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15th Annual OECD Public Sector Accruals Symposium

Paris, 26-27 March 2015

EPSAS - Update

Keith Hayes

Task Force EPSAS, Eurostat

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Background: 2012 to mid-2013

Study on the suitability of IPSAS: Retrospective

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Budgetary Frameworks

Directive "… the

Commission shall assess the suitability of the International Public Sector Accounting Standards for the Member States"

Public consultation

on IPSAS

Task Force IPSAS

E&Y study on public sector accounting

and auditing practices

Report on suitability of

IPSAS IPSAS cannot easily

be implemented in EU Member States as it stands currently

IPSAS would be a suitable starting point for the future development of a set of European Public Sector Accounting Standards

EPSAS Conference

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Impact Assessment

Legislative

proposal

Outputs from:

TF EPSAS Governance

Taking forward EPSAS: mid-2013 - onwards

TF EPSAS Standards

Public consultation on

EPSAS governance

PwC study on behalf of

Eurostat

Commission

Communication

3/18

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TF EPSAS Meetings

- 2 Oct 2013

- 13 Feb 2014

- 27 Mar 2014

- 20/21 Nov 2014

- 17/18 Mar 2015

TF EPSAS Governance TF EPSAS Standards

- 12 Feb 2014

- 13 Jun 2014

WG EPSAS

- 12 June 2015 (p)

4/18

CIRCABC: https://circabc.europa.eu/w/browse/8b9f731d-4826-4708-9069-5f65a9edc9bf

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EPSAS Governance: proposed structure

5/18

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Public consultation on EPSAS governance 2014

• 203 responses, 70% from German local authorities

Results:

Principles: substance is basically covered, up to potential

rewordings

Governance Advisory Board (GAB): idea not widely supported

Technical Advisory Group (TAG): widely supported

Interpretation function: overall support

6/18

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PwC study on behalf of Eurostat

"Collection of information related to the potential impact, including costs, of

implementing accrual accounting in the public sector and technical analysis

of the suitability of individual IPSAS standards"

http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_stati

stics/documents/EPSAS-study-final-PwC-report.pdf

− Task 1: Assess the costs and benefits of implementing EPSAS

− Task 2: Critical analysis of IPSAS as a basis for developing EPSAS

(assess state of play of government accounting in the EU + suitability of

IPSAS considering Member States concerns)

− Task 3: Summary and proposals for implementation 7/18

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Technical analysis of IPSAS confirms:

• The general technical suitability of existing IPSAS

• Classification of IPSASs in 3 categories for the future effective

and efficient work on EPSAS

1. No standard exist yet (social benefits, expenses from non-

exchange transactions, first time adoption)

2. Standards may need some amendments (9 out of 32)

3. Standards with no or minor amendments (22 out of 32)

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PwC Study on behalf of Eurostat (2014)

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PwC Study on behalf of Eurostat (2014)

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Extrapolated costs at EU level spread over the reform period

• Scenario 1 – Adaptation of all existing IT systems

between 1.2 billion and 2.1 billion EUR

• Scenario 2 – New IT systems for all entities with low IT maturity

between 1.8 billion and 6.9 billion EUR

IPSAS report (2013): costs of 0.02-0.1% of GDP

PwC Study (2014): costs of 0.01-0.05% of GDP

NB: To interpret with due care, taking into account the inherent limitations of such extrapolations.

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PwC Study on behalf of Eurostat (2014)

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Benefits reported by the MS:

More transparency, better and more sustainable political decision

making, more efficient public administration, more accountability, higher

competitiveness.

Benefits - sustainable and for the mid-long term, but difficult to quantify

Net - benefits outweigh the costs.

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Impact Assessment

• Objectives

• Problem statement

• Likely Economic, Social and Environmental impacts

• Costs and benefits

• Comparison of policy options

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Nature of the problem and consequences

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The development, endorsement and implementation of EPSAS will

have to be:

• Implemented over a medium-term perspective

• Gradual, stepwise process – taking into account the existing

accounting maturity, in particular from those entities booking only

on a cash basis

• Initial focus on public sector accounting specific issues

• Should not represent a step back for the most advanced

accounting and reporting systems

• Take into account materiality

Towards EPSAS implementation

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Staged approach to EPSAS

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The EPSAS framework

The EPSAS framework should comprise:

• Principles underlying governance

• Governance mechanism

• Due process

• Standard-setting capacity

• IPSAS as first reference base

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Next steps - I

• Release Communication

• Accompanied by an Impact Assessment

• Parallel publication of the summary report of the public consultation

on governance including individual responses

• EPSAS Working Group – June 2015

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Next steps - II

EPSAS is a major initiative

Pending the Commission Communication, the technical work continues:

• Public communication and exchange with stakeholders

• Progress with the preparation of a legislative proposal

• Supportive measures for preparations in the Member States.

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European Commission (Eurostat) Task Force EPSAS:

http://ec.europa.eu/eurostat/web/government-finance-

statistics/government-accounting