Brian QuinnDirectorWorld Bank Group

The Global Case for Transparency

Road Map

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• Where were we?

• Lessons from Latin America

• What’s the global message?

• Strategic decisions for IPSAS adoption

• Where are we now – again?

• World Bank perspective

• Some final thoughts

Where were we?

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• Sovereign debt

• 2008 financial crisis…old news?

• Understanding of governments’ fiscal position

• Global inconsistency in reporting

• Lack of transparency & accountability

• Lack of monitoring and enforcement

• The burning platform…really?

• Oh well… so what?!

Lessons from Latin America (1)

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• In and outs; IPSAS as reference

• Initial focus on government reforms needed toensure macro-fiscal stabilization

- Reduce inflation

- Control budget deficit

- Attract foreign direct investment

• Once this was achieved, shift towards managementof public resources and delivery of services –demand for accurate historic financial data

Lessons from Latin America (2)

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• Higher growth rates since 2003 has contributed to:

– Lower poverty rates

– Expanding middle class

– Greater demands for improvements in the quality ofpublic services

– Increased calls for transparency and accountability

• Virtually all countries in the region pursuing somekind of public sector accounting reforms, with theWB fulfilling a role of regional integrator/facilitator

What’s the global message? (1)

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• Budget is the single most important policydocument of governments

• Budget; financial statistics; accounting & financialreporting

• Yet accounting and financial reporting are thefoundations of proper budgeting and fiscalprojections

• From….lack of harmonization in preparinggovernment information

• To….convergence attempts at international andregional level

What’s the global message? (2)

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• There are incentives and strong pressure to adoptaccrual accounting standards

• Countries are motivated by the benefits of adoptingIPSAS, but aware of the obstacles to successfulimplementation

• Further integration of fiscal statistics, budgetinginformation, and financial accounting is important

• Accrual accounting standards minimizes tendencies towork in silos to reduce time and costs

What’s the global message? (3)

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• Similarities in the challenges faced

• Universal need to better understand, document andoptimize

• Solutions require engagements at both country andglobal levels:

Country level – harmonize laws, regulations, policies,and procedures to enable implementation acrossdifferent levels of government

Regional – to facilitate knowledge sharing anddissemination, and deepen collaborations to identifycommon, cost effective solutions

• And the winner is…

Strategic decisions for IPSAS adoption

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1. Gradual implementation by sectors

2. Adopt all IPSAS simultaneously

3. Indirect adoption if IPSAS through the issue of a newnational standard

4. Co-design of the new standard with public sector entities

5. Collaboration from universities and audit firms

6. Dissemination and training programs led by CGR,universities and audit firms

7. Modify existing information systems

8. Partnership with MoF

9. Use of transitional period for first time adoption

Where Are We Now – Again?

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• The Greek problem – back in the news

• $369 billion declared debt

• 175% of its $210 billion GDP

• What does it take?

World Bank perspective

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• Better quality loan portfolio

• Promote best practice

• Loan proceeds used for the purpose intended

• The fight against fraud & corruption

• Maintaining the relevance of financial reporting in a datarevolutionary world

• Cash accounting is a start, but not good enough

• Political will & leadership

• If only there was conditionality

• Transparency in the form of accrual based financialreporting

• Stronger financial markets

Some final thoughts

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• IPSAS Conceptual Framework

• Implementation challenges

• World Congress of Accountants, Rome, 2014

• Governance of IPSASB – formation of the PIC

Thank you