CIPFA International Chair Dr Ian Ball has today said that one of the largest and most opaque risks to the global economy are the accounting practices of Governments themselves.
Speaking at the World Congress of Accountants in Rome, Ian Ball argued that the lessons of the financial and sovereign debt crisis have not been learnt and in fact the application of accountancy best practice to Government balance sheets has actually been resisted by some of the larger economies attending the G20 this week.
In a speech to the World Congress of Accountants, and as world leaders head to the G20 meetings in Australia, Ian Ball called upon Governments around the world to act now to adopt accrual accounting and international accounting standards or face the potential economic consequences.
Speaking to the congress Dr Ian Ball said:
"With public sector spending making up around one third of the global economy it is unacceptable that many Governments can't demonstrate what they spend and what assets they have to a basic level expected of any business.
"Though governments are fond of boasting about their levels of economic growth, the truth is that it is all built upon sand unless they can properly account for how they run their public finances.
"The lessons of the past few years of economic and financial turmoil are that unless Governments have a grip on the basics of their public sector balance sheets they cannot deliver for the citizens that elect them and who they are supposed to serve."
At the World Congress of Accountants Ian Ball called upon all Governments to move towards accrual accounting and the adoption of International Public Sector Accounting Standards as a way of underpinning and supporting economic growth and stability in their countries.
This call came after Dr Ian Ball was awarded the IFAC Gold Service Award recognising his outstanding individual contributions to the global accountancy profession.
Dr Ian Ball is the Chair of CIPFA International and the former Chief Executive of IFAC, the International Federation of Accountants.