Senior financial management officials from OECD-member countries met in Paris recently to assess how their governments were progressing in accrual accounting adoption and share their accomplishments, challenges and approaches used to overcome them.
One of the sessions ‘The Future of Government Fiscal Reporting’ highlighted that users, particularly parliaments, have raised concerns about the usefulness and understandability of government fiscal reports and looked at how some countries (including the UK) are addressing this challenge. The rationale for embarking on the UK’s Simplifying and Streamlining Statutory Annual Reports and Accounts project was presented by Vikki Lewis, Senior Finance Advisor of HM Treasury. Participants also learnt of the UK’s approach, the results of the implementation review and next steps. Included in the next steps for UK government is to simplify and streamline whole of government accounts.
The International Public Sector Accounting Standards Board (IPSASB), through several presentations, provided a progress report on the board’s on-going work on promulgating standards and guidance. Ian Carruthers, Board Chair, presented the IPSASB’s overall strategy and work programme for 2016–2018. It consists of seven projects including social benefits, revenue and non-revenue expenditure, heritage, public sector measurement, infrastructure assets, cash basis accounting, leases, and financial instruments.
The 2019-2023 IPSASB Strategy and Work Plan will commence with a stakeholder outreach in 2017 followed by public consultation in 2018. Their newly formed Public Interest Committee, which serves as the oversight body, will provide advice to the formulation of the strategy and work plan. The complexity of the PFM landscape and defining what IPSASB’s role should be in relation to adoption and implementation of the accounting standards are just some of the issues that the Board will take into consideration in its strategy and work plan development.
Alexandre Makaronidis, Head of Unit, Quality Management and Government Accounting, Eurostat, informed participants introduce European Public Sector Accounting Standards (EPSAS) project.
He shared that, within the short to medium term, a voluntary and progressive approach was being taken to increase fiscal transparency among member states. From a medium to long term perspective, the aim of the project is to ensure comparability of financial reporting amongst member states.
The first phase of the project is focused on promoting accruals accounting in member states as one of the pillars for increasing fiscal transparency. There is expectation that all member states will transition to accrual accounting by 2020. In parallel, the project will be developing the EPSAS framework (ie EPSAS governance, accounting principles and standards). The second phase of the project will seek to address comparability within and between the member states with a timeline EPSAS adoption by 2025.
In 2016 Eurostat commissioned ten issues papers on key public sector accounting topics including:
Other sessions of the symposium highlighted some key lessons learned from early adopters of accrual accounting. Among the significant observations from countries such as New Zealand is how accrual accounting adoption has transformed the finance and accounting functions "from compliance controls and year-end financial reporting’ to one which provides data to its stakeholders to inform countries" fiscal policies and position.