By Vivienne Russell | 6 May 2014
The G20 group of world-leading economies need to do more to promote the adoption of International Public Sector Accounting Standards, according to the International Federation of Accountants.
One year on from the meeting of G20 finance ministers and central bank governors in Moscow, which pledged to strengthen public sector balance sheets, Ifac said much still remained to be done to raise the general standard of government reporting, transparency and accountability.
At the heart of the issue is the fact that many governments – even those with bonds on the capital markets – still do not use accrual accounting. This is in stark contrast to private sector companies raising funds from investors on the capital markets, which are required to provide audited, accrual-based, financial statements.
Ifac chief executive Fayez Choudhury said: ‘Ifac is encouraged by several initiatives that are currently underway; in particular, strengthening the current governance arrangements of the International Public Sector Accounting Standards Board will further enhance the credibility of Ipsas and their influence on public sector financial reporting.
‘However, there is much more that needs to be done, and we believe that the G20 has a key role to play in ensuring that momentum is maintained and governments recognise the benefits of enhancing financial management and reporting – to ultimately improve transparency and accountability.’
It said that throughout the remainder of the year, G20 governments – particularly finance ministers and central bank governors – should continue to focus on the adoption of accrual accounting. In particular, the federation said Ipsas should be added to the Financial Stability Board’s list of standards that are designated as deserving of priority implementation.
For its part, Ifac said it would continue to promote the need for enhanced public sector reporting and financial management through its Accountability Now! initiative. As well as raising awareness, this scheme provided guidance on implementation of Ipsas and encouraged development of the necessary technical capacity.
Following last year’s Moscow meeting, the International Monetary Fund, World Bank and Organisation for Economic Co-operation and Development have progressed a review of the governance of the IPSASB.
Additionally, the European Commission, via its statistical body Eurostat, has begun work to consider who public sector financial reporting can be improved within the European Union. It has noted that Ipsas ‘represent an indisputable reference for potential development of European standards’.
