1、SYSTEMS OF ACCOUNTING IN THE PUBLIC SECTOR,Cash/Accrual/Public Sector Accounting StandardsIan Mackintosh2 March 20041,OVERVIEW,Weaknesses in current reporting International accounting/statistical standards Harmonization and reconciliation of standards The reporting entity A suggested reporting frame
2、work The bottom line The National Standard Setter2,Weaknesses in the Current System,Resources reported-allocation of financial resources or use of economic resources?Reporting entity-what do we want the information for?Comparability- what comparability?,Movement to Accrual Accounting,Good cash syste
3、m firstEach step to be a useful stepPart of overall reform-not an end in itself,INTERNATIONAL ACCOUNTING/STATISTICAL STANDARDS (Lies, damn lies and standards/statistics),International financial reporting standards (IASB)International public sector accounting standards (PSC)Government Finance Statist
4、ics (IMF)European system of accounts 1995 (Eurostat)3,INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) (Previously IAS),IASB is a full-time adequately resourced boardAn imperative to have an improved and increased set of standards by 2005These standards used as a basis for IPSASsHarmonization of I
5、FRS and IPSASs is of prime importance4,IASB WORK PROGRAM,Projects under way or proposed include:Financial instruments Reporting performance Consolidation and special purpose entities Pension accounting Foreign exchange Small and medium sized entities Revenue recognition Lease accounting Government g
6、rants Measurement Impairment of assets Share based payments Insurance contracts5,RELEVANCE OF IASB TO PUBLIC SECTOR,Basic concepts are the same in private/public sectorsLater topic of harmonization IFRS/IPSAS/GFS/ESA95The IASB is advancing conceptual thinking at a rapid rateThe public sector needs t
7、o keep upThe PSC and IASB are working constructively together6,INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSASs),Public Sector Committee (PSC) a committee of IFACFunded by ADB, IFAC, IMF, UNDP, WBStandards program started 1996/Standards based on IASs including notion of control7,PSC OUTPUT T
8、O DATE,Study on governmental financial reporting 20 accrual accounting standards A standard on cash based accounting Guidance on transition to accrual based accounting Occasional papers on governments financial reporting (including NZ, France, UK and Argentina) Governance in the public sector8,PSC 2
9、003+ AGENDA,Public sector specific issues Accounting for social policies of government Non-exchange revenue Budget reporting Accounting for development assistance Heritage assetsBroad issues GFS/ESA95/IPSAS harmonization Alliance with IMF Conceptual frameworkOther matters Consultative group Workshop
10、s Translations (to date French, Spanish, Italian, Arabic, Russian, Bahasa, Portuguese, Mandarin, Mongolian, Japanese) Adopting new IASB standards Care and maintenance9,ACCOUNTING FOR SOCIAL POLICIES OF GOVERNMENTS,Developing an IPSAS on accounting for obligations like pensions, health care, educatio
11、nMembers from NZ, Australia, Canada, China, FEE, IMF. Pakistan, Sweden, UKITC January 200410,NON-EXCHANGE REVENUE,Developing an IPSAS to account for revenues like taxes, grants, transfersMembers from Canada, Australia, China, Czech Republic, FEE, France, New Zealand, Sweden, South Africa, UK, USAITC
12、 January 200411,BUDGET REPORTING,On the edge of accounting/economics Two stage approach1. Research report to identify: Current best practices Whether budget reporting falls under the PSCmandate Any precedent, or argument for, an accountingstandard setter to deal with this topic The matters appropria
13、tely dealt with in anyproposed standard2. A possible exposure draft Steering committee being appointed with very wide representation Preliminary report March 200412,GFS/ESA95/IPSAS HARMONIZATION,Technical working group PSC Chair, IMF, Eurostat, Australia, UK Test extent of possible harmonization Pro
14、vide a reconciliationTask Force Chaired by IMF-broad membership Overviewing changes to IPSASs, GFS and SNASNA to be revised in 200813,ACCOUNTING FOR DEVELOPMENT ASSISTANCE,Stage one dealing with the disclosure of information on development assistance under the cash basis of accountingStage two deali
15、ng with the disclosure under the accrual basis of accountingProject advisory panel establishedReport on survey March 200414,GOVERNMENT FINANCE STATISTICS (GFS),Promulgated by the IMF-latest manual issued 2001Accrual based, using same concepts as IPSASsWithin over-arching System of National Accounts,
16、 used to measure movements in a national economyConcentrates on General Government Sector but encourages consolidation of whole of governmentThere are differences with IPSASs 16,THE FOUR STATEMENTS OF GFSM 2001,Statement of government operations (like operating statement)Statement of other economic
17、flows (deals with revaluations)Balance sheetStatement of sources and uses of cash 17,DIFFERENCES GFS/IPSASs,The reporting entity (control vs. sector) Military platforms Require market value Debt provisions Gains and losses on disposal of assets Fundamental errors Foreign exchange Borrowing costs18,P
18、OSSIBLE FUTURE CHANGES TO IPSASs/GFS,It is possible that future changes may remove the differences on:Military platforms Disclosure of GGS information in IPSAS New performance statement in IPSAS Current values required Public/private sector arrangements19,EUROPEAN SYSTEM OF ACCOUNTS 1995 (ESA95),Pro
19、mulgated by Eurostat, a part of the EU It is the requirement for members of the EU Both GFS and ESA95 are consistent with 1993 System of National Accounts as regards definitions, accounting rules and classifications ESA95 differs from GFS in the presentation of its publication, and its concepts are
20、more specific and precise ESA95 is more rules based than 1993 SNA The 2002 GFS yearbook maps the ESA95 results to GFS20,STANDARDS OVER-KILL?,IPSASs,Public Sector GAAP,GFS,International Statistics,Private Sector GAAP,European Statistics,ESA 95,IFRS,HARMONIZATION AND RECONCILIATION OF STANDARDS,PSC, I
21、MF, EU would like to simplify the present situation We will work to eliminate as many differences as possible It is inevitable that some differences will remain because the purposes of the various reports are different The best hope in the short term is for a simple reconciliation statement to be ag
22、reed Hopefully, in the longer term the standard setters will be able to promulgate standards jointly22,THE REPORTING ENTITY,Statistical Reports GFS and ESA95 need to have the general government sector, the financial public corporation sector and the non-financial public corporation sector reported s
23、eparately They encourage but do not require consolidations These statistical reports are designed to assist statistical economic analysisFinancial Reports IPSASs are standards for general purpose financial reports, which report on the financial performance and position of an economic entity The econ
24、omic entity reports all assets, liabilities, revenues and expenses it controls Thus it requires full consolidation of all entities controlled Unless you have full consolidation, the true measure of financial position and performance is not shown THE TWO SETS OF REPORTS ARE REQUIRED FOR SEPARATE, QUI
25、TE LEGITIMATE, REASONS23,A SUGGESTED FRAMEWORK,Consolidated accounts under IPSASs Reconciliation to GFS or ESA95 Segmentation to the three economic sectors If an accrual budget, prepared under the same standards as the ex-post accounts If a cash budget, reconciled to the relevant cash flow statement
26、 All statements to be auditable (except as to projections) The PSC budget project should give some answers as to which part of a budget is auditable24,WHICH BOTTOM LINE?,The suggested solution potentially would give us a number of bottom lines:Consolidated operating result-GAAP Consolidated operatin
27、g result-GFS/ESA95 GGS operating result Consolidated cash flow GGS cash flowTHE BOTTOM LINE YOU CHOOSE DEPENDS ON WHAT YOU WANT TO KNOW25,WHAT DO YOU WANT TO KNOW?,If you want to know how the government is performing financially, you need the IPSAS based full consolidation If you want to know the fi
28、scal effects of the financial transactions of the general government sector on the national economy, you need the GFS/ESA95 general government operating result If you are interested in the cash flows, you probably need both the consolidated and segmented cash flows26,THE NATIONAL STANDARD SETTER SUGGESTED ROLES,Adopt relevant international standardsSet timing and method for adoptionSet standards for unique national situationsOverview introduction of new international standardsParticipate in international standard setting process27,
