International Public Sector Accounting Standards: Difference between revisions
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Revision as of 10:16, 28 November 2009
International Public Sector Accounting Standards (IPSAS) are accounting standards for use by public sector entities around the world in the preparation of financial statements.
The International Public Sector Accounting Standard (IPSAS) Financial Reporting under the Cash Basis of Accounting is currently being reviewed. As part of the review process, the IPSASB is asking those who have been involved in the adoption of the Cash Basis IPSAS in developing economies-or who have been exposed to the standard-to complete a questionnaire on their experiences, or anticipated experiences, with respect to implementation issues. The questionnaire, along with an invitation letter that more fully explains the review process, can be downloaded from the IPSASB website at [1]. These materials are available in English, Spanish, and French. Responses are invited by July 15, 2009 from interested parties.
Objective
IPSAS aims to improve the quality of general purpose financial reporting by public sector entities, leading to better informed assessments of the resource allocation decisions made by governments, thereby increasing transparency and accountability.
Scope
IPSAS are accounting standards for application by national governments, regional (e.g., state, provincial, territorial) governments, local (e.g., city, town) governments and related governmental entities (e.g., agencies, boards and commissions). IPSAS standards are widely used by intergovernmental organizations. IPSAS do not apply to government business enterprises.
Due process
IPSAS are issued by IPSASB (International Public Sector Accounting Standards Board). The IPSASB adopts a due process for the development of IPSAS that provides the opportunity for comment by interested parties including auditors, preparers (including finance ministries), standard setters, and individuals. IPSASB meetings to discuss the development and to approve the issuance of IPSAS or other papers are open to the public. Agenda papers, including the minutes of the meetings of the IPSASB, are published on the IPSASB’s website: www.ipsasb.org. Observers on the IPSASB meetings include ADB, EU, IASB, IMF, INTOSAI, OECD, World Bank, UN and UNDP.
Convergence of IPSAS with IFRS
IPSAS are based on the International Financial Reporting Standards [2] (IFRS), formerly known as IAS. IFRS are issued by the International Accounting Standards Board (IASB). IPSASB adapts IFRS to a public sector context when appropriate. In undertaking that process, the IPSASB attempts, wherever possible, to maintain the accounting treatment and original text of the IFRS unless there is a significant public sector issue which warrants a departure.
Language of IPSAS
The approved text of IPSAS standards is that published by the IPSASB in the English language. The IPSASB Handbook has been translated from English into a number of languages, including French [3], Spanish [4], German, Russian and Chinese. The Arab Society of Certified Accountants (ASCA) of Jordan issued an Arabic [5] version of the IPSASB Handbook. In addition, Brazil is working on translation of IPSAS into Portuguese. See [6] for more information.
Features of IPSAS
There are 26 standards on the accrual basis of accounting and one standard on the cash basis of accounting. Further standards are being prepared. When the accrual basis of accounting underlies the preparation of the financial statements, the financial statements will include the statement of financial position, the statement of financial performance, the cash flow statement and the statement of changes in net assets/equity. When the cash basis of accounting underlies the preparation of the financial statements, the primary financial statement is the statement of cash receipts and payments.
Funding
Multilateral development banks (World Bank, ADB) provide a substantial amount of funding for the work of IPSASB. Other sources of revenue for the development of IPSASs include funding from international, national and regional government entities. In addition, IFAC (International Federation of Accountants) and the CICA (Canadian Institute of Chartered Accountants) support the IPSASB activity.
The impact of the credit crisis on public sector accounting
The credit crisis has raised several public sector accounting issues. Governments have extended credit to banks, guaranteed the liabilities of banks, purchased impaired debt instruments and in some instances have assumed control of banks. The unique nature of the credit crisis and the unprecedented response by governments around the world has reinforced the importance of high-quality standards for financial reporting by governments. The credit crisis has increased the need for accountability in the public sector and for transparency in its financial dealings.
IPSAS Adoption by intergovernmental organizations
The following intergovernmental organizations have adopted IPSAS or are in the process of adopting IPSAS:
CoE (Council of Europe)
Issues IPSAS compliant financial statements since 2007.
EC (European Communities)
Issues IPSAS-similar financial statements since 2005.
ESA (European Space Agency)
Aims to be IPSAS compliant by January 1, 2010.
EUMETSAT (European Organisation for the Exploitation of Meteorologial Satellites)
Aims to be IPSAS compliant with the production of the annual accounts 2012, in March 2013.
NATO (North Atlantic Treaty Organization)
Issues IPSAS financial statements since 2006.
OECD (Organisation for Economic Co-Operation and Development)
Issues IPSAS-compliant financial statements since 2000, the first body in the world to do so.
United Nations System
UN (United Nations), Programmes and Funds (such as UNDP, UNICEF and UNHCR), Specialized Agencies (such as FAO, ICAO, ILO, UNIDO, UNESCO and WHO) and Related Organizations (such as IAEA, OPCW and WTO, the World Trade Organization), WMO (World Meteorological Organization) aim to be IPSAS compliant by January 1, 2010. WFP achieved this goal by January 1, 2008.
WFP (World Food Programme)
WFP (World Food Programme) is the first United Nations agency to implement IPSAS. In its 2008 financial statements, WFP adopted all standards issued by the IPSAS Board including several standards prior to their effective date. The financial statements of WFP are available from: http://fb.unsystemceb.org/reference/05/fold31069/WFP/
IPSAS Adoption by Country
Afghanistan
Process in place to adopt IPSAS, first cash basis then accruals. Legislation passed.
Albania
Government plans to adopt accruals IPSAS with Italian government, United Nations Development Program, and World Bank support.
Algeria
World Bank project for accounting and other reform includes IPSAS.
Argentina
Process in place to develop public sector accounting standards that are harmonized with accruals IPSAS.
Armenia
In the process of adopting the cash basis IPSAS, will then move to adopt accruals basis IPSAS.
Australia
Adopted full accrual accounting standards, consistent with IPSAS. The Australian Accounting Standards Board (AASB) has issued 'Australian equivalents to IFRS' (A-IFRS). The AASB has made certain amendments to the IASB pronouncements in making A-IFRS, however these generally have the effect of eliminating an option under IFRS, introducing additional disclosures or implementing requirements for public sector entities, rather than departing from IFRS for Australian entities. Because of these amendments, the final standards as they apply to public sector entities, are very similar to IPSAS.
Austria
Process in place to adopt accruals IPSAS.
Azerbaijan
Process in place to adopt accruals IPSAS.
Bangladesh
The government of Bangladesh has expressed both commitment and willingness to adopt the cash basis IPSAS and has taken an initiative to prepare the financial statements in accordance with the cash basis IPSAS. The first set of IPSAS based statements for the core ministries (excluding specialized organizations) and the specialized organizations are planned to be produced by the fiscal year 2007-2008 and 2009-2010 respectively. The government considers the adoption of the cash basis IPSAS a point of departure towards implementing the accrual basis of accounting in the long run.
Barbados
Process in place to adopt accruals IPSAS.
Bhutan
The department of public accounts (DPA) has notified that it will develop Royal Government of Bhutan Accounting Standards by referring to the cash basis IPSAS. The government of Bhutan has expressed a commitment to adopting the cash basis IPSAS and studying the feasibility of gradually moving to accrual basis of accounting.
Brazil
The Federal Government of Brazil has announced plans to fully implement IPSAS by 2012.
Cambodia
Process in place to adopt accruals IPSAS.
Canada
Applies accounting standards that are broadly consistent with IPSAS
Cayman Islands
Government has adopted accruals IPSAS.
China
Project in place to adopt IPSAS. There is no formally announced decision.
Cyprus
Has adopted the cash basis IPSAS.
Colombia
The government of Colombia has made a commitment to IPSAS and is working on the convergence of its national accounting standards with international standards.
Costa Rica
Government of Costa Rica mandated the use of IPSAS on October 11, 2007, by publishing Decree No. 34029-H. The process of adopting and implementing IPSAS has been undertaken by the preparation of the Official Accounting Framework for the financial and non-financial sectors of the public sector in Costa Rica.
Croatia
Process in place to adopt accruals IPSAS.
Cyprus
Process in place to adopt cash basis IPSAS.
East and Southern Africa
The East and Southern African Association of Accountants General member states’ aims include adoption of IPSAS. The association’s member states are Botswana, Kenya, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Rwanda, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe. Funding support is provided by the Swedish International Development Cooperation Agency.
East Timor
Has adopted the cash basis IPSAS.
El Salvador
World Bank project has IPSAS adoption as one objective.
Estonia
Process in place to adopt accruals IPSAS.
Fiji
Process in place to adopt cash basis IPSAS.
France
Government has moved to accrual basis in 2006. Accounting standards are based on IPSAS and French accounting regulation for the public sector. Government financial statements were issued for the first time in 2006. The financial statements for 2007 are available on the website of the Ministry of Budget. www.performance-publique.gouv.fr. They are audited by the Cour des Comptes (Public National Audit Office).
Gambia
In the process of adopting the cash basis IPSAS, will then move to adopt accruals IPSAS.
Germany
The City of Hamburg takes IPSAS as well as IFRS and the German Handelsgesetzbuch (HGB) into consideration in preparing its accrual accounting financial statements.
Ghana
Has adopted the cash basis IPSAS, is transitioning to the accruals IPSAS.
Guatemala
Process in place to adopt accruals IPSAS.
Honduras
Process in place to adopt accruals IPSAS.
Hungary
European Union twinning project for accounting and other reform includes IPSAS.
India
The Government Accounting Standards Advisory Board is in favor of limited adoption of cash basis IPSAS for cash transactions and corresponding accrual IPSASs for those transactions recorded on other than the cash basis. A road map has been prepared for transition from the cash to accrual accounting system and an operational framework for its implementation. The possible transition towards accrual accounting has been planned incremental and in phases spanning from 10–12 years. The central government and the majority of Indian state governments have accepted the idea of accrual accounting. The Committee on Accounting Standards for Local Bodies is reviewing IPSAS with a view to their adoption.
Indonesia
IPSAS-compliant government accounting standards expected by 2009.
Israel
Adoption of accruals IPSAS by all public sector entities in process.
Italy
Process in place to adopt accruals IPSAS.
Jamaica
Commitment to adopt accruals IPSAS and change is in process.
Japan
A government in Japan adopted full accrual accounting, which is in line with IPSAS. Tokyo municipal government has started the preparation of accrual based financial statements applying IPSAS similar accounting policies. The financial statements of Tokyo are available from: http://www.kaikeikanri.metro.tokyo.jp/kessan(english).htm.
Kazakhstan
The Government of Kazakhstan has announced that from January 1, 2013, the Republic of Kazakhstan will prepare and present public sector financial statements that comply in all material respects, with accrual basis International Public Sector Accounting Standards. Current financial reporting practice in the public sector is based on various decrees issued by the government, and the current proposal is to migrate directly to the IPSASs from the current basis. The migration process has been initiated by the Ministry of Finance with input from the National Bank.
Kuwait
The Ministry of Finance of the State of Kuwait has a project in place to implement accrual accounting IPSAS.
Lao PDR
World Bank is working with the government to adopt IPSAS.
Latvia
EU twinning project for accounting and other reform includes IPSAS.
Lithuania
EU twinning project for accounting and other reform includes IPSAS.
Lebanon
Project in progress to introduce IPSAS.
Macedonia
In the process of adopting the cash basis IPSAS, will then move to adopt accruals basis IPSAS.
Malaysia
The Malaysian Federal Government has adopted the cash basis IPSAS. Its financial statements for the year ended December 31, 2005 were prepared in accordance with the cash basis IPSAS, were audited by the Supreme Audit Institution of Malaysia and received an unqualified audit opinion.
Maldives
The Audit Act of the country allows the cash basis IPSAS to be followed albeit this is not specified in the public finance law. Process in place to adopt IPSAS. The Ministry of Finance and Treasury has been planning to introduce the IPSAS formats for statements, explanatory notes, and disclosures in 2009 as part of a public sector accounting project.
Mauritania
Decision made to adopt IPSAS, implementation initiated.
Mongolia
Paragraph 26.3 of the Management and Financing Law for Budget Entities specifies that state entities prepare financial statements on the accrual basis of accounting. The Ministry of Finance, Mongolia and the Mongolian Institute of Certified Public Accountants provide public sector entities with the current IPSASB handbook of pronouncements for this purpose.
Morocco
Institution building includes IPSAS.
Nepal
There is general consensus among policy makers, accounting professionals, and international organizations on the need for Nepal to adopt the cash basis IPSAS. Nepal has been developing Nepal public sector accounting standards by referring to the cash basis IPSAS in a close collaboration between the professional accountants and government officials. Attempts are being made to change the accounting regulations in order to incorporate the mandatory use of IPSAS.
Netherlands
Government has experimented adoption of accruals IPSAS, with amendments where deemed necessary. The minister of Finance submitted an evaluation to parliament in October 2008. The minister of Finance concluded in the evaluation implementation of accrual accounting for federal departments is not more useful than the present system of cash-commitments for departments and accrual accounting for agencies, quangos and other 'business-like' organisations. Minister of Finance concluded that improvements can be made. Most improvements can be made in the non-financial information. The Minister decided to continue improving the current system of accounting and also improving the non-financial information in the budget and the annual report. Parliament accepted this conclusion in february 2009.
New Zealand
Adopted full accrual accounting, consistent with IPSAS. New Zealand applies NZ-IFRS to the public sector, with 'public benefit entity (PBE)' amendments to ensure that public sector entities appropriately report items such as revenue from non-exchange transactions and assets held to generate services rather than cashflow. Because of these amendments, the final standards as they apply to public sector entities, are very similar to IPSAS.
Nicaragua
Adopted cash basis IPSAS.
Nigeria
In the process of adopting the cash basis IPSAS, will then move to adopt accruals basis IPSAS.
Norway
Central government is piloting the change to full accruals. Norway applies accruals IPSAS where there is no applicable Norwegian private sector accounting standard.
Pakistan
The government has been planning to meet all the requirements of the cash basis IPSAS. The compliance with the cash IPSAS is seen as a transition path towards presenting the full accrual information. World Bank project supports this change.
Palestinian Authority
The 2008 financial statements are the first financial statements similar to the cash-basis IPSAS to be issued by the Palestinian Authority.
Peru
In the process of adopting IPSAS. IPSAS 1 to 17 were implemented on January 1, 2004 and IPSAS Standards 18 to 21 were implemented on March 14, 2006.
Philippines
Has adopted accruals IPSAS.
Romania
Central government has adopted the accruals basis of accounting, including some of the IPSASs, notably IPSAS 1 Presentation of Financial Statements, IPSAS 2 Cash Flow Statements, IPSAS 12 Inventories, IPSAS 17 Property, Plant and Equipment and IPSAS 19 Provisions, Contingent Liabilities and Contingent Assets. Plans include improvement of accrual accounting, convergence with other IPSASs and consolidated financial statements for the whole-of-government (2008-2009).
Russia
Has adopted the accruals IPSAS and has made significant progress towards implementation.
Rwanda
Adopted cash basis IPSAS.
Saudi Arabia
The Ministry of Finance of the Kingdom of Saudi Arabia and the Saudi Audit Bureau commissioned a study starting 2008 to evaluate the Saudi government’s current financial reporting and to analyze the improvements IPSAS might bring.
Serbia
Process in place to adopt accruals IPSAS.
Singapore
Adopted full accrual accounting standards, consistent with IPSAS.
Slovak Republic
Has adopted accruals IPSAS.
South Africa
Adoption in process of accruals IPSAS with South African amendments.
Spain
The Spanish Ministry of Economy and Finance is implementing accruals IPSAS for public sector financial reporting. The Ministry plans to have implemented accruals IPSAS by 2011 at the latest. Spanish translation of IPSAS Handbook is available.
Sri Lanka
The state annual accounts are prepared in accordance with the cash basis IPSAS since 2002. The incorporation of the additional accrual disclosures in the financial statements has been seen as a first step towards the accrual-basis of accounting. The government has expressed its commitment towards adopting the accrual-basis IPSASs for accounting and budgeting. The Government of Sri Lanka has requested that the Institute of Chartered Accountants of Sri Lanka [1] prepare suitable accrual basis accounting standards for use by public sector entities. The ICASL's Public Sector Accounting Standards Committee has begun the process of developing Sri Lankan versions of the IPSASs, as at July 2009, five standards had been completed and forwarded to the Government.
Switzerland
Federal government is adopting IPSAS, effective from 2007. The government of the State/Canton of Geneva is similarly adopting IPSAS from 2008 and the State/Canton of Zurich from 2009.
Tanzania
The Accountant General led the adoption of the Cash Basis IPSAS for the central government in 2008, with a plan for migrating to accrual basis IPSASs in 2010. Local government moved to accrual basis IPSASs for the fiscal year ended June 30, 2009.
Uganda
Government has adopted IPSAS.
Ukraine
Presidential decree requires government to adopt accrual accounting, and accounting standards for application appear to be IPSAS.
United Kingdom
UK public sector applies accounting guidance that is broadly consistent with IPSAS. The accounts of the central government departments and entities in the central government and health sectors will be produced using International Financial Reporting Standards as adopted by the EU from 2009/10 onwards. IPSAS form the second level of standards in the hierarchy used in developing the IFRS-based accounting guidance, and are relied on where they cover issues not covered by IFRS or IAS, or where they provide additional guidance on interpretations or adaptations for the public sector context. Local government bodies in the UK will adopt this framework from 2010/11 onwards.
United States of America
Applies accounting standards that are broadly consistent with IPSAS.
Uruguay
The government has mandated IPSAS for the national accounting entity. This is established in clause 21 of Decree 81, dated December 17, 2002, that gives responsibility to the National Audit Office of the Republic, to record and publish the financial statements. Decree 327/997 gives responsibility to the General Accounting Office of the Nation to draw up the General Framework for Public Accounting, including the master plan of accounts, and all related standards and to draft the financial statements for the Nation’s Treasury and Public Accounts. The General Accounting Office of the Nation has not yet complied with the decree, but it is making a great effort to implement the mandate and to install a reliable accounting system. It is also preparing the government staff to become proficient in the knowledge and practical use of IPSAS.
Uzbekistan
Adopted cash basis IPSAS.
Vanuatu
Process in place to adopt accruals IPSAS.
Vietnam
Process in place to adopt IPSAS with World Bank support. Translation of IPSAS in process.
Yemen
Process in place to adopt cash basis IPSAS.
Zambia
Government has implemented the cash basis IPSAS.