The International Public Sector Accounting Standards Board (IPSASB) welcomed the recent release of the International Monetary Fund (IMF) paper, Fiscal Transparency, Accountability, and Risk, and its support for International Public Sector Accounting Standards (IPSASs), the globally accepted, high-quality, accrual-based standards issued by the independent standard-setting body.
Many governments, jurisdictions, and international institutions have already adopted IPSASs, while others are working toward their implementation.
The IPSASB advocates for better financial reporting by governments worldwide and the need for improvements in the management of public sector resources. Since 1997, the IPSASB has developed and issued a suite of accrual standards and a cash-basis standard for countries moving toward full accrual accounting. IPSASs promote greater transparency and accountability in public sector finances and allow for enhanced monitoring of government debt and liabilities.
The IMF paper highlights the seriousness and extent of the current inadequacies in governments’ fiscal reporting and accountability and underscores the immense risks associated with these shortcomings.
Fiscal Transparency, Accountability, and Risk also calls for other measures supported by the IPSASB, including:
- Updating fiscal transparency standards to address gaps in, and inconsistencies between, individual jurisdictions’ standards;
- Including all entities that have fiscal implications for governments (including central banks, public entities, and corporations outside of the general governments) in fiscal forecasting, budgeting, and financial reporting;
- Evaluating countries’ compliance with fiscal transparency standards using, for instance, auditing and assurance as a means for assessing compliance with standards;
- Strengthening incentives for improvements in fiscal transparency practices;
- Aligning the methodologies and standards for fiscal forecasting, budgeting, and financial reporting to reinforce the links between fiscal transparency and long-term sustainability; and
- Strengthening fiscal transparency and public sector financial management in all nations and, in particular, in developing and emerging nations.
IPSASB Chair Andreas Bergmann said the IPSASB agrees with the IMF that the requirements of accounting standards and the statistical framework should be harmonized, as far as the different purposes of the two frameworks permit, adding that it is critical for transparency and accountability that governments around the world have unambiguous guidance. He said the IPSASB also concurs that the efforts to monitor and enforce compliance with international standards, including IPSASs, need to be reinvigorated.
“The IMF paper underlines the need for strong and transparent financial reporting, which has the potential to improve public sector decision making and make governments more accountable to their constituents,” Bergmann said. “As we have witnessed with the sovereign debt crisis, when governments do not properly manage their finances, the consequences can include a loss of democratic control, social unrest, and the failure to meet their current and future commitments.”
About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, and the governments of Canada, New Zealand, and Switzerland.
About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
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