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‘Strong hope’ Ipsas will be basis of EU-wide accounting standards

By Nick Mann | 8 March 2013

The chair of the body responsible for developing the International Public Sector Accounting Standards has said he remains hopeful they will have a major part to play in the creation of any harmonised European Union-wide public accounting rules.

IPSAS Board International Public Sector Accounting Standards
Andreas Bergmann, chair of the International Public Sector Accounting Standards Board

In a long-awaited report published this week, the European Commission said that, while Ipsas should serve as an ‘indisputable reference’ for any set of EU-wide standards moving forward, it was ‘clear’ that they could not be easily implemented in their current form.

Speaking to PF International, Ipsas Board chair Andreas Bergmann acknowledged the commission’s concern that Ipsas do not currently cover how social benefits are accounted for, but stressed that the Ipsas Board was currently considering a project in this area. ‘We hope they appreciate we’re probably going to do work on the social benefits,’ he said.

And he said the commission’s conclusion that taxes were not covered by Ipsas was ‘not correct’, highlighting Ipsas 23, which covers revenue from non-exchange transactions including taxes and transfers.

Bergmann highlighted concerns over the development of any European Public Sector Accounting Standards based on Ipsas. ‘We’re a bit concerned about the possibility of our standards being watered down in this process, that’s the concern of every standard setter,’ he said.

But there was a ‘strong hope’ that the EU would move towards a system with no substantive departures from Ipsas.

‘My hope would be that they are proposing to take many Ipsas as they are when they define how Epsas are going to be developed and implemented and we’re going to work collaboratively with them,’ he explained.

In its report, the commission said more work needed to be done before deciding whether to actually move forward with developing and implementing Epsas.

Bergmann stressed the scale of the task this would involve. ‘You have such a diverse environment from the top scorers in terms of accounting like the UK at national level down to Greek local government which basically has no accounting, and to bring that together is an enormous job,’ he said.

The European Parliament’s original proposal to implement full Ipsas across Europe in just three years was ‘certainly not feasible’, he added, noting that it ‘would have been bound to fail and could have damaged Ipsas’s reputation’.

The commission report comes just weeks after finance ministers and central bank governors from the Group of Twenty leading nations highlighted the importance of transparent and comparable public sector financial reporting in their latest communiqué.

Fayez Choudhury, chief executive of the International Federation of Accountants, said the documents showed the need to do more to reform public sector reporting.

‘While there has been some progress on reforming public sector financial management and adopting accrual accounting and Ipsas, we need to quicken the pace of change,’ he said.

‘IFAC’s efforts are strengthened when global organisations like the G20, European Commission, International Monetary Fund, and World Bank show leadership in this area.’

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