The event took place in the US capital yesterday at the International Monetary Fund and was attended by delegates from the World Bank, IMF, International Public Sector Accounting Standards Board, and International Federation of Accountants. It highlighted successes in spreading accruals and growing evidence of its effectiveness.
Speaking after the Transparency and Beyond: Harnessing the Power of Accrual in Managing Public Finances conference, IPSASB chair Ian Carruthers said the board’s standard-setting programme had been in place for 20 years.
This event was a crucial first step in deciding IPSASB’s strategic direction and projects for the next five years and how it will work with other bodies to strengthen PFM globally, he stated.
“IPSAS – high-quality global accrual-based accounting standards – enable governments to produce high-quality financial information that leads to better decision making and builds accountability and trust with citizens,” Carruthers said.
At the event, delegates took stock of the current landscape in PFM and emphasised the need to increase both the availability and use of high-quality accrual information to improve public sector transparency and decision-making.
IFAC chief executive Fayez Choudhury highlighted that government spending represents a significant portion of a country’s GDP, and many governments were incurring deficits that will have to be settled by future generations.
There was therefore a need to boost both the supply of, and demand for, better public sector financial information, he said.
“Public sector leaders must embrace accrual-based IPSAS as the basis of transparent, accountable financial reporting, which is an essential component of strong PFM. And citizens must be encouraged to demand stronger PFM and hold their government officials to account.”
Delegates from the World Bank set out both the importance of implementing the standards, and the challenges countries face in accounting and reporting.
Broader public sector reforms were needed alongside a move to accruals to ensure better decision-making, said Jim Brumby, director of bank’s governance global practice.
“There are many implementation issues that countries encounter in adopting these standards and the World Bank Group remains ready to assist this process,” he said.
“As well as the technical and systems work this requires, a particular focus should remain on the best uses of this information – how accruals can assist governments in doing a better job with the resources they mobilise and how citizens can better hold their governments to account.”
Gabriel Quiros, a deputy director of the IMF statistics department, told the event that several IMF members are pursuing a phased migration toward accrual accounting. This was encouraging, but the fund was also “cognizant of the challenges” that countries would face.
Check back with PF International later this week for further in-depth reporting and videos from the Transparency and Beyond event