Europe headed for ‘road to accruals’, says EPSAS project lead

14 Mar 19

Europe could be “pushed down the road of accruals” next year as proposals for public sector accounting standards for the EU will be brought to the European Commission, the head of the initiative has told PF International.

This is also when a new European Parliament will take term. The project aims to improve transparency and comparability of accrual-based public sector financial accounting and reporting within the EU, by introducing European Public Sector Accounting Standards – known as EPSAS.

Acting director of macroeconomic statistics at Eurostat John Verrinder, who is leading the EPSAS project, said the hope is that by 2020, countries in the bloc will see the benefit of having harmonised accrual-based reporting standards.

But he said that with a project like this, at a “high political level and potentially big cost”, the European politicians need to be in support of it.

“What I hope is that we have a Commission which is prepared to fairly view the technical proposals and the work we have done, and to have a dialogue about the costs and the benefits – and make a rational decision, which pushes us down the road of accruals,” he told PF International, at an event in Washington hosted by the International Public Sector Accounting Standards Board, this week.

“What we want is to come with a full technical proposal and have analysed the costs and benefits. We want to be prepared when the politicians start asking the questions.”

Accrual implementation can be costly and countries in Europe have been sceptical in the past – particularly Germany, which still reports on a cash basis at federal level.

Thomas Müller-Marqués Berger, partner at EY in Germany and the chair of the Public Sector Group of Accountancy Europe, also said: “Much of what will happen in 2020 depends on the outcome of the 2019 elections for European Parliament and how key positions will be filled.

“Until we have the results of the election, it will be very hard to say what we can expect because it is a very political process.”

But he highlighted that EPSAS, which was first tabled in 2011, in his opinion would become reality in the future.  

“I don’t expect EPSAS to never materialise, because too much has already been achieved and invested – and too many benefits have already materialised in terms of experiences exchanged between countries.”

Verrinder and Müller-Marqués Berger both stated that it is unknown whether the standards would be made binding or would first be on a voluntary basis. Verrinder suggested the European Union has a preference to putting things into law.

The International Accounting Sector Standards will be a reference point and “a strong basis” of the European standards.

Müller-Marqués Berger said: “What the EPSAS project intends in terms of adaptation of IPSASs to European specificities is not unique – countries all over the world are adapting IPSAS to their national settings – it’s what we call indirect implementation.”

Eurostat is leading the project, through the EPSAS Working Group.

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