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#IPSASB20

Day 2 overview

Ian Carruthers

IPSASB Chair

#IPSASB20

Day 2 overview

Day 2Morning • Welcome back activity

• Strategy and Workplan – Strands 2-5 (including networking break)

• Standards Development – Infrastructure Assets and Measurement projects

Afternoon • Strategy and Workplan Strand 1 – further discussions and prioritisation (including networking break)

• Strategy and Workplan – outreach and where to next?

• Forum close

#IPSASB20

IPSASB Strategy and Workplan Development – Strands 2- 5

Ian Carruthers

Ian MackintoshAndreas BergmannVincent Tophoff

#IPSASB20

To share ideas about content and scope of remaining four Strands (2 – 5) of the IPSASB Strategy and Workplan

• Initial input to stimulate thought then discussions in break out rooms

Session aim

#IPSASB20

2.) Maintaining IFRS convergence

3.) Improving financial reporting communication

4.) Promoting accrual-based information usage

5.) Supporting IPSASs adoption and implementation

• Reading in advance

• IASB’s work, <IR> and CRD – Ian Mackintosh

• Reading in advance

• The Swiss Experience –Andreas Bermann

• Accountability. Now. -Vincent Tophoff

IPSASB Strategy and Workplan – Strands 2 - 5

#IPSASB20

IASB’s Better Communication in Financial Reporting Theme

• The dominant theme for the IASB for the next few years given that the major projects have been finished (financial Instruments, leases, revenue recognition, insurance contracts and concepts).

• Designed to make financial information more relevant and improve the communication of it.

• Avoid boiler-plate disclosures and encourage better presentation.• There are several related projects.

3. Improving financial reporting communication

#IPSASB20

Related Projects

• Clarification on the exercise of judgement-IAS1. Completed.• Improved disclosure of liabilities from financing activities (net debt)-

IAS7. Completed.• Materiality practice statement. Finalising a practice statement• Definition of material. ED.• Principles of disclosure. ED• Standards level review. Not started• Primary financial statements. Discussing. DP or ED? New presentation

requirements for the statement of financial performance. The biggy.• Taxonomy


#IPSASB20

Integrated Reporting

• Paris accord on climate change is a big focus.• IVSC asking should they look at how climate change considerations

might effect valuations.• The International Federation of Actuaries has warned that climate

change poses a material risk and could effect the advice they are giving.

• The task force of the FSB (TFCD) is looking at disclosures for financial institutions in relation to how climate change is effecting their business.

• Other organisations such as SASB, GRI, IIRC and CDSB are continuing their work in this area.


#IPSASB20

Corporate Reporting Dialogue

• Made up of 8 organisations. IIRC, ISO, CDSB, GRI, FASB, IASB, CDP and SASB. How’s that for alphabet soup?

• Its goal is to promote greater coherence, consistency and comparability between corporate reporting frameworks, standards and related requirements.

• It strives to strengthen cooperation, coordination and alignment between key standards setters and framework developers.

• Has produced documents on the relationship between the various parties and materiality.

• Is working on transparency and accountability and alignment of frameworks.


Building Competence. Crossing Borders.

Prof. Dr. Andreas Bergmann, Institut für [email protected]

Adoption & Implementation of IPSASThe Swiss Experience: Challenges and Benefits

The Swiss Confederation

Accrual budgeting and accounting in Switzerland

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• 8.5m inhabitants (98th)• 41000 sqkm area (135th)• GDP: USD 660bn (17th)

• Founded 1291, a federalrepublic since 1848

• 26 constitutionally “sovereign” states(also called “cantons”)

• Public sector accounting isNOT included in theconstitutional remit of the federal government

History in a nutshell: Early accruals

− Implemented accrual accounting at state (“canton”) level in the 1970/80s,based on HAM77/HAM81 (“Harmonized Accounting Model”)

− HAM was applied by states and municipalities (but NOT federal government)

− HAM always included accrual budgeting

− Core component: Unified Chart of Accounts

− HAM always served as the data basis for GFS

− Financial statements have always been audited (perhaps rather at something like “review level” in smaller municipalities)

− HAM is just a recommendation, which had been enacted by each of the states individually (and with some differences)


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Budgeting Accounting AuditGovernmental

Financial Statistics

Integrated approach

History in a nutshell: Standards

− Federal Government implemented IPSAS in 2007

− Plus in parallel Cash and Accrual Budgeting

− Gradually closing gaps against IPSAS over the years

− 4 large states also implemented IPSAS in 2008-10: Geneva, Zurich, Basel-Stadt, Lucerne; representing 43% of GDP

− Also gradually closing gaps

− Berne will follow in 2017

− The other 21 states are on various forms of accruals

− “Harmonized Accounting Model 2” specifies minimum, but allows for IPSAS

− Core component the unified CoA (now including federal govt)

− HAM2 is maintained and further developed by SRS-CSPCP


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Success factors and issues

− Success factors:

− Integration of (Accrual) Budgeting, Accounting, Auditing and GFS

− Unified Chart of Accounts

− At least the key economic entities on IPSAS

− Issues:

− Little harmonization (other than CoA) for smaller entities

− Diversity permitted by HAM2, sometimes exploited by politicians


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Challenges using full IPSAS

− A few standards do not reflect jurisdictional specificities, e.g. all pension plans are “hybrid plans” (not addressed in IPSAS 25; only to a limited degree addressed in IPSAS 39)

− A few standards, after significant investigation, turned out “not applicable” (e.g. IPSAS 11, where the name “construction contracts” certainly sends most users on a wrong track; in part IPSAS 28-30 if government entities only have receivables, payables and straight loans)

− Reluctance of standard setters to address new economic issues: Negative rates seem to become permanent


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Benefits from using full IPSAS

− Immediate Benefits: “Found” assets – exceed direct project cost at federal level

− Benefits from high quality financial reports:− Liabilities Management: Strong interest of parliament(!), «debt shifting» to be

avoided− Asset Management: Better use or sale− Lower interest rates (Canton of Geneva: -0.5%/Hiler 2012)−Rating agencies “appreciate” use of IPSAS

− IPSAS protect accounting from political influence

Accountability. Now.Enhancing Public Financial Management

Vincent TophoffLead IFAC’s Accountability. Now. Initiative

Public Sector Standard Setters Forum

Winterthur, CH, July 3/4, 2017

• Founded 1977• 175+ members organizations• 130+ countries & jurisdictions• 2.84 million professional accountants

in public practice, commerce & industry, public sector, education, and not-for-profit sector

• Public interest focus

IFAC—A Global Profession

Bar for sound Public Financial Management (PFM) continues to rise▲

Raised expectations of citizens▲

Sustainable Development Goals ▲

Pressure on national budgets▲

Global Financial Crisis / Sovereign Debt Crisis

The Bar Continues to Rise

Accountability. Now.

• A global campaign for enhanced public financial reporting– Supported by a broad coalition

– Replicated at the regional and national level

• Main areas of focus1. Raising Awareness

2. Facilitating Public-Private Partnerships

3. Building Capacity Public Sector Accountancy Capacity

Accountability. Now.

• AN Newsletter – 1,500 plus subscribers• Conferences, etc.• Website – Global Knowledge Gateway, IFAC,

MOSAIC • Reports – three in 2017

– Accrual Practices and Reform Experience in OECD Countries

– The Status of Public Sector Financial Reporting and PAO Membership in Francophone Africa

– Accrual Practices & Reform Expectations in the Caribbean

• Public Sector Financial Accountability Index

1. Raising Awareness

• Governments (Ministries of Finance, Accountants General, Auditors General)

• Professional Accountancy Organizations• Regional Organizations and Acknowledged

Accountancy Groupings• Accounting firms• Donor organizations – UK DFID, World Bank• Civil society organizations – GIFT• Economic groupings – CEMAC, WAEMU

2. Facilitating Partnerships

• The power of roundtables– Build public—private partnerships– Establish the accountancy profession as trusted advisors to

government– Equip Accountants Generals, Auditor Generals and their staff to move

from adoption to implementation through knowledge sharing– Give rise to communities of interest

3. Building Public Sector Accountancy Capacity

Caribbean Apr 2016

EthiopiaMar 2016

Ghana May 2015

UAE Nov 2015

Senegal Oct 2015

Madagascar Oct 2016

• DFID-Funded IFAC PAO Capacity Building Program– Ghana: Roadmap to implement IPSAS– Nigeria: Enhanced education, training, and

professional qualification, including public sector component, for the Nigerian College of Accountancy

– Rwanda: Enhanced Certified Accounting Technician qualification to respond to government demand for 5,000 accounting technicians over five years

– Uganda: Roadmap to deliver training to finance personnel at all levels of government

– Zimbabwe: Enhanced public sector accountancy capacity to support IPSAS adoption and implementation (collaborating with AFROSAI-E)

3. Building Public Sector Accountancy Capacity

Accountability?

Accountability

Accountability. Now?

Now

Accountability. Now & In The Future

Future Ready?

• Planning & control• Stakeholder engagement• Management accounting• Budgeting• Link finance with service

delivery outcomes• Understandability• Etc.

• Solid public financial accounting and reporting

• Public Sector Financial Accountability Index

Fundamentals Right

• Undertaken jointly by IFAC and CIPFA, with the Zurich University of Applied Sciences (ZHAW) as knowledge partner

• Objective to stimulate PFM reform, especially focused on improving public financial accounting and reporting

PS Financial Accountability Index: Aims

• Index will provide an accurate and actual picture of the quality of public sector financial reporting around the globe

• In particular the extent of accrual accounting and IPSAS adoption

• In addition, the Index aims at gaining a better understanding of PFM reforms

PS Financial Accountability Index: Content

• Our Index focuses on the quality of externally reported public financial information

• The International Budget Partnership's Open Budget Survey primarily focuses on the transparency of public financial information

• A future perceived usefulness index would also include opinions on how useful the public financial information is that they receive

PS Financial Accountability Index: Scope

• Structured process:• Existing data / reports as basis

• Invitation to national standard setters to complete

• Review by IFAC/CIPFA/ZHAW team

• National standard setters to comment on discrepancies

• IFAC/CIPFA/ZHAW team to decide and publish

• Open to interim adjustments

PS Financial Accountability Index: Quality Assurance

• Main output will be a publicly available database, providing information on a country by country basis that will be regularly updated

• There will also be regular summary reports with interim updates

• The initial focus will be on central government level, expanded subsequently to cover state/provincial and local levels

PS Financial Accountability Index: Outputs

Get Involved

Are you?

#IPSASB20

Your chance to discuss…..• 3 topics out of 4• 35 minutes per topic• Networking break 1045 - 1110

IPSASB Strategy and Workplan Strands 2 - 5

#IPSASB20

IPSASB Strategy and Workplan Strands 2 – 5Break-out sessions

Table Room Facilitator Topic 1 Topic 2 Topic 3

1 SW111 Angela Ryan Communication Adoption and Implementation

IFRS Convergence

2 SW216 Leonardo Nascimento Accrual-based info usage

Communication Adoption and Implementation

3 SW311 Rod Monette IFRS Convergence

Accrual-based info usage

Communication

4 SW316 Stuart Barr Adoption and Implementation

IFRS Convergence


5 Aula Marc Wermuth Communication Adoption and Implementation

IFRS Convergence

#IPSASB20

IPSASB Strategy and Workplan Strands 2 - 5

Table Room Facilitator Topic 1 Topic 2 Topic 3

6 SW316 Stuart Barr Adoption and Implementation

IFRS Convergence


7 Aula Marc Wermuth Communication Adoption and Implementation

IFRS Convergence

8 SW216 Leonardo Nascimento Accrual-based info usage

Communication Adoption and Implementation

9 SW111 Angela Ryan Communication Adoption and Implementation

IFRS Convergence

10 SW311 Rod Monette IFRS Convergence


Communication

#IPSASB20

New IPSASB projects

• Public Sector Measurement• Infrastructure Assets

Your ideas and input please!

30 minutes per topic in break out rooms

#IPSASB20

New IPSASB Projects – Your chance to discuss…..

Table Room 1145 – 1215 1215 – 1245

1 Aula Measurement Gwenda Jensen Infrastructure Assets Mike Blake

2 SW111 Infrastructure Assets Mike Blake Measurement Gwenda Jensen

3 SW216 Measurement David Watkins Infrastructure Assets Jo Spencer

4 SW311 Infrastructure Assets John Stanford Measurement David Watkins

5 SW316 Infrastructure Assets Jo Spencer Measurement John Stanford

6 Aula Measurement Gwenda Jensen Infrastructure Assets Mike Blake

7 SW111 Infrastructure Assets Mike Blake Measurement Gwenda Jensen

8 SW311 Infrastructure Assets John Stanford Measurement David Watkins

9 SW216 Measurement David Watkins Infrastructure Assets Jo Spencer

10 SW316 Infrastructure Assets Jo Spencer Measurement John Stanford

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