Mo­men­tum is grow­ing for bet­ter pub­lic sec­tor ac­count­ing, says PwC sur­vey

Financial Mirror (Cyprus) - - FRONT PAGE -

Gov­ern­ments around the world are in­creas­ingly tak­ing steps to im­prove their ac­count­ing and achieve greater trans­parency and bet­ter pub­lic fi­nance man­age­ment - amidst grow­ing recog­ni­tion that the ac­count­ing frame­work tra­di­tion­ally used by the pub­lic sec­tor isn’t fit for the 21st cen­tury, ac­cord­ing to a PwC sur­vey con­ducted in 120 coun­tries.

“It is im­por­tant that gov­ern­ments - which reg­u­late ac­count­ing in the pri­vate sec­tor – lead by ex­am­ple and have a high stan­dard in their ac­count­ing sys­tem. This is not the sit­u­a­tion to­day, but we see great in­ter­est in seek­ing i mprove­ment,” said Jean-Louis Rou­vet, PwC Global Pub­lic Fi­nance and Ac­count­ing leader.

Ac­crual ac­count­ing prin­ci­ples re­flect the long-term eco­nomic im­pact of po­lit­i­cal de­ci­sions in the financial state­ments. This re­sults in a com­pre­hen­sive view of a gov­ern­ment’s as­sets and li­a­bil­i­ties, and of its financial per­for­mance and cash flows. Some seven in ten gov­ern­ments in­tend to use ac­crual ac­count­ing in five years’ time, with IPSAS (In­ter­na­tional Pub­lic Sec­tor Ac­count­ing Stan­dards) be­ing of­ten taken as a ref­er­ence point, the sur­vey found.

“There is now grow­ing recog­ni­tion of the im­por­tance of ap­pro­pri­ate ac­count­ing and financial man­age­ment in the pub­lic sec­tor as a key means of achiev­ing sus­tain­able pub­lic fi­nances. Gov­ern­ments need to step up and adopt sound and trans­par­ent ac­count­ing and re­port­ing rules, as part of the demo­cratic ac­count­abil­ity process and the wider pub­lic fi­nance man­age­ment,” added Pa­trice Schumesch, PwC Global Pub­lic Fi­nance and Ac­count­ing Part­ner.

While in Europe, the Euro­pean Com­mis­sion is pro­gress­ing with its plan to adopt har­monised ac­crual ac­count­ing stan­dards for all EU mem­ber states, the re­search shows that the big­gest shift to ac­crual ac­count­ing is ex­pected in Africa and Latin Amer­ica, fol­lowed by Asia. Among the non-OECD coun­tries sur­veyed, 50% plan to tran­si­tion to ac­crual ac­count­ing in the next five years.

“Tran­si­tion­ing to ac­crual ac­count­ing is not an end in it­self, it is an en­abler. Adop­tion of high-qual­ity ac­crual ac­count­ing also lays the ba­sis for de­vel­op­ing bet­ter man­age­ment in­for­ma­tion sys­tems, which should also con­trib­ute to bet­ter de­ci­sion mak­ing and a bet­ter use of pub­lic money,” Jean-Louis Rou­vet added.

“Per­for­mance man­age­ment should help gov­ern­ments to mea­sure the achieve­ment of their ser­vice de­liv­ery ob­jec­tives and in so do­ing add value for cit­i­zens. The end goal is to de­liver a bet­ter pub­lic ser­vice and to achieve sus­tain­able pub­lic fi­nances, there­fore cre­at­ing a pos­i­tive legacy for the next gen­er­a­tion.”

The gov­ern­ments sur­veyed also in­di­cated their pri­or­i­ties for the next five years in­clude one or sev­eral of the fol­low­ing projects, de­pend­ing on their po­si­tion along the gov­ern­ment fi­nance ma­tu­rity spec­trum: ac­crual ac­count­ing (based on IPSAS or sim­i­lar stan­dards) im­ple­men­ta­tion, mod­erni­sa­tion and greater in­te­gra­tion of IT sys­tems, ca­pac­ity build­ing and im­prove­ment of man­age­ment in­for­ma­tion sys­tems.

The re­port ‘To­wards a new era in gov­ern­ment ac­count­ing and re­port­ing’ (2nd edi­tion) is avail­able to down­load at www.pwc.com/gx/en/in­dus­tries/gov­ern­men t-pub­lic-ser­vices/pub­lic-sec­tor-re­search­cen­tre/pub­li­ca­tions/sec­ond-edi­tion-glob­al­sur­vey-gov­ern­ment.html

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