IFAC Reiterates its Call for Global Adoption of IPSAS by Governments
The latest Policy Position Paper from the International Federation of Accountants (IFAC) renews its call for governments to apply accrual accounting principles in light of ongoing sovereign debt issues, and in particular, to adopt International Public Sector Accounting Standards (IPSASs).
IFAC Policy Position Paper 4, Public Sector Financial Management Transparency and Accountability: The Use of International Public Sector Accounting Standards, sets out IFAC’s view that governments around the world must provide clear and comprehensive information regarding the financial consequences of economic, political, and social decisions, in order to protect the public as well as investors in government bonds.
The paper notes the following:
The type of information required can only be provided through a high-quality, robust, and effective accrual-based financial reporting system, which allows for government assets and liabilities (including debt) to be appropriately recorded, reported, and disclosed — and hence effectively monitored. The most globally accepted high-quality accrual-based financial reporting system is IPSASs. IPSASs provide for the full disclosure of all assets, liabilities, and contingent liabilities, which is vital for assessing the true economic implications of public sector financial management. The disclosure of all liabilities, including long-term obligations (e.g., pension obligations), also may encourage government leaders to make decisions that are driven by matters other than short-term political incentives.
IPSAS are issued by the International Public Sector Accounting Standards Board (IPSASB), which is an independent board of IFAC. A number of global organisations have adopted IPSAS, and a number of countries are considering adoption at the current time.