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Latin American Regional Conference

Latin American Regional Conference. Strengthening Public Sector Accounting & Auditing Stephenie Fox Technical Director, IPSASB. IFAC. IFAC’s Mission.

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Latin American Regional Conference

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  1. Latin American Regional Conference Strengthening Public Sector Accounting & Auditing Stephenie Fox Technical Director, IPSASB

  2. IFAC IFAC’s Mission To serve the public interest,IFAC will continue to strengthen the worldwide accountancy profession and contribute to the development of strong international economies

  3. IFAC Government Reporting • Fiscal accountability of governments enhances economic growth & development worldwide • Good financial reporting critical • Need clear understandable & reliable information for those who elect, pay tax and invest

  4. IFAC Government Financial Reporting Expect high quality reporting: • Accountability – spending our money • Timely, accurate financial information – to monitor and manage performance • Transparency – engages constituents in democratic process; engenders confidence Mexico City

  5. IFAC Current practice • Widespread poor quality financial reporting • Imposes burden on economy • Disconnect between government response to private sector failures and lack of urgency devoted to improving own financial reporting and management Mexico City

  6. IFAC Challenges Changing paradigms: • Educating taxpayers – Have a right to information about use of their taxes • Educating governments – Fiduciary obligation to be accountable • Use of public funds - a higher obligation/level of accountability owed Mexico City

  7. Strengthening Public Sector Accounting and Auditing IFAC contributes to governance in multiple ways: • Public sector accounting standards • External audit • Ethic standards • Independence standards for professional accountants in government Mexico City

  8. IPSASB’s Mission To serve the public interest by developing high-quality accounting standards for use by public sector entities around the world in the preparation of general purpose financial statements Mexico City

  9. IPSASB IPSASB IPSASB • Develops International Public Sector Accounting Standards (IPSASs) - cash and accrual • Supported/adopted by the UN, World Bank, OECD, NATO and others • Facilitates convergence of national and international public sector standards Mexico City

  10. Rationale for IPSASs • Standards -essential to high quality reporting • High quality reporting -essential to governmental performance and accountability • Governmental transparency - key element of quality of governance • Quality of governance -leads to economic growth and all that goes with it Mexico City

  11. IPSASs A foundation for better financial reporting by governments Mexico City

  12. IPSASB • 3 meetings per year • Open to the public • All materials publicly available – posted on internet • Transparent due process • 15 from member bodies; 3 public members Mexico City

  13. Developing Standards • Accrual basis standards based on IFRSs • Convergence with IFRSs unless public sector specific reason for departure • Current hierarchy – where no IPSAS exists consider IASB standards or national standards • Public sector specific standards • Cash basis IPSAS Mexico City

  14. IPSASB Challenges • Broad spectrum of practice internationally • Availability of resources within jurisdictions • Previous limited resources for IPSASB has delayed full standard setting program Mexico City

  15. Conditions for IPSAS Implementation • Acceptance by Government of need for comprehensive financial reporting • Effective external audit • Independent interpretation • Trained professionals – accountants, auditors, managers • Political will to be accountable Mexico City

  16. Financial Management Reform • Main reason for adopting IPSASs: reform of public sector financial management • Improve the use and management of all public sector resources – can’t manage that which you have no information about Mexico City

  17. Benefits of Financial Management Reform • Improved information for public sector managers • Knowledge is power • Better financial reporting: • Greater transparency in public sector finances builds trust with the constituency • Easier access to international capital markets • Cheaper access to capital markets Mexico City

  18. Financial Management Reform • IPSASs fundamental • Awareness of financial position leads to managing it • Need high quality information systems Adoption of IPSASs and accrual basis of financial reporting is critical in financial management reform. Mexico City

  19. Implementing IPSASs • Start with cash basis • Strong implementation of cash basis a solid first step toward accrual accounting • Adopt cash basis and ensure that institutional framework supports this standard • Plan adequately for transition to accruals • Role of external audit Mexico City

  20. IFAC and IPSASB help by: • Assisting with development of accountancy profession • Developing public sector accounting standards • Developing auditing standards – enhance trust • Ethics & education standards • Providing standards free of charge Mexico City

  21. How are we doing? • UN System (28 bodies) • OECD, NATO (21 bodies), EC, IFAC, INTERPOL • 58 countries have agreed processes or have a project in place to adopt IPSASs or align with IPSASs Mexico City

  22. International Federation of Accountants www.ifac.org

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