loading… 100% complete. adding value through innovation first time users returning users: skip...
TRANSCRIPT
LOADING…100% COMPLETE
Adding Value Through Innovation
First time users Returning Users: Skip Intro
Welcome to Periscope Consulting Limited’s Interactive IPSAS Study Pack – A document which sets out the principles of the International Public Sector Accounting Standard.
If you are here for the first time, please click the icon below, or return to the contents page by clicking on the icon.
Adding Value Through Innovation
This document details the results of our study of the experiences of certain countries and organisations in their IPSAS implementation journey. It was developed by Periscope Consulting Limited (PCL) to educate organisations in the process of implementing IPSAS about common pitfalls along the continum.
The purpose of this document is to:
Provide an overview of practical IPSAS implementation challenges;
Show an awareness of various issues and challenges of implementation in different jurisdictions;
Facilitate appreciation of the quantum of efforts required for a successful implementation;
Apply lessons learnt from other jurisdictions
The structure and format of this document allows for flexibility in the event that certain sections require modification.
Adding Value Through Innovation
Overview of Leading PFM Reforms & Fundamentals of IPSAS - Document Structure
1. Introduction
This chapter provides a refresher on IPSAS
2. Adoption to Date
This section details the countries/organisations
which have adopted IPSAS
4. Conclusion
This section elucidates the conclusions from studies and implementation experiences
3. Case Study – Implementation Challenges
This section provides overview of common snags to
implementation as well as specific country challenges
based on studies
Section Name
Link to Home pageLink to Help Link to Exit
Link to previous and next page
Adding Value Through Innovation
Now that you have learnt about the content of our IPSAS Study Pack, please click on the “ENTER” tab below to commence your detailed journey. You can click on the Help menu at any
point of navigation within the document.
Adding Value Through Innovation
Contents
1 Introduction
2 Adoption to Date
3 Case Study – Implementation Challenges
4 Conclusion
Internal Audit FrameworkIntroduction
Prev Next
Adoption To Date
Introduction
IPSAS provisions detail the results of an interplay of policies and processes, systems and people. Thus, entities and Governments inherited the burden of harnessing the interrelationships of these critical factors of organisational existence to provide the end results required by the Standards. Accordingly, implementation of IPSAS is more than an accounting exercise. Rather, it entails the following:
Burden of IPSAS
What is Affected?
It is a Reform Exercise: From
Accounting to Financial
Reporting.
It has Great Impact on
countries and supranational organisations
Implementation will affect:
Policies, People, Systems and
Processes.
Enhance Accountability
and Transparency
Case Study
Conclusion
Internal Audit FrameworkIntroduction
Prev Next
Burden of IPSAS
What is Affected?
Policies Accounting policies, country legislations need to be changed
People Significant mindset shift
ProcessesIncreased internal controls for management of new effective accounting standards
Systems Amendment of IT system to cope with new requirements
Adoption To Date
Introduction
Case Study
Conclusion
Internal Audit FrameworkAdoption To Date
Prev Next
>80 countries have either adopted or are in the process.
The following countries have complied fully with IPSAS requirements
Fully Compliant
Countries Adopting
Organisations Adopting
Australia Canada New Zealand
UK US
Adoption To Date
Introduction
Case Study
Conclusion
Internal Audit FrameworkAdoption To Date
Prev Next
Argentina Indonesia Romania Nigeria
Armenia Israel Russia China
Brazil Latvia South Africa Mexico
Cyprus Lithuania Spain Indonesia
France Malaysia Switzerland Turkey
Ghana Morocco Tanzania India
Guatemala Pakistan Ukraine Peru
Uruguay
MINT Others
Fully Compliant
Countries Adopting
Organisations Adopting
Introduction
Case Study
Conclusion
Adoption To Date
Internal Audit FrameworkAdoption To Date
Prev Next
Organisations Adopting
Adoption To Date
Introduction
Case Study
Conclusion
Fully Compliant
Countries Adopting
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
Practical Experiences
• Change Management: resistance to change
• Lack of enough skilled personnel
• Alignment of enabling legislation / regulations
• Revision / Update of current accounting manuals
• Training / retraining of accounting personnel
• Legislative backing
• Divergent views on accountability in the public sector
• Requires more complete and accurate records of: Assets Liabilities Expenses Revenue
Syndicate Session
Adoption To Date
Introduction
Case Study
Conclusion
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
Syndicate Session
Adoption To Date
Introduction
Case Study
Conclusion Practical Experiences
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
Practical Experiences
The Eurostat’s project report on the assessment of the suitability of IPSAS for EU Member States.• Assessment was based on a
wide range of considerations with substantial stakeholder involvement
• Task force of member states’ experts
• Public consultation• Time: 2010 - 2013• Huge cost
Adoption To Date
Introduction
Case Study
Conclusion
Syndicate Session
1 of 6
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
Whole of Government Account – Final stage of IPSAS adoption.• Time frame – 6 years: gradual
adoption of accruals requirements.• Reform fatigue – a risk to be
aware of• Accrual based budgeting –
necessary to establish a framework for IPSAS accrual basis
• Change in organisational culture – mind-set change, especially at the management level
UK
Adoption To Date
Introduction
Case Study
Conclusion Practical Experiences
Syndicate Session
2 of 6
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
• Accuracy of Accounts: Many inaccurate account balances for many years: - A commission was formed to look into the issue and develop specific policies and IT platform that would support the integrity of account balances.
• Lack of adequate resources – IPSAS budget $20m includes new IT systems
• Legal framework: Enacted the ‘Organic Budget Law’ (OBL) which authorises Ministry of Finance to implement IPSAS.
• Political environment: Frequent changing of leaders
Guatemala
Adoption To Date
Introduction
Case Study
Conclusion Practical Experiences
Syndicate Session
3 of 6
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
• Identification of Assets – who owns what?
• Assets classification – PPE, Investment Property, Inventories, Agriculture and Intangible assets.
• Non-availability of historical cost of assets. Entities have been allowed to determine a ‘deemed cost’
• A 3 year period given to comply with assets recognition and measurement requirements – not met by most entities.
• Exemption of segmental reporting – classified as exemption that does not affect fair presentation and IPSAS compliance. A potential risk??
South Africa
Adoption To Date
Introduction
Case Study
Conclusion Practical Experiences
Syndicate Session
4 of 6
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
• January 2007: Approved IPSAS Programme budget of $9 million for 2008–2009
• IPSAS adoption estimated at $19.8 million. Additional funding of $10.8 million required to address:
• Organizational impact analysis• Training, communication and in-country
support• IT cost for developing reports • Additional recurring cost to cover extra
workload anticipated.
UNDP
Adoption To Date
Introduction
Case Study
Conclusion Practical Experiences
Syndicate Session
5 of 6
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
• Most systems organisations did not prepare financial statements on an annual basis.
• Changing from ‘modified cash’ accounting under UNSAS – e.g. PPE is fully expensed.
• Process took much more time than estimated
• Costs of implementation – twice the estimated budget.
• Huge spend on staff training and IT upgrade to ERP
Adoption To Date
Introduction
Case Study
Conclusion Practical Experiences
Syndicate Session
6 of 6
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
Practical Experiences
Syndicate Session
Working in groups;
1) Identify and discuss potential risks and constraints for the implementation of IPSAS Financial Statements in your jurisdiction.
2) Present and discuss your group findings
1 of 2
Adoption To Date
Introduction
Case Study
Conclusion
Internal Audit FrameworkCase Study
Prev Next
Common Challenges
Practical Experiences
Discuss the progress made so far on IPSAS implementation in Nigeria and the general readiness of the MDAs for IPSAS cash and accruals adoption
2 of 2
Adoption To Date
Introduction
Case Study
Conclusion
Syndicate Session
Internal Audit FrameworkConclusion
Prev Next
Nigeria’s experience is not unique
IPSAS is not the end goal
Promotes Accountability and Transparency
Introduction is a challenge
Greatest news:
We can learn from others
Make use of expertise available to us
Be Champions of implementation of IPSAS
Support the move to Accruals Accounting
There will always be challenges in adopting a new reporting framework
Experiences across the globe demonstrate key potential issues and challenges
Success will largely depend on our willingness and preparedness to embrace the change.
Adoption To Date
Introduction
Case Study
Conclusion
Adding Value Through Innovation
Questions & Answer