ICGFM Promotes Knowledge Transfer Among Public Financial Management Experts

Working globally with governments, organizations, and individuals, the International Consortium on Governmental Financial Management is dedicated to improving financial management by providing opportunities for professional development and information exchange.

Monday, December 6, 2010

IPSAS Lessons Learned

Jesse Hughes, Professor Emeritus, Old Dominion University provided lessons learned on the adoption of IPSAS standards. He commented that people speak many languages around the world, but accounting is the language of management. He emphasized that we can't speak of improved public financial management without improving accounting system. "It is the glue that pulls everything together to see what the whole of government is doing."

Dr. Hughes sees IPSAS as one the strategies to improve public financial management. He also recommended that cash management should be separate from budgetary controls, that the Treasury Single Account (TSA) be used and Integrated Financial Management Information Systems (IFMIS) adopted by governments.

Dr. Hughes emphasized the need for improved education in public financial management. He described the benefits of accrual accounting in government. These benefits include:

  • Better accountability and better decisions

  • More meaningful understanding of costs for goods and services

  • Basis for performance management
Dr. Hughes stated that if we get nothing else about accrual accounting, it ensures that you don't pass along your debt to children and grandchildren.

12 steps for transition to IPSAS was described by Dr. Hughes:

  1. Develop organizational transition plan and coordinate with auditors

  2. Train staff

  3. Assess the information system changes required

  4. Prepare Policy and Procedures Manual for approved IPSAS policies

  5. Pilot test IPSAS policies and procedures in the new/upgraded information system

  6. Prepare IPSAS-compliant opening and closing Statements of Financial Position.

  7. Prepare proforma Statement of Financial Performance.

  8. Prepare proforma Statement of Net Assets/Equity.

  9. Prepare proforma Statement of Cash Flows

  10. Prepare proforma Statement of Comparison of Budget to Actual Amounts

  11. Prepare proforma IPSAS-complaint statements for controlled entities

  12. Prepare proforma Consolidated Statements

Dr. Hughes suggests that IPSAS may tackle public private partnerships, fiscal sustainability and social security reporting standards. He showed the difference in size between the cash and accrual version of IPSAS.

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