Public Sector Accounting Standards Board Research Articles

Vymezení konsolidačního celku v rámci veřejného sektoru České republiky a na Slovensku

Příspěvek se zabývá vymezením konsolidačního celku státu v podmínkách České republiky a na Slovensku. Dne 30. ledna 2015 vydala Rada pro mezinárodní standardy pro veřejný sektor nový standard IPSAS 35 - Konsolidovaná účetní závěrka. Tento standard představuje velmi sofistikovanou konstrukci účetních axiomů, která v dané oblasti veřejný sektor výrazně přibližuje sektoru soukromému. Cílem tohoto příspěvku je identifikace a následné porovnání metodických prvků při vymezení konsolidačního celku státu obsažených v české a slovenské národní legislativní úpravě v kontextu se standardem IPSAS 35.

The New Public Financial Management (NPFM) and accrual accounting in Sri Lanka

Abstract Purpose The purpose of this paper is to analyse the reasons why Sri Lanka adopted International Public Sector Accounting Standards (IPSAS) recently. Many less developed countries (LDCs) have introduced IPSAS during the recent past. However, little research has been conducted to study the New Public Financial Management and accrual accounting and their impact on LDCs. Methodology/approach Using a qualitative approach, the methods of this paper consist of interviews, a documentary review and participatory observation in the Ministry of Finance and Planning (MOFP) and Auditor General’s Department of Sri Lanka, and present a critical interpretation supported by the perspective of globalisation. Findings The findings of the research indicate that the public sector reforms and the transition from cash accounting to accrual accounting in the public sector have been strongly affected by the global pressures imposed by international agencies such as International Public Sector Accounting Standards Board (IPSASB) and the World Bank (WB). Empirical evidence shows the dysfunctional impact of globalisation in the public sector accounting standards as there are major structural issues yet to resolve. There are increasing doubts over whether the change to accrual accounting is worth the costs and the additional risks involved. Research limitations The results of the interviews are based on the knowledge and past experiences of interviewees. What is generalisable is an understanding of the processes and mechanisms that relate to the way the public sector accounting functions. Originality/value This paper adds new literature on public sector accounting in LDCs, which recognises the nexus and interests of international agencies and practice of public sector accounting.

Pension Management between Financial Market Development and Intergenerational Solidarity: A Socio-Economic Analysis and a Comprehensive Model

In recent decades, management modes for pension obligations has been coevolving with political and financial economic strategies aimed to prompt and promote active financial markets and institutional investors, as well as transnational harmonisation and convergence of accounting standards between private and public sectors. In this context, our article provides a theoretical analysis of these management modes for pension obligations, drawing upon a comprehensive review of existing practice and regulation. The latter are still inconsistent with the actuarial representation that has been fostered by international institutions, including the World Bank, the European Commission and the International Public Sector Accounting Standards (IPSAS) Board. According to our frame of analysis, a variety of viable modes of pension management exists and may be acknowledged. Our article elaborates a model of pension management in view to clarify and improve on pension protection, that is, the assurance of continued provision of pension payments at their agreed levels under viable alternative modes of pension management. Drawing upon this model, we further develop policy recommendations for accounting and prudential regulations concerned with pension obligations.

Advancing performance measurement

Purpose – The purpose of this paper is to analyse the implementation of performance measurement tools by medium-to-large size Italian Local Governments (ILGs) with the aim of establishing their position in comparison with the content of the International Public Sector Accounting Standards Board’s (IPSASB’s) Consultation Paper (CP) on Reporting Service Performance Information and the points of views of other countries. Design/methodology/approach – A survey of all ILGs with more than 50,000 inhabitants has been carried out with the objective of evaluating which kind of performance management tools are implemented; moreover, these results are compared with the content of the IPSASB’s CP to evaluate the role of this guide as well as the main differences between the IPSASB’s approach and the current situation in Italy. Findings – Data collected highlight that several performance measurement tools required by law are generally prepared in ILGs even if a limited use of them for decision-making or accountability purposes occurs. Moreover, in accordance with the opinions of the countries that submitted letters of comment to IPSASB’s CP, Italian results reveal that information on the scope of the service performance information, on the entity’s objectives and their achievement, including a narrative discussion of this achievement, are perceived as relevant. Originality/value – The research investigates the future development of the CP by analyzing the points of view of the countries that submitted letters of comments to IPSASB. It also examines whether the current Italian situation is in line with the IPSASB’s position.

IPSASB’s Conceptual Framework: Coherence with Accounting Systems in European Public Administrations

Accounting and reporting systems in public administrations of European countries have deeply changed in the last 20 years due to the new public management wave and the trend toward international harmonization. This research aims to examine the possibility of implementing International Public Sector Accounting Standards Board’s (IPSASB’s) Conceptual Framework (CF), by observing accounting and reporting systems in the different governmental levels of countries selected and taking into account the embedded traditional characteristics of European countries. Results highlight how many structural differences still occur within and among countries, showing that much work is still necessary to obtain harmonization as implied in the IPSASB’s CF.

Harmonisation efforts in the field of accounting of public sector

Increasing requirements for financial reporting of public sector led to a need to create a system that would provide relevant and reliable information for management of accounting entities of public sector and also to increase the quality of accounting and financial statements of public institutions. The International Public Sector Accounting Standards Board (IPSASB) is therefore creating high-quality financial reporting standards for public sector (IPSAS). Paper points out the ongoing reform of accounting in the field of public finances in the Czech Republic, where there are substantial changes in accounting rules and it also introduces new accounting methods. Regarding the fact that accounting of public sector is nowadays accounting system perhaps with the greatest potential of development, paper highlights the differences in financial reporting in accordance with Czech legislation and IPSAS system. It tries to catch the essential differences that arise from the financial legislation, the accounting basis and also from the content of financial statements. The paper also indicates the difference between Czech Accounting Standards for selected accounting entities that maintain accounts in accordance with Decree No. 410/2009 Coll. and International Public Sector Accounting Standards (IPSAS). There is also recommended approach to the creation of national standards with regard to international harmonization.

Central Government Accounting and Financial Reporting: a Comparison between France, Italy and the European Union

In recent years, many countries have undertaken governmental accounting and financial reporting reforms, at central level as well as at local level, in order to meet transparency, accountability and comparison needs. In the meantime, the International Public Sector Accounting Standards Board issued the first set of accounting standards specifically dedicated to the public sector; but the adoption of these standards is not compulsory, so not all countries referred to them in reforming their government financial reporting. Given that a standardised governmental accounting and financial reporting model does not exist, the paper aims to focus the attention on the European continent: firstly, analyzing central government accounting and financial reporting systems of two European countries (France and Italy), paying particular attention on the reforms recently carried out, in order to compare these two systems, emphasizing similarities and differences; secondly, assessing if French and Italian central accounting models are in line with the EU system, as they are both EU member states.

International public sector accounting standards board aims to enhance international accountability through reporting service performance information

General purpose financial reports (GPFRs) of public sector entities are developed primarily to respond to the information needs of service recipients, resource providers, and their representatives, who do not possess the authority to require a public sector entity to disclose the information they need for accountability and decision-making purposes. GPFRs can report information about the past, present and future that is useful to users – including financial and non-financial, quantitative and qualitative information about: The IPSASB is currently exploring how service performance information can assist users in assessing how efficiently and effectively public sector entities are using resources to provide services and achieve their objectives.

THE SUBSTANCE OF ACCOUNTING FOR PUBLIC-PRIVATE PARTNERSHIPS

This article evaluates Public-Private Partnerships (PPP) accounting practice and the related financial accounting and reporting requirements. Governments across the world are seeking to access private finance to improve public infrastructure. Accounting for PPPs has encountered many difficulties, one of which is the practice by which PPPs are not accounted for as fixed assets on the balance sheet of either the public sector client or the private sector operator. Accounting for PPPs has grown in importance at a time of transition from national Generally Accepted Accounting Practice (GAAP) to International Financial Reporting Standards (IFRS). Under UK GAAP, both client and operator accounting adopt the reasoning – familiar from leasing standards – of the allocation of risks and rewards between the parties to determine the party which should recognize the fixed asset on its balance sheet. The gap in IFRS with regard to operator accounting has been filled by the interpretation IFRIC 12 on service concession agreements: this moves the reasoning from risks and rewards to control, familiar from consolidation standards. The UK Treasury and the International Public Sector Accounting Standards Board (IPSASB) have required/proposed the adoption of the mirror-image treatment of IFRIC 12. In most, but not all, cases, control will be assessed to rest with the client, which will recognize property, plant and equipment, and not with the operator, which will recognize either a financial asset or an intangible asset on the basis of an assessment of which party bears the majority of risks and rewards. Under both UK GAAP and IFRS, accounting policy choices are strongly influenced by, for the client, governmental control frameworks, and for the operator, by the implications for the profile of distributable profits and for taxation. An important public policy issue is that the national accounts, which for European Union member states must comply with European System of Accounts 1995, will remain on a risks and rewards basis. It is these numbers that will be used in assessments of macro-fiscal policy and fiscal risks, notwithstanding that the Eurostat version of risks and rewards is even more open to manipulation than were the national financial reporting standards.

The Australian Market Perception Of Goodwill And Identifiable Intangibles

The Australian Market Perception Of Goodwill And Identifiable Intangibles

Consolidation in the public sector: a cross-country comparison

This article analyses consolidated annual accounts in the public sector in six countries (Sweden, the UK, the USA, Canada, New Zealand and Australia) highlighting the differences and similarities in approaches. The authors also examine international trends and take an in-depth look at the International Public Sector Accounting Standards Board (IPSASB).

Towards Harmonization or Standardization in Governmental Accounting? The International Public Sector Accounting Standards Board Experience

The main difference between harmonization and standardization processes lies in the degree of strictness of the accounting standards. Harmonization involves a reduction in accounting variations, while standardization entails moving towards the eradication of any variation. This distinction provides the basis for the present study. The purpose of this study is twofold: to analyse the degree of strictness of the IPSASs and to identify the sources of accounting diversity so that the potential of comparability of that international accounting framework can be evaluated. The methodology used enables areas of harmony or disharmony to be identified for IPSASB harmonization purposes. The results show that, given its high degree of regulatory strictness, the IPSASs model is a standardizing model. Potential sources of diversity are identified in areas such as capital assets as well as new research directions in the public sector formal harmonization.

A Conceptual Framework for Accounting for Public-Benefit Entities

There is a renewed impetus in the International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board (IPSASB) to develop a conceptual framework for financial reporting for both private sector and public-benefit entities. This article takes stock of some of the key issues related to this endeavour with particular emphasis on what the objectives should be and whether it is possible to have one conceptual framework for all entities.

Due Process and Standard-setting: An Analysis of Due Process in Three Canadian Accounting and Auditing Standard-setting Bodies

Due process is the means by which ethical constraints are placed on administrative decision-making. I have developed a model of variation in due process and use this model to explore the implementation of “due process” norms by three standard-setting bodies that are created, funded, and overseen by the Canadian Institute of Chartered Accountants – the Accounting Standards Board, the Auditing and Assurance Standards Board, and the Public Sector Accounting Standards Board. I conducted two analyses: a comparative analysis of the implementation of due process norms based on differences among the three cases; and, a critique of the due process norms followed by these boards based on their internal logic and a set of best practices identified in other contexts for due process by standard setters. I have presented evidence that due process norms are more fully developed, where standards are enforced by the state and the heterogeneity of users is greatest.

Accrual Budgeting: Accounting Treatment of Key Public Sector Items and Implications for Fiscal Policy

Budgeting in accrual terms is one of the most controversial issues in public sector accounting. In this paper, we analyze the accounting treatment of problematic elements of the financial statements when introducing accrual budgeting, and discuss the effects of the analyzed accounting alternatives on fiscal policy. We focus on three pioneer countries in the implementation of accrual budgeting and accounting: the United Kingdom, Sweden, and New Zealand. The accounting standards of the International Public Sector Accounting Standards Board, the European System of Accounts, and the Government Finance Statistics Manual of the International Monetary Fund are taken as benchmarks.

Public‐Sector Accounting:A Common Reporting Framework? A Rejoinder

This article responds to some criticisms in Newberry's recent article in Australian Accounting Review concerning whether there is, or should be, a common reporting framework for public‐sector and private‐sector accounting. The Public Sector Accounting Standards Board supported this approach. Here, it is argued that business accounting is not appropriate for those parts of the public sector concerned with the provision of public goods to citizens. Following this article is a further rejoinder by Carnegie and Wolnizer, and a response by Newberry to both commentaries.

Local Government Accounting Standard‐setting in Australia: Did Constituents Participate?

The Public Sector Accounting Standards Board (PSASB) has developed accounting standards for the public sector in Australia. A procedural ‘due process’ has been developed to protect the openness, neutrality and independence of Australian standard‐setting both in the private and public sectors. Prior research into constituent participation in the ‘due process’ for specific cases in the public sector has raised doubts as to whether the ‘due process’ operated in an open, neutral and independent manner. It has found that account preparers were under‐represented in their responses and used less sophisticated lobbying strategies than other respondents. The research also concluded that some constituents had favourable access to the ‘due process’, and that standard setters did not receive all pertinent information from constituents. This paper examines constituent participation in the ‘due process’ for the first public sector accounting standard, that for local government (AAS 27). The submissions made on the exposure draft preceding the standard –ED 50– have been analysed using content analysis. The findings suggest that account preparers were well‐represented in their responses and adopted the lobbying strategy of weighting their responses with supporting argument for the most controversial issues. Contrary to prior research, the paper concludes that in the case of ED 50 there is no evidence that the ‘due process’ failed to operate in an open and neutral manner.

Australian public sector financial reporting: a case of cooperative policy formulation

In the past two decades, the public sector both in Australia and overseas has undergone a period of intense change. The focus has been on efficiency, effectiveness and value for money of public sector operations. The methods by which governments account and report on their operations has received scrutiny. While Treasuries and Departments of Finance in each Australian jurisdiction have traditionally formulated the reporting and accounting rules used in the public sector, since 1983, with the formation of the Public Sector Accounting Standards Board (PSASB), the accounting profession has become involved in the setting of accounting standards for the public sector. Several researchers have suggested that a “contest” exists between the accounting profession and the government regulators for control over the public sector accounting standards process. This paper explores the processes whereby the public sector in Australia formulates its financial reporting policies by examining the interactions between the PSASB and the government regulators in each of the Australian jurisdictions. Policy community and policy network theory are used to argue that policy is formulated by a “cooperative” grouping of accounting professionals from the central agencies of Treasuries and Departments of Finance and the PSASB. The paper concludes that this method of policy formulation has implications for the content of policy and for the access of stakeholders to the formulation of that policy.

Public and Private Sector Accounting ‐ The Non‐identical Twins

A debate in this journal, spanning severa1 years, over the accounting treatment of public assets has concentrated attention on the appropriateness of the Public Sector Accounting Standards Board's decision to apply private sector accounting concepts to the development of public sector accounting standards. The Case is examined here and it is shown why private sector accounting standards must be appropriately adapted to suit a very different and varied operating environment in the public sector. These differences have been largely ignored, with resulting problems for public sector accounting standards.

Constituent Participation in the Australian Public Sector Accounting Standard‐Setting Process: The Case of ED 55

The Australian public sector has recently undergone a period of intense reform including a comprehensive reform of financial reporting policies. A major aspect of this reform is the involvement of the Australian accounting profession in the formulation of financial reporting standards through the Public Sector Accounting Standards Board (PSASB). Despite this extensive change, scant research has examined constituent participation in the Australian public sector accounting standard‐setting ‘due process’. This paper considers the regulatory model adopted for accounting standard‐setting in the public sector in Australia and identifies the implications of this model for constituent access to the ‘due process’. In particular, the co‐operation between the PSASB and the various regulatory bodies in each Australian jurisdiction suggests that these bodies may have more direct influence over the standard‐setters than other constituents. The submissions made on ED 55 Financial Reporting by Government Departments are examined as a case study of the ‘due process’ as it operates in the public sector. Different constituent groups were found to respond in varying proportions, to hold conflicting positions on some issues contained in ED 55 and to use different strategies to present these positions. The research identifies a lack of input by the major group affected by the proposed standard, the account preparers (government departments). In addition, account preparers which did respond to ED 55 were found to use less sophisticated lobbying strategies than other respondents who weighted their responses by commenting on a greater number of issues and by supporting their position with conceptual arguments. These results support the contention that some constituents have favourable access to the ‘due process’ and that standard‐setters may not have received all pertinent information from affected and/or knowledgeable constituents.