Consultation shows little consensus on EU-wide Ipsas

3 Jan 13
A consultation on whether all European Union countries should use International Public Sector Accounting Standards has revealed a significant split of opinion.

By Nick Mann | 3 January 2013

A consultation on whether all European Union countries should use International Public Sector Accounting Standards has revealed a significant split of opinion.

Just over a third (38%) of respondents considered Ipsas suitable for EU-wide implementation either in full or with ‘minor obstacles’ overcome, 31% said they were partly suitable and 28% thought they were unsuitable.

The consultation, launched by the statistical agency Eurostat last February, asked whether the standards were needed to improve fiscal surveillance. Respondents included national statistical offices, government departments, audit offices and accountancy bodies such as CIPFA. Eurostat’s reveals supporters of EU-wide adoption highlighted ‘the need to improve the accountability, transparency and comparability of public sector accounts, especially in the light of the sovereign debt crisis’.

It adds: ‘It was considered important to improve government financial management and to increase the confidence of citizens and the capital markets.’

Those who thought Ipsas were partly suitable generally agreed on the need for a single harmonised set of accruals-based public sector accounting standards, but had reservations about Ipsas themselves. A ‘major concern’ was that Ipsas originated from private sector accounting standards. ‘It was considered that the standards were as a consequence insufficiently adapted to public sector requirements,’ the summary explains.

A similar argument was put forward by those who said Ipsas were unsuitable. The majority said they favoured a single harmonised set of accruals-based public sector accounting standards, but were against Ipsas.

Among the key arguments identified to support this view was Ipsas’ ‘incompleteness’ with respect to public sector accounting requirements in areas such as taxation and social benefits. Concerns were also raised over the ‘complexity’ of the standards, making it difficult for small entities to implement them, as well as the potential costs of doing so.

In terms of how long it would take to implement Ipsas across the EU, the majority of respondents expected that more than ten years would be needed, with a ‘significant number’ of the remainder expecting it to take five to ten years.

‘Several’ respondents supported a phased approach to implementation to mitigate its impact, with member states also being given different timescales to introduce the standards depending on their preparedness.

A spokeswoman for Eurostat told PF International that the consultation responses would now be taken into account and addressed in the commission’s follow-up report, which is expected to be published next month.

‘The report will summarise the current situation with regard to public sector accounting in the member states and weigh up the merits of adopting harmonised standards, and will be accompanied by a supporting document providing more detailed information and analyses,’ she said.

'Eurostat also intends to release, in parallel, a study conducted on its behalf providing an overview of the current accounting and auditing practices in member states.'

Commenting on the responses to the consultation, CIPFA policy and technical director Ian Carruthers said: ‘The majority of respondents have accepted the importance of high-quality accrual data to strong public financial management. Given the huge range in levels of maturity between countries and types of body, the mixed views on how to deliver this across Europe were only to be expected.

‘The big question now is what the commission’s final report will say. The extent to which future public finance information is comparable will depend on how closely Eurostat sticks to Ipsas in its implementation requirements. CIPFA therefore awaits with keen interest both the report and the subsequent debate on the way forward.’

Did you enjoy this article?

Related articles

Have your say

Newsletter

CIPFA latest

Popular

Most commented

Events & webinars