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24 July 2014

FEE comments on the IPSASB Strategy Consultation


According to FEE, the time period covered by the strategy consultation and work plan presents a unique opportunity for IPSASB to address the factors cited as reasons for IPSASs not yet being fully suitable for application in the EU.

FEE believes that, at the current time, if it is necessary for the IPSASB to concentrate on only one of the strategic objectives identified in the Consultation, the greatest long term benefit would be derived from concentrating on the development of high-quality financial reporting standards, particularly to fill the gaps relating to public sector specifics perceived as being critical by Member States within the EU.

FEE believes that there is a need for the IPSASs and, indeed, the use of accruals based accounting, to be actively promoted to governments. Other international standard setters like the IASB and the IAASB are promoting their standards. The IPSASB should also engage in such outreach activities, provided that sufficient resources are available and that the perception of independence is not prejudiced. Additionally, it is important that individual

IPSASB members continue to contribute to roundtables and other public outreach activities that they are already undertaking that contribute to the promotion of IPSAS.

FEE believes that of the key factors in initiating projects outlined in this Consultation, the most important are the significance of the projects to the public sector and addressing gaps in existing suite of standards.

With reference to addressing gaps, the IPSASB should continue to use standards already adopted by governments as a reference point, as more and more countries are developing public sector accounting standards. The IPSASB should continue to review what is considered to be best practice elsewhere, test this against the requirements of governments and then refine the output based on the results of this testing. FEE believes that this should not only expedite the process of filling gaps in the standards but also give the resulting standards greater credibility with their potential users.

The question of priorities also drives FEE´s response to the question of further development of the Cash Basis IPSAS. Whilst FEE feels that further development of this standard might be useful for those countries that still use cash based accounting, FEE believes that the ISPASB should concentrate its resources, first and foremost, on the far more pressing task of developing accruals based standards for the period addressed in the Consultation.

Finally, FEE believes that apart from gaps in the suite of standards, other important contributory factors to the resistance of some jurisdictions in Europe to adopting IPSASs include the lack of a public sector conceptual framework for reporting and the question of IPSASB governance.

Consequently, FEE is looking forward to the publication of the Conceptual Framework during 2014. Furthermore, FEE believes that the matter of governance is of crucial importance in establishing the legitimacy of IPSASs in the public sector. 

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© FEE


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