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30 April 2014

IFAC's comment letter on the future governance of the IPSASB

IFAC commented on the IPSASB Review Group's proposed governance arrangements for the IPSASB detailed in the consultation paper. IFAC believes that this review represents an opportunity to enhance the governance arrangements of the IPSASB in a timely manner.

Consistent with its message for the past several years, IFAC continues to call on governments to improve their transparency and accountability for the stewardship of their citizens’ resources, as well as to providers of capital to governments. IFAC believes that high-quality financial information is a pre-condition for informed decision making and improved societal outcomes. IPSASs are the only global and comprehensive set of accounting standards for the public sector.

Strengthening the governance of the IPSASB will enhance confidence in the standard-setting arrangements. This is important as some have commented that the absence of monitoring and oversight arrangements serves as an impediment to the adoption of the standards. IFAC recognizes that there are some who subscribe to the view quoted in the conclusions of the Review Group that “if IPSASs are to play a role which they have the potential to do in improving government accounting practices, it is essential to resolve questions related to their governance…” However, the reality is that IPSASs are already a major global influence on financial reporting in the public sector. Strengthening the current governance arrangements will further enhance the credibility of IPSASs and their influence on public sector financial reporting.

Over the last decade there has been an increasing interest in IPSASs and a strong trend toward their adoption, which is anticipated to continue. Currently, over 80 governments and public sector entities have either adopted or have processes in place to adopt IPSASs, directly or indirectly, including the government of New Zealand; South Asian countries including Thailand, Indonesia, and Malaysia; African countries such as Nigeria and South Africa; Latin and South American countries such as Peru and Brazil; and some European countries, including Switzerland, Austria, Lithuania, and Estonia. A number of international organizations have also adopted IPSASs; for example, the United Nations Systems, the OECD, and Interpol. A EC report issued during 2013 considered the suitability of IPSASs for the member states of the EU and described the standards as an “indisputable reference” in the development of EPSASs. Other countries, including Russia, India, and China, have also signalled their intention to adopt, though specific deadlines have not been set.

Adopters of IPSASs are keen to see the IPSASB’s agenda continue to make progress. Many organizations have built adoption activities into their plans based on the IPSASB’s public timetable for completion of its current projects. The credibility of the Board and the timing of its outputs may be put at risk if there is undue delay in the completion of projects due to protracted implementation of enhanced governance arrangements. Accordingly, IFAC shares the concern of the Review Group that the implementation of new governance arrangements should not impede the IPSASB and its standard-setting efforts.

Full comment letter


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