Course Name: Introduction to IPSAS Page 1 – Course Introduction Hello and welcome to Introduction to IPSAS, the first online

training based on the IPSAS Webinars delivered by Helen Hall, Chief of Accounts, OFA. This course will provide an introduction to IPSAS and will also explain the impact of IPSAS on UNDP’s business practice and processes. Page 2 – Course Objectives At the end of this course, you will be able to: Recognise the benefits of IPSAS adoption. Understand the business goals behind IPSAS adoption. Identify the main points of difference between UNSAS and IPSAS. Understand the areas where IPSAS is going to affect UNDP projects and programmes. Get started to initiate IPSAS implementation in your office. Page 3 - Why Are Standards Necessary? It is the responsibility of the Office of Finance and Administration, or OFA, to provide accurate, timely and consistent financial information to UNDP. This information requires us to abide by certain accounting rules, known as standards. All the information we provide is meant to be used with the same rules. Standards ensure that UNDP’s financial information provided to donors, Program Governments, Executive Boards and even the General Assembly—is uniform and consistent. IPSAS—the acronym for International Public Sector Accounting Standards—refers to these accounting standards. In this course, we are going to talk about IPSAS, the new set of accounting standards in UNDP, and outline the roadmap for adopting IPSAS, with a special focus on what we need to do differently as part of IPSAS implementation in order to deliver a new financial information standard for UNDP. Page 4 - Importance of Good Financial Management Let's now look at the benefits that IPSAS implementation is going to have for UNDP. As you see from the image on screen, we have a road to travel and the road requires many stopping points in order to make sure that we have accurate information. This will ensure that Financial Reporting and Donor Reporting are of good quality and in compliance with IPSAS standards.

Consistency Consistency is not an entirely new concept—if you look at UNSAS. let’s talk about our investment portfolio. we all use the same accounting standards. As an example. It is useful for you to know these. Transparency IPSAS is well-known for the increased transparency that it introduces. As a staff member at the Country Office or Division level. and that is why we are making this move. you will not need to know these. What IPSAS does is that it starts to make us think about all the risks and the information that we should be paying attention to. IPSAS requires us to do it in a similar fashion across the UN System. It helps towards making better decisions and being more accountable for the money that donors give us. as well as the nature of these investments (short. especially to be better-informed while talking to your program government or your donors. IPSAS is a catalyst to make a move toward having better information—this was the chief reason that the General Assembly agreed to adopt IPSAS in 2006.or long- . They believed that IPSAS would make a positive contribution to UN reform. Good financial management is important so that we can make sound decisions. but we apply them very differently. This is where IPSAS can help. Click each label to learn more about it. Some of the information we hold right now is not robust enough and it is not as expansive for management actually to know where the risks are.Good financial management means that we deliver our development results in a well-coordinated manner and that we tell our story through the financial information that we present. It has a real requirement that we disclose to the world. Page 6 .Reasons for IPSAS Adoption: Consistency Let’s now look at the reasons for adopting IPSAS. but our Treasury Expert in HQ will ensure that information on UNDP’s portfolio is made public—how the organisation invested. the details on the things we own and the amounts we might owe to people. Let us take a deeper look at each reason. Comprehensive information IPSAS is going to give us more comprehensive information about a whole lot of things that UNDP does—the standards lay down that you need to tell the world a lot more about how you manage your investment portfolio. transparency and for more comprehensive information. Page 5 . The three main reasons for adopting IPSAS are consistency.How can IPSAS Help? You just learned that it is critical for public sector organisations to follow principles of good financial management. but have not been doing in the past.

Page 9 . IPSAS will ensure complete central financial information disclosure— something that we currently do not follow. WFP went live with IPSAS in 2008 and UNESCO in 2010.IPSAS-Impact on UNDP The adoption of IPSAS is going to impact the following areas of UNDP: Staff IT Systems Processes and Practice Timeliness Financial Performance/Reporting Click the buttons on screen to know more about the impact of IPSAS on each area of UNDP. UNSAS.UNSAS vs. This date is not the same across all UN agencies. This will allow us to record and store information that will be needed for IPSAS. accurate and timely global information will be key to UNDP’s adoption of IPSAS. it is necessary to consider things other than cash. IPSAS Let’s now compare the two standards UNSAS and IPSAS and see their main points of difference. . both within and between entities. Page 8 . UNDP along with some other agencies that have adopted Atlas as their ERP—including UNOPS and UNFPA—will go live in 2012. They are inconsistently applied. purchase orders (PO-s) and outgoing cash. and based on the best practices of a host of public sector entities. Page 7 . This is just what IPSAS does. IPSAS is very detail-oriented—an aspect that we delve deeper into as part of the Webinars we are conducting. since they were written by the UN. IPSAS is written by an independent group of global accountants. They focus only on incoming cash. Atlas. This means that their recommendations are independent.Timeline for IPSAS Implementation The Go Live date for IPSAS implementation in UNDP is January 01. 2012. For instance. Voice of Expert Having accessible. financial entries are triggered by events such as receiving a good or service. In the current business world. UNSAS is cash-oriented—which means that the standards do not focus on receiving or owing.term). does not get the organisation much credibility with donors. The UN itself will not go live until at least 2014. Unlike several other UN entities. we already have a global ERP. Finally. Additionally.

and as we revise them. and although you do not need to be an accountant. Page 10 . transparent. and more comprehensive information. Everyone of us needs to understand what is happening. As such. they will be shared with everyone. Processes and Practice IPSAS will require us to introduce new processes and practices. It is also crucial to have awareness of IPSAS for the information you will give to external parties. it requires that the organisation provide enough support to staff members to be able to become conversant with the new standards. Timeliness Timeliness is key—we cannot overestimate the importance of completing all financial transactions in a timely fashion. IT Systems We are going to make some changes to Atlas. you do need to understand the changes and how they are going to affect the information you have available to make decisions.Lending a Helping Hand Because IPSAS is more complex. Financial Performance/Reporting IPSAS will impact some of our current reporting and introduce new reports that will provide consistent. We will see how these will work at a project level in the later sections of this training.Staff Understanding the new policies and processes and particularly the impact they are going to have on your financial management and reporting is going to be essential in IPSAS adoption. These include the introduction of the Contracts module and redefining how we use the AM module. UNDP is introducing new initiatives in the following areas in order to lend a helping hand: Training Recruitment Global Shared Service Centre (GSSC) Click the buttons on screen to know more about the organisation's initiatives in each area. It is very important that we understand what these changes are. . We need real-time data as it happens.

where UNDP is going to support the elections in the Republic of Ruritania. The GSSC will take care of the next step in accounting. Under IPSAS. It will be a proper UNDP Shared Service Centre built to world-class standards—and they are there to exceed your expectations and to help to keep UNDP IPSAS compliant. As of now the information is scattered across . 2. Let’s now look at each of the following areas to understand the key changes that IPSAS will introduce. computer based learning. UNDP will need to buy supplies. incur operating costs. the UN IPSAS courses 1. whenever you sign a standard agreement. The Contracts module will enable and empower us with the quality of financial information it will provide. be able to access necessary training. and take care of other miscellaneous items related to staff and so on. The Learning Resources Centre is working closely with its learning vendors to ensure that all mandatory online trainings be made available both on the LMS as well on internet or CD Rom. Asset and or Expense Management under new IPSAS Rules. The GSSC will be a Centre of Excellence employing IPSAS qualified multilingual staff with expertise and systems to help you with your specific query on Revenue. It is important that those staff who are required to complete as soon as possible. check their backgrounds to understand their familiarity and comfort with IPSAS. Going through all the trainings that the organisation has arranged for you will put you at an advantageous position. Currently. Global Shared Service Centre Setting up the GSSC will help us reduce the risks associated with new IPSAS ways of working. If they are being recruited in the Operations or Finance departments. We will soon be introducing further training sessions. including monthly webinars. so that the event (of signing the agreement) is recorded. so that those personnel without access to LMS. 5. but still require training. This is a typical UNDP elections project. this qualifies as an event and will need to be sent to the GSSC. Recruitment Consider making smart decisions each time you have the opportunity to bring someone new on board.IPSAS in Practice Let’s now look at a UNDP election project in a fictitious country that we have named Ruritania. As part of that. The GSSC will record all agreements in the Contracts module—a new module in Atlas that shall be explained later. Page 11 . They will have access to ATLAS and be able to review your documentation and queries. as well as face to face training sessions. 3. hire personnel.Training Training is essential to ensure that IPSAS is widely understood and adopted across UNDP. Their services will be provided on a split shift basis to cover your working hours. 6 are available on the Learning Management System. lease premises. Page 12 – Project Ruritania-Revenue Let’s first look at revenue.

which is what we do currently. goods and services are expensed when the PO is dispatched. on her views on Expense Recognition. program governments. Click the button on screen to read an expert tip on Expense Recognition. We are not going to wait for the invoice and three-way matched pay anymore. which means that we recognise that we owe somebody for the goods that we took in. It will align our financial results with our development results. Click the button on screen to read an expert tip on Expenses. and the UNDP executive board. budget will still be cash controlled. Your financial performance cannot be boosted by you raising a PO close to the end of the year. Page 14 – Message from Facilitator: Expense Recognition Let’s now listen to Helen Hall. that is a ULO—an un-liquidated obligation. Through the Contracts module. these ULOs will not exist anymore. the facilitator of the Webinar. Voice of Expert Remember the KK does not change under IPSAS. In UNDP terminology. under IPSAS. These are the small change on accruals. Page 13 – Project Ruritania. Unliquidated obligations are very common in UNDP. Voice of Expert IPSAS is a good fit for results-based management. This will require us to reconsider our practice of just-in-time procurement. anything that is physically received over the line—if you took it in through the gate or into the loading dock—is going to be recorded as an expense accrual. Communicating those changes will be key. We will no longer record expenditures when we place an order. IPSAS necessitates that we plan upfront because now you can only record an expense when you receive the goods and services.Expenses Let’s next look at expenses. As part of current practice.spreadsheets at Partnership Bureaux. . there will be a single unified corporate body of information available for the first time. IPSAS requires us to record the expense when we take the suite of goods or consume the service. Essentially. Under IPSAS. this means that we are not going to record an expense when we place the PO. While you will have more detailed agreement information in atlas. There is no central repository of information. Understanding the impact will be important for all of us. However. Voice of Expert IPSAS will impact the financial results we report to donors.

you record the expense as a whole e. For example. because we deliver them to government that day. we will need to focus on items that UNDP uses and controls. These categories include: Land and buildings Leasehold improvements Furniture Click the buttons on screen to know more about each category. Instead. Page 16 – Project Ruritania. Plant and Equipment (PP&E). let’s assume that UNDP has leased a building with ten computers and has bought vehicles—these are things that UNDP will need and control in order to deliver the project. So there is a distinction here that we need to remember. the value of the asset will be spread over the life of the asset. What are the guidelines on assets that UNDP buys and delivers directly to governments? Click the button on screen to find out. if we buy a laptop for the office we have leased—so that UNDP will be able to support the project—this would be an asset because UNDP keeps it.Property. . when you place a PO. Assets that UNDP Delivers to Governments We are not going to focus on the assets that UNDP buys and delivers directly to a government. USD 40. you will get a monthly charge expensed to show that UNDP is using or consuming the asset in order to deliver projects. then they are not ours. when you place a PO. As of now. if we buy 50 supercomputer stations to go into the polling booth. Plant and Equipment (PP&E) Let’s now look at how IPSAS impacts fixed asset management—what UNDP calls Property. These items will henceforth need to be treated as assets.g.Page 15 – Project Ruritania. NGO or partner. it is important to remember that we need to spread the cost of those assets over the life of the asset.000 for a Land Cruiser. As part of IPSAS. delivered directly to the government. in the case of the elections project in Ruritania. This can sometimes be tricky—identifying whether an asset will be controlled by UNDP. Under IPSAS. In terms of assets. the asset will be identified but nothing will be expensed as such. In the case of the electoral project. Plant and Equipment (PP&E) Let’s now look at the key categories of fixed assets that must be reported under IPSAS. However. In the example of the Land Cruiser. if you hold the car for five years.Property. the way of reporting is going to be different. So although there is no change in the total cost of the asset.

adding an elevator. Leasehold improvements This category may be new for many of you. or other items like that will be recorded. we often do some changes on it—add an annex. So from now. that we physically have the deed to them. and will be the subject for the second webinar on IPSAS Ready Procurement Catalogue. if you are in a Country Office and are refitting an AC system. we need to recognise the cost of the leasehold improvement as both the cost of putting up the wall as well as the cost of taking it down—in other words. like a very large conference room table or safety vaults that we buy. This webinar will focus on the changes in Atlas that will help us track and trace and codify information about furniture groups. This is a new asset area that we need to focus on. So when you undertake a renovation in a Country Office. The current absolute count is around 15 or 20 countries where we physically own a building. The webinar is only an introduction—it is important that everyone understands how the process is going to work. We have now discovered that we have many land and buildings. a parking lot that UNDP owns. Vehicles This category is familiar to most and includes motorised mobile equipment with two or more sets of wheels. landscape the garden—or similar things that may enhance the value of that property. but if the actual agreement with the landlord says that when you need to revert the space to the original. the only reported land of UNDP was in Argentina. if you are in a CO you must inform the ASD now that you have a garage. You need to know whether the vehicle is for UNDP and titled under UNDP or to be delivered to implementing partner in order to make the determination on whether or not to record the vehicle. you will need to select the item from the catalogue through a drop-down menu. you need to understand what you are doing. Once you select the item. . the value of it and whether it might qualify as a leasehold improvement. Land and buildings is something that needs special focus. This will make things easier for you—when you are going to make a requisition in the future. The procurement catalogue is a critical learning piece.Land and buildings This is an interesting category. What this means is that when we lease a premise. you will have to take the walls down. putting up walls. you will need to understand what the impact of these actions is. we need to look at the total cost of that leasehold improvement. The groupings for furniture are still being determined. Furniture and Fittings Furniture is a huge and complex category. the system can handle how to record it. a warehouse. As long as you can make that distinction. A few years ago. We may put up walls. All you need to know is for whom you are buying the item for—for UNDP or government. Although HQ staff do not need to worry about this category and can leave it to ASD. Some of the more complex issues around leasehold improvement are not just about the improvement itself. Here. IPSAS requires us to capture these costs as part of the cost of the building. some of the information that we need for the Asset Register will automatically get derived in the background—you will not need to worry about it. IPSAS requires us to value these and let everyone know about their existence. It is important to remember that we do not need you to include every chair. but there may be some pieces of furniture.

As staff members of the United Nations. the cost of the employee will be higher. will be the same. Both HQ and Country Offices have come under a lot of criticism by internal and external audits for not possessing accurate leave records. some people don’t do it all—the bottom-line is that we have poor record keeping. Page 17 – Project Ruritania-Staff Costs Let’s now look at Staff Costs. language allowance. for example. this is useful because it addresses a challenge we have had to tackle over the years—where the last project takes the hit for the staff member who is retiring. and house rental subsidies. these costs will be spread across all the projects and/or programmes that the staff member has worked on. when the staff member separates for repatriation grant or to pay for the annual leave that was accrued during service to the organisation. The next important thing that we need to consider as part of staff costs is leave records. projectors. after-service health insurance. Some of these are annual leave. education grants. As part of IPSAS. What this change implies is that on a monthly basis. The total cost over time. however. OHR has launched the new module in Atlas and this is being used actively in HQ now. it is necessary that we record the total cost of employing a staff member on a monthly basis. Everybody is getting a number on their pay slip—please check this number and if it is wrong. we earn various benefits. For example. This is because. Some people don’t do it on time. . do ensure that it gets corrected. and not wait until a later date. repatriation. IPSAS refers to this as the ‘true costs’ of employing staff.Heavy Machinery This includes equipment that will be used by UNDP for more than 12 months and are not categorised as any of the other items. ICT This category includes items like computers. home leave travel. faxes. under UNSAS the post-employment benefits are costs only when the person leaves the organisation. because the costs associated with the accrued annual leaves or earned home leave points will be reflected in the financial records of the organisation. In some ways. Look at the guidelines on screen to understand how this works and what needs to be done. and any other technological items that assist UNDP in its information and telecommunication management. in addition to the normal salary components such as gross salary. dependency allowance. going forward. Under IPSAS. under UNSAS benefits not paid in the current period are not shown as the employee costs. Examples include items like generators and drilling equipment.

In these cases there is usually a lease agreement between the government and UNDP that states how long the lease is for and confirms that the premises shall be occupied by UNDP without them having to pay rent. you would have had to pay cash for it!). you will need to sign the lease (just as you sign a donor agreement) and send it to the GSSC. Free Lease In many countries UNDP is given the free use of property by the local government. the rental charge is going to be recorded. (This makes sense because if the government had not given it to you. he will allow you to buy the building for a low price. UNDP had leased a building. The “rent free” leases are a good example of an “in kind” transaction. Click the button on screen to read an example of a deviation from a standard agreement. because the moment you start straying from the standard agreement. the right to use the property) . and it is important is that you do not deviate from the standard agreement. UNDP is a big user of lease agreements—there are more than 500 lease agreements in the organisation. Under IPSAS. This arrangement will then need to be accounted for as if we bought the building and we would record the asset as a loan mortgage. the new IPSAS accounting rules require this.Page 18 – Project Ruritania-Leases Let’s look at the next area of expense—leases. it will need to be recorded differently. (Sometimes UNDP pays utilities even if the rent is free). even though you don’t pay rent you have to record rent expense based on the value of what you are property you are using. Remember that as part of the election project in Ruritania. Another important point is that Because UNDP standard agreements do not accommodate these variations in lease type. Under IPSAS then. This is quite different to what happens today. Additionally. The GSSC will review the terms and conditions and conclude on the accounting treatment whether it is alright to continue to do the routine recording. Page 19 – Message from Facilitator: Free Lease Click the button on screen to view a message from the facilitator on the concept of a free lease. Deviation from a Standard Agreement Let me give an example of something that would be different under IPSAS: Let’s assume that you signed a lease for 20 years that states that. It is important to account for all leases even if they are “rent free”. UNDP must recognise all “in kind” arrangements. The key message on leases is that there is no big change between UNSAS and IPSAS—you can go out and lease a building or a space. the landlord of the building says after 20 years. Let’s use an example to understand this better. Incidentally.e. as the government had given you something of value (i. This last point is especially important.

Said another way. This accounting does sound a little strange because there is no cash inflow or outflow – but it is the way we will now have to account for such “in kind” arrangements. will be reflected in the first CDR. the General Assembly.<br><br>Although the accounting is different to what is done today.Reporting When it comes to external reporting. All the aspects of IPSAS that this training has focused on—including using accrual accounting instead of ULOs. Page 20 – Project Ruritania . This accounting will require UNDP to determine the “fair market value” of the rent so that it can estimate the value of the contribution from the government and the amount of rent expense to record. And. the UN Board of Audit. Donor Reporting Although we do donor reporting once a year. in such cases. Combined Delivery Report (CDR) The CDR will be the first key external report that we will be issuing and we will do it for the first quarter of 2012. (These will be the same amounts). it does make sense if you realize that it will enable you to compare the full cost of occupying premise – not just the cash cost. UNDP Executive Board. and so on. We need to provide extensive information to the General . consistent and accessible information Simplicity—Easy to understand information that demonstrates and explains to everyone—including general users—about what is going on The three types of reporting we shall focus on in this course include: Combined Delivery Report (CDR) Donor reports Corporate reports—financial statements and other information we prepare for the Administrator. We will be moving to more frequent reporting and will evaluate the impact of this on donor reporting. Corporate Reporting This is another important area because we provide a lot of corporate information to the Administrator. UNDP would recognise revenue for the contribution and rent expense for the amount of rent paid. We are going to try to practice IPSAS on a daily basis—and not record expenses and other transactions only at the end of the year. and eventually. Executive Board.that “contribution” should be recognised too even though it is not paid in cash. Auditors and the General Assembly Click the buttons on screen to know more about each type of reporting. where UNDP is occupying a property rent free it is like the local government made a contribution to UNDP for the amount of rent that it would have paid and it is like UNDP is then paying the rent with the contribution made by the government. the essential principles that both UNDP and IPSAS are concerned with include: Transparency—Clear. it is important that we communicate with donors more frequently than that. increased staff cost.

Resources Here are some resources that can help you learn more about IPSAS. then they might confuse the donor. Understand the areas where IPSAS is going to affect UNDP projects and programmes. Understand the business goals behind IPSAS adoption. Look at the chart on screen. would reflect the total recorded in the agreement. With this. We therefore need to backtrack for a bit. Page 23 . Page 24 – Course Summary Congratulations. and reorganise the information differently. and once we add what has already been received. The next item we will look at is Receivables. We recommend that you apply these in your work and encourage colleagues to practice them as well. If you looked at those. It will talk about any other income that has come in—such as account transfers—and then it will show you the total cost. The third chart is the pure extracted IPSAS information from the general ledger Atlas. we are informing the donors how much they owe us. and how much you spent.Donor Reporting Let’s now look at donor reporting in a little more detail. . a total value of expenses that we have made. they will no longer use ULOs and they will begin to see depreciation. you have reached the end of this course. This will show us what we recorded as the contribution. You will now be able to: Recognise the benefits of IPSAS adoption. Contact the Learning Resources Centre or your Learning Manager for details. For these we will add a new column titled Commitments. but if you remember. you will know how much money you have available for the project. we will still need to communicate to donors that we have the open POs where the goods and services have not been received. we arrive at the current available balance. from charge to date. Get started to initiate IPSAS implementation in your office. However. UNDP is also organising a comprehensive of body of training on the subject. Page 21 – Project Ruritania . Page 22 – Best Practices of IPSAS The list on screen enumerates the best practices of IPSAS. so we need to be ready to provide that information based on the new standards.Assembly on UNDP’s activities. but on an accrual basis. Identify the main points of difference between UNSAS and IPSAS. as for instance. We do recognise that if we only used IPSAS amounts.

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