8/27/2010

The Institute of Chartered

Accountants of Zimbabwe
IPSAS and role of the
Accountancy Profession

ROAD:
LOAN ? X
ASSET? X

CASH?
Y

Road
N2, Madagascar,
A, Country X,Loan
LoanUS$
US$150m
150m

Borrowings, guarantees….

• Borrowings?
• Contingent
liabilities?
• Guarantees?

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Questions
• Should the transactions be recorded and
presented and /or disclosed in governments
financial statements?

• …..how do you assess the quality of public

sector financial information?

• Should we improve public sector reporting?

Presentation outline…
Quality of reporting ‐ Africa

IPSAS…why, what , adoption

Role of the Profession ‐

Zimbabwe

Conclusion

Quality of financial
information in Africa…

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PFM …. Key dimensions per PEFA

Effective
Budget audit and
credibility External
scrutiny
Six critical
dimensions
Comprehensiv of PFM
eness and system Accounting,
performance recording and
transparency
reporting

Policy-based Control and stewardship

budgeting in budget execution
7

PEFA Assessments results..Africa (Oct 09)

Link to economic growth… 8

PEFA overall results…

Significant variability in average scores.
Africa Region PEFA Scores
(October 2009 data)
3.50

3.00

2 50
2.50

2.00

1.50

1.00

0.50

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What about financial reporting?

PEFA – Accounting Performance Indicators
Indicator Description

P1 22 Timeliness and regularity of accounts

reconciliations
P1 24 Quality and timeliness of in‐year budget
reports
P1 25 Quality and timeliness of annual financial
statements
P 1 26 Scope, nature and follow up of external audit
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a. Quality and timeliness

Accounting – Bank Reconciliation (PI-22)
Tunisia

Morocco Algeria
Libya Egypt

Mauritania Niger
Cape Verde Mali
Senegal Chad Sudan Eritrea
Gambia
Burkina Faso Djibouti
GuinneeBissau
Guinee Togo Nigeria
Côte
Sierra Leone d'Ivoire Benin
Cameroon CAR Ethiopia
Liberia
Ghana
Somalia
Equatorial Guinea Uganda
Congo
Sao Tome and Kenya
Rwanda
Principe
Gabon Burundi
DRC
Tanzania
<2.0 Comoros
Angola
Malawi
2.0 – 2.5 Zambia

Zimbabwe
Madagascar
2.5 – 3.0 Namibia Botswana
Mozambique
Mauritius
> 3.0 Swaziland
South
Africa Lesotho
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b. Quality and timeliness: AFS

Reporting (P1 24+ PI 25)
Tunisia

Morocco Algeria
Libya Egypt

Mauritania Niger
Cape Verde Mali
Senegal Chad Sudan Eritrea
Gambia
Burkina Faso Djibouti
GuinneeBissau
Guinee Togo
g g
Nigeria
Côte Benin
Sierra Leone d'Ivoire
Cameroon CAR Ethiopia
Liberia
Ghana
Somalia
Equatorial Guinea Uganda
Congo
Sao Tome and Kenya
Rwanda
Principe
Gabon Burundi
DRC
Tanzania
<2.0 Comoros
Angola
Malawi
2.0 – 2.5 Zambia

Zimbabwe
Madagascar
2.5 – 3.0 Namibia Botswana
Mozambique
Mauritius
> 3.0 Swaziland
South
Lesotho 12
Africa

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c. Performance in other areas

 External audit ‐
time, standards, AG
issues
 Size of reports
 Completeness of
information: standards
13

So, what should we do?

…adopt IPSAS

International Public Sector Accounting Standards

Board (IPSASB)

Objective:  Develops: Cash and accrual

..high-quality standards, transition guide
public sector
accounting  Membership:
standards • 15 members + 3 public
(Kenya + South Africa)
• Observers (Funders)

Why IPSAS standards…

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Why IPSAS:
…..quality financial information…REAL

 Planning and budgeting

 Measurement of govt performance
 Accountability and stewardship
 Internal controls improvements
contribute to improved service delivery and economic growth

Why not IFRS… 16

Why public sector standards, not IFRS?

 Public Sector specific issues
• Revenue from non‐exchange transactions
• Social benefits e.g. old age pension, child grant
• Heritage assets
• Budget reporting
• Public Private Partnerships
 Purpose of financial statements
 Public sector terminology, examples
how developed?
17

…IPSAS development approach

IFRS • Terminology
(Private Sector)
• Public sector guidance
• Public sector examples
1

• Public sector issues

IPSASs
(Public
Sector) 2

18
Achievements…

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Achievements ..work plan

 I cash based standard (2003)
 31 Accrual based standards (April 2010)
 Strategic plan 2007 – 2009 (> 2010?)
1 Conceptual framework
1.
2. Public sector specific standards
3. Convergence with IFRS
4. Promotion and communication

Adoption…global, Africa 19

Adoption of IPSASs
UN system (28 bodies) 2008
OECD, NATO (21 bodies), EC, IFAC, INTERPOL

Switzerland, Israel, South Africa

Over 70 countries..in progress or intention

Brazil, Russia, India, China have indicated their

intention to adopt

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..adoption in Africa …..

adoption….African countries

Tanzania Mauritius Kenya

• IPSAS Cash • IPSAS cash • Local govt:
f
from C t l
Central accruall 2008 Bostwana
2006/7 Government • Central govt GFS format
> 4 years Parallel
IPSAS cash Cash basis
2010/11

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..adoption…South Africa
 Legislation: PFMA…GRAP (accrual) developed
by Accounting Standards Board (ASB)
 GRAP implementation
 Municipalities (283) all by 2010

 National & Provincial Dept – modified cash

 Trainings: government and profession

 Reforms: Assets, inventory, internal controls
22

What should we
consider to implement
the standards?

Key adoption considerations

1. Leadership: political support, partnerships

2. Legislation : IPSAS mandate

3. Information system [COA]

4. Staff development [current, future]

5. Information generation: REAL

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What is the role of the

profession? Are there
opportunities?

1.Partnership with Government

 Legislation enactment…PFM / reporting
 Strategy formulation…use expertise
 Guidelines development
 Training programs for Government employees
 Awareness: Parliament, PAC, public
 Audit committees ‐ governance
leadership
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2. Accountancy qualification
 Number of Accountants – professional
Botswana: 1,500 (Auditor‐General: 3; Accountant General:0)
 Kenya: 6,500 (922 public sector)
 Mauritius: 1,575 ( 96 public sector)
 Uganda: 99144 ( 234
34 public sector)
 SAICA, CA: 30k (3% public sector estimate)
Malawi 518(97 public sector)
Zimbabwe 2254
 Qualification – professional and technician
 Inclusion of public sector?
 Technicians development
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3….opportunities….
 Assets reforms: Identification, Recording: assets
registers; Valuations

 Working capital management: cash, receivables

 Information systems
 Financial statements preparations
 Internal controls strengthening
 Internal audit services..
 External audits…local govts, GBEs, contract

…World Bank support… 28

World Bank support for IPSAS

1. IPSAS GAP analysis tool

2. PFM Staff capacity development

3 Partnership,
3. Partnership funding and promotion
a. IPSAS adoption guideline (Botswana)
b. Promote: Bank projects apply IPSAS cash
c. Partnerships with IPSASB: funding, observer

conclusion…..
29

Conclusion
 IPSAS adoption can enhance financial
reporting in public sector
 Challenge..what should we do to
i l
implementt the
th standards
t d d in i Zimbabwe?
Zi b b ?
 Profession .. are we ready to support
government and ..benefit from the
opportunities?
30

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Patrick Kabuya
Senior Financial Management
Specialist
World Bank
Thank you for your time 31

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