Public sector financial reporting

The PULSE aims to support national and subnational governments in developing efficient and effective PSA systems. To achieve that goal, it is essential for governments to have a comprehensive understanding of the status of their PSA system and the associated public sector environment.

“Benefits of Accrual Accounting in the Public Sector” analyses and  illustrates benefits but also costs related to the implementation of accrual accounting in public sector entities which is a long-term project and requires understanding of outcomes and enabling conditions of such reforms.

Pathways to Accrual is a tool, developed by the IPSAS Board, which intends to assist public sector entities, including national, regional, and local governments, and related governmental entities and international governmental organizations wishing to report on the accrual basis of accounting. It is primarily intended to assist public sector entities transitioning from cash to the accrual basis of accounting, and it may also be useful for entities currently reporting on an accrual basis and considering the adoption of IPSAS.

Public Sector Accounting (PSA) is a key enabler for good governance and economic growth. Financial information is of critical importance for both accountability and decision-making purposes, in particular when it comes to investment in public infrastructure. According to the International Monetary Fund, governments, which use high quality accrual basis accounting information, are economically more successful than those merely considering budget execution.

The Public Sector Accounting and Reporting (PULSAR) Program held a joint workshop on December 1, 2022, for members of its Communities of Practice: on Financial Reporting (FinCoP) and Education (EduCoP). The EduCop was also joined by the members of The Strengthening Auditing and Reporting in Countries of the Eastern Partnership (STAREP) Program. The workshop was organized by the World Bank Centre for Financial Reporting Reform (CFRR) as part of events marking 15 years of CFRR activities.

The main objectives of the event were:

1. Introduce the members of both assessment team (Armenia and Ukraine).
2. Provide general and more specific information useful for the PULSE assessment process.

The workshop was hosted by the Georgian MOF. The event was attended by 96 participants from 12 countries, including 11 PULSAR beneficiary countries (Albania, Armenia, Azerbaijan, Bosnia and Herzegovina, Georgia, Kosovo, Moldova, Montenegro, North Macedonia, Serbia, and Ukraine), and Kazakhstan.

Consolidation is one of the essential and, at the same time, challenging processes in terms of implementation of PSA reforms. IPSAS 35 “Consolidated Financial Statements” provides specific guidance on consolidation, which uses an economic perspective that is based on the concept of control. However, the consolidation in public sector possess is particularly challenging given its complex organization and wide range of decentralized and subnational entities, including State-Owned Enterprises (SOEs), which, often use different accounting framework.

Based on the list of priority topics discussed in the previous events, the main topics during this ninth workshop were: (i) link between Public Asset Management (PAM), Public Investment Management (PIM), and PSA; (ii) IPSASB news and recent developments; (iii) role of internal and external auditors to support PSA reforms; (iv) sustainability reporting in public sector.