Post on 13-Apr-2018
Global survey onaccounting and financialreporting by centralgovernments (2nd edition)
14 September 2015
www.pwc.com
PwC
Our ambition
14 September 2015
Why?
What?
How?
Covering four areas:
• Accounting practices• Budgeting practices• IT environment• Finance function
Update on progress since 2012
120 countries surveyed
Part I
Accounting practices
14 September 2015
PwC
There is still great diversity in the current governmentaccounting landscape
Cash basis
Modified Cash
Modified Accrual
Accrual basis
31%
14 September 2015
PwC
But the 5-year trend toward accrual accounting is clear
Cash basis
Modified Cash
Modified Accrual
Accrual basis
71%14 September 2015
Do not know (6)
PwC
The dynamic for accrual accounting
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31% of governments apply accrualaccounting now as compared to26% in 2012.
71% of governments will applyaccrual accounting in five years’time (as compared to 63% in2012).
The trend towardsaccrual accounting isconfirmed and evenreinforced
+8%14 September 2015
PwC
The trend is visible across all continents, with the biggestshift expected in Africa, Latin America and Asia
14 September 2015
50%
100%
49%
21%
30%
16%
20%
38%
45%
68%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
North America (n=2)
Oceania (n=3)
Europe (n=35)
Asia (n=29)
Latin America & Caribbean (n=20)
Africa (n=25)
Now
5 years
PwC
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The proportion of governmentsapplying accrual accounting thatwill apply IPSAS or similarstandards (IFRS, IPSAS-like)within the next five yearsincreases from 59% to 77%(+18%).
This is particularly remarkable innon-OECD countries.
The use of IPSAS asreference frameworkis expected tofurther increase
+18%
A trend towards international accounting harmonisation
14 September 2015
PwC
+18%
The European case - Key learnings from the EPSAS(European Public Sector Accounting Standards) study
14 September 2015
Critical analysis of IPSASas a basis for developing EPSAS2
Proposals for implementation3
Costs and benefitsof implementing EPSAS1
Country visits, questionnaire and interviewswith the 28 EU Member States
PwC
+18%
The European case - Key learnings from the EPSAS study -Benefits
14 September 2015
Accountabilityand
transparency
Betterdecision-making
Controls andadministrative
processes
Labourmarket
PwC
+18%14 September 2015
AM ≥ 70%
40% ≤ AM ≤ 70%
AM ≤ 40%
The European case - Key learnings from the EPSAS study -Central governments
PwC
+18%14 September 2015
AM ≥ 70%
40% ≤ AM ≤ 70%
AM ≤ 40%
The European case - Key learnings from the EPSAS study -State governments
PwC
+18%14 September 2015
AM ≥ 70%
40% ≤ AM ≤ 70%
AM ≤ 40%
The European case - Key learnings from the EPSAS study -Social security funds
PwC
+18%14 September 2015
AM ≥ 70%
40% ≤ AM ≤ 70%
AM ≤ 40%
The European case - Key learnings from the EPSAS study -Local governments
PwC
+18%14 September 2015
Cost to implementEPSAS at the EUlevel assessedbetween
0,009% and 0,053%of the GDP
1,2 and 6,9billion
Decision/need toinvest or not in anew IT system has asignificant impact
Net cost/benefitassessment needed
The European case - Key learnings from the EPSAS study -Cost
PwC
+18%
The European case - Key learnings from the EPSAS study -Suitability of IPSAS for developing EPSAS
14 September 2015
Governments areoverall ratherpositive about IPSAS
Limited number oftopics for whichsome amendmentsor further guidancemay be needed
Governments withadvanced accountingpractices do not wanta step back
IPSAS already usedas a source ofinspiration by mostgovernments
PwC
The European case - Key learnings from the EPSAS study -The way forward
14 September 2015
23%
Diagnostic in eachMember State orgovernment, tailoredroadmap
Continuousimprovementprocess
Best implementationpractices, pragmaticapproach
Focus standard-setting on key issues
Part II
Budgeting practices
14 September 2015
PwC
Cash budgeting is still largely used, but accrual budgeting isprogressing
The number of governments reporting under accrual budgeting isexpected to increase from 18% now to 48% in five years (versus from31% to 71% for accrual accounting).
Budgets largelyremain on a cashbasis…
82%
… although an upwardtrend towards accrualbudgeting is identified
+30%
14 September 2015
Part III
IT environment
14 September 2015
PwC
A trend towards greater IT integration
The use of ERP-systems is seenas best practice to manage theaccounting, budgeting andreporting processes.
Greater integration of IT systemsis a key priority and a keychallenge for most governments.
% with ERP systemsin next 5 years
64%
15% 20% 15% 11%
Very fragmented Very harmonised
39%
Neither nor
14 September 2015
Part IV
Finance function
14 September 2015
PwC
Governments indicate a desire to improve their financefunction
14 September 2015
Desire to improveover the next fiveyears
Major areas forimprovement arefixed assetmanagement,cost accounting,performancemanagement andlong-term planningand forecasting
Main focus oncompliance andcontrol
PwC
Government priorities in the next 5 years
Moving along the maturity spectrum of the government finance function is ajourney and government priorities for the next 5 years depend on their levelof maturity along that spectrum.
lAccrual accounting(based on IPSAS orsimilar) adoption
Greater integration ofIT systems
Capacity building Improvement ofmanagementinformation systems
14 September 2015
PwC
Thanks!
Patrice Schumesch,Global Public Finance and Accounting partner,patrice.schumesch@be.pwc.com
PwC global survey on accounting and reporting bycentral governments (2nd edition)http://www.pwc.be/en_BE/be/publications/pdf/global_ipsas_survey_2015.pdf
PwC EPSAS studyhttp://ec.europa.eu/eurostat/documents/1015035/4261806/EPSAS-study-final-PwC-report.pdfhttp://www.pwc.be/en/publications/2014/epsas_oct_2014.pdf
14 September 2015