IPSAS in Latin America: innovation,isomorphism or rhetoric?

ABSTRACT

Over the past 30 years, many initiatives have been undertaken to reform public administration in Latin American countries. Among other aspects, the reforms seek to improve the transparency and accountability of the public sector by modernizing public accounting and budgeting systems. The adoption of accrual accounting in the public sector has been seen as an innovation and it is driven by the implementation of IPSAS. This paper sheds light on the process of reform of public financial management in Latin America and the state of implementation of IPSAS. The paper analyses the driving forces for adopting or adapting IPSAS, as well as the obstacles and challenges in doing so.     

New development: Accounting recognition of public infrastructure—applying a practical control criterion approach

ABSTRACT

The accounting recognition of public infrastructure can be extremely complex. This article explores and discusses the key IPSAS definitions and reviews the national accounting frameworks of some countries as regards their criteria for recognizing these assets. The author makes an important contribution to public sector accounting research by presenting a new way of recognizing public infrastructure as an asset based on the control criterion.     

IPSAS,ESA and the fiscal deficit—a question of calibration

The academic literature on IPSAS adoption is not clear whether this would lead to a fiscal deficit measure close to that reported in national accounts. This paper presents a case study which attempts to clarify this dilemma. The authors show that IPSAS compliance would result in yet another deficit measure that is nowhere close to the statistical measure, leading to even more confusion.

IMPACT

IPSAS compliance would neither simplify nor standardize the conversion exercise that EU member countries have to do to change a governmental accounting deficit to the EC’s required statistical deficit. Nor would it directly lead to more reliable statistical data. The authors therefore question the impact of the proposed EPSAS on the quality of macro-surveillance.     

New development: The IPSASB project on accounting for social benefits—IPSAS 42

ABSTRACT

This article explores the work undertaken by the International Public Sector Accounting Standards Board (IPSASB) in developing IPSAS 42 on ‘Social Benefits’, which was probably the IPSASB’s most challenging project to date. The authors explains IPSAS 42’s approach to liability recognition with the overriding considerations behind the IPSASB’s final decisions. In 2012, the EC identified the lack of a standard on social benefits in the IPSASB’s suite of standards as one of the arguments against the application of IPSASs in the EU, so this article is important in terms of the IPSASs being used as the basis for EPSASs (European Public Sector Accounting Standards).     

Drivers for the voluntary adoption of consolidated financial statements in local governments

ABSTRACT

This paper investigates consolidated financial statements (CFS), which have been implemented by several countries. In Italy, CFS implementation was preceded by a testing period in which local governments could participate on a voluntary basis. This paper explains why this was a useful preliminary step to implementing CFS: the local governments that took part in the testing period were able to enhance their knowledge of the topic while improving their employees’ skills.     

Glocalization of accounting standards: Observations on neo-institutionalism of IPSAS

This paper defines and then observes processes of glocalization surrounding the adoption of International Public Sector Accounting Standards (IPSAS) for public sector financial reporting. Glocalization can be best understood using sociological institutionalism, because this theory focuses on the retention of identity, and processes of legitimacy, during adaptation (diffusion) of standards. The paper discusses the history of standard-setting for the public sector in New Zealand to explain why this theory has value.

IMPACT

This paper defines and describes the utility of the concept of glocalization in analysing the implementation of IPSAS, with a New Zealand focus. The value of the paper is in its combination of a jurisdiction-specific experience with an understanding of the broader issues of ‘global versus local’ and processes of sociological institutionalism. Such studies of IPSAS adoption can offer distinctive perspectives on global processes of isomorphism within neo-institutional theory. This paper explains the advantages of flexible strategies to standard-setters.     

Deadlines and software: disentangling local government accounting reforms in Brazil

ABSTRACT

This paper shows how ongoing accounting reforms in Brazilian local governments were affected by a shift from a universal to a gradual implementation approach. Deadlines being postponed led to a decrease in local governments’ willingness to reform. This effect varied according whether the accountants involved depended on commercial software to operate a particular accounting policy. An important finding from this research was that software providers are to some extent setting the IPSAS implementation agenda in Brazil.     

The reluctance of a developed country to choose International Public Sector Accounting Standards of the IFAC. A critical case study

A movement towards internationally standardized public sector financial reporting started at the end of the 1990s. This standardization process is led by the non-governmental organization the International Federation of Accountants (IFAC). The IFAC has published International Public Sector Accounting Standards (IPSAS standards) for all public sector entities from national central governments to local governments. This article analyses the reasons why a developed country refused to adopt IPSAS standards. The analysis is done in the country context of Finland, where the national government accounting board (FGAB) took a negative stand on IPSAS standards. The method of this article consists of a literature review, interviews, a documentary review and of participatory observation in the FGAB. The article describes the reasons for the FGAB's decision and presents an interpretation supported by institutional theory. The choice of the FGAB is compared to the situation regarding the IPSAS adoption in European and especially in Nordic countries.     

Comparability in IPSASs: Lessons to be Learned for the European Standards

Abstract

In 2013 the European Commission started addressing issues concerning public sector accounting harmonization across EU Member States, embarking on a project to develop European Public Sector Accounting Standards (EPSASs). Although acknowledging the indisputable reference of the existing International Public Sector Accounting Standards (IPSASs), it highlighted that IPSASs, as they were, could not be suitably applied in the EU context (European Commission, 2013a). IPSASs were considered as not covering specific important matters of public sector accounting, not showing enough stability due to the need of constant convergence with IFRSs, and offering several options that compromised comparability.

Comparability of public sector accounts across Member States is one of the main objectives of EPSASs (EUROSTAT, 2016, 2019), clearly established as a qualitative characteristic in the draft EPSAS Conceptual Framework (EUROSTAT, 2018). It is critical for EU economic and fiscal convergence that countries’ accounts allow for substantial comparison and standardized transition to the National Accounts (Jorge et al., 2014).

The IPSAS Conceptual Framework (IPSASB, 2014), meanwhile issued, sustains that adopting these standards would improve comparability of General Purpose Financial Reporting (GPFR), in this way strengthening transparency and accountability of public sector finance.

Given that, despite the above concerns, EPSASs are to be developed on the basis of IPSASs (European Commission, 2019), the purpose of this paper is to show that IPSASs are not an adequate reference for EPSASs in terms of allowing the desired comparability of countries’ accounts in the EU. It relies on evidence gathered from IPSAS-based financial reports prepared by some Agencies of the United Nations System and from audit reports of the UN Board of Auditors.

The research illustrates that IPSASs only allow for de jure comparability of financial reports at a very broad level. Their implementation and interpretation in practice (due to the options permitted and the judgement required) does not allow for de facto comparable GPFR. European standard-setters need to be aware that the comparability EPSASs need to address across EU Member States’ accounts must go beyond the one that is permitted by IPSASs – EPSASs need to stretch IPSASs harmonization to a higher level of standardization.     

IPSAS or IFRS as the Framework for Public Sector Financial Reporting? New Zealand Preparers’ Perspectives

The last 30 years have seen public sector accounting in many countries undergo considerable change. More recently, some governments adopted accrual accounting and International Public Sector Accounting Standards (IPSAS), some adopted modified International Financial Reporting Standards (IFRS) while others continued with cash‐based accounting. New Zealand (NZ) has, for more than two decades, followed a sector neutral approach to financial reporting and standard setting where the same accounting standards were applied to all entities in all sectors: for‐profit, not‐for‐profit and the public sector. This period included the adoption of IFRS by for‐profit entities with minor modifications for the public sector. The suitability of IFRS for the public sector has been questioned and, recently, standard setters in NZ decided to adopt a sector‐specific standard‐setting approach with multiple tiers for each sector. The for‐profit sector will continue to follow IFRS but reporting standards for the public sector will be based on IPSAS. In this period of change we sought the views of preparers of public sector financial reports regarding the users of such reports and their preferences for the public sector reporting framework. We also sought the views of the preparers regarding the usefulness of each financial statement for users, and whether the benefits of reporting by their organisations exceeds the costs. The findings indicate support for maintaining IFRS as a basis for reporting in the NZ public sector. However, IPSAS modified to NZ conditions is also perceived as an acceptable option by respondents in this study. The income statement is, in the opinion of the respondents in this study, the most useful statement while cash flows appear to hold little value. A high proportion of respondents believe that the benefits of reporting exceed the costs, which contradicts the view that such reports are mainly compliance documents that provide little value. This finding contributes to the continuing debate on costs versus benefits on the recent introduction of IPSAS as the reporting framework for the public sector and the perceived appropriateness of IPSAS in public sector reporting.     

THE DIVERSITY OF ACCRUAL POLICIES IN LOCAL GOVERNMENT FINANCIAL REPORTING: AN EXAMINATION OF INFRASTRUCTURE,ART AND HERITAGE ASSETS IN GERMANY,ITALY AND THE UK

This paper examines the norms and practices for infrastructure, art and heritage assets in six cities, across three European countries, to determine how the national norms of accrual accounting compared with each other, and with IPSAS, and how the practices in each city compared with the norms. We identify significant diversity between actual practices and the norms imposed by national policy‐makers or set by IPSAS. Given that a longstanding concern of the literature has been on whether these kinds of assets should be included in governmental balance sheets and operating statements at all, it is striking how often the question was settled in practice by excluding art and heritage assets, even when this meant non‐compliance with national norms. In our three countries, it is clear that comparability of the financial statements between countries was not a concern of policy‐makers, and comparability between cities within each country not a concern of preparers.     

国际公共部门会计准则体系研究

国际公共部门会计准则（IPSAS）是全球政府会计准则的标杆。本文就国际公共部门会计准则（IP—SAS）的制定程序、制定团队、现有IPSAS的内容、国际公共部门会计准则理事会（IPsAsB）的未来战略和工作计划、IPSAS的未来布局及发展趋势等一系列问题进行概括与分析,以冀为我国的政府会计准则研究提供启发与借鉴。     

The Impact of IAS/IFRS on Polish Accounting Regulations and their Practical Implementation in Poland

Abstract

In the face of the globalization process that we have witnessed over recent years, the European Union (EU) decided that it is crucial to improve the competitiveness of Europe and the development of financial services and capital markets through enforcement of International Financial Reporting Standards (IFRS) as a basis of financial reporting of listed companies. Poland as a member of the EU was obliged to incorporate International Accounting Standards (IAS)/IFRS in national accounting regulations. Our paper discusses this issue. We also present the impact of IAS/IFRS implementation by Polish companies on their financial statements, particularly the impact on income and equity (capital). The presentation is the result of the review and analysis of 255 financial reports (including 171 consolidated) of companies listed on the Warsaw Stock Exchange.     

政府财务会计与预算会计的适度分离与协调:一种适合我国的改革路径

我国现有预算会计系统的局限性引发了理论界与实务界的改革诉求。理论研究者们希望通过引入西方国家的政府会计概念与企业会计中的应计制基础对我国现有预算会计系统进行改造,以便披露完整的政府财务状况与运营业绩等财务信息。然而,一味强调以政府会计取代预算会计,在政府会计系统中直接提高应计制运用的比重,又必将削弱会计系统的预算管理功能。本文借鉴了IPSAS第24号准则等规范的做法,分离并协调政府财务会计与预算会计系统,试图改变政府会计改革的两难局面。     

Governmental Financial Reporting of Heritage Assets From a User Needs Perspective

The implementation of IPSASs in European Union countries and the harmonization of governmental financial reporting are intended to respond to the needs of citizens. An important characteristic of reforms to governmental accounting and financial reporting is the incorporation within the accounting systems of all public authority assets, which include the case of ‘heritage assets’. This paper investigates to what extent IPSAS 17 responds to user needs of governmental financial reporting about heritage assets by conducting a survey of mayors and councillors in the Italian local government.     

The Role and Current Status of IFRS in the Completion of National Accounting Rules – Evidence from Finland

ABSTRACT

We investigate how Finland has applied Directive 2013/34/EU of the European Parliament and of the Council to the annual financial statements, consolidated financial statements and related reports of certain types of undertakings. In addition to the implementation process and general implications of the Finnish Accounting Act, we emphasize its implications and interplay with IFRS. We conclude that the national implementation of Directive 2013/34/EU successfully diminished the administrative burden experienced by small companies.     

New development: Importance of accounts receivable in Colombian state entities and their impact on the preparation of financial information

ABSTRACT

The article shows the importance of accounts receivable in the financial structure of state entities (purely government entities and state companies), and the challenge of standardizing accounting policies in order to prepare a national consolidated balance sheet. The focus is on Colombia. The research is qualitative, based on an analytical link between the nature of state entities, liquidity management and measurement in the preparation of financial information. Evidence is provided about the opportunities and limitations of the accounting regulation frameworks established for the public sector in Colombia. The author identifies future fields of research on public sector accounting and its role in accountability.     

Financial Cooperative Potential Between China and Belt and Road Countries

ABSTRACT

Along with the increasingly frequent economic exchanges between China and the Belt and Road countries (BRCs), bilateral and multilateral financial integration within the region has become a current trend. This article quantifies the level of cooperative potential by designing an index based on the investment demand in China and the financing needs of the BRCs. Using this index, this article analyzes the distribution of the financial cooperative potential among the BRCs and uncovers its influencing factors. The statistical findings are that countries with higher financial cooperative potential have closer economic ties with China. These countries are mostly low-income or middle-income countries with a shortage of infrastructure investment, while their economic development is stable. The research results provide guidance for the overseas strategic layout of the Chinese financial institutions. More funds should be injected into China’s trade and investment counterparts that have stable economic growth and a strong demand for infrastructure investment, such as countries in Northeast, Central, and Southeast Asia.     

International taxation and intrafirm pricing in transnational corporate groups

Since early this century, with the introduction of direct taxes on income or profits by most developed capitalist states, tax authorities have been concerned to prevent manipulation of transfer prices between related firms, especially within transnational corporate groups (TNCs). By the 1930s most states had introduced a broad power to adjust such prices to conform with the “arm's length” criterion, since it was felt that either the application of national taxes directly to foreign parent or subsidiary companies, or taxation on a unitary or consolidated basis, would exacerbate overlapping or double taxation. However, both theory and a detailed examination of practice show that the arm's length criterion cannot in most cases be applied on the basis of “market” prices, since the raison d'être of an integrated firm is economies of scale and scope and generation of synergy profits. Microeconomic methods also can only identify these, but provide no basis for their allocation. Criteria for allocation of the costs and profits of an integrated TNC must have a political dimension: for the firm, it entails issues of strategy, and for the states, the control of oligopolistic powers over investment and allocation of the benefits of international economic integration. The tax authorities of the main OECD countries have developed close administrative co-operation through which these issues can be bargained on an ad hoc basis; but these bureaucratic and secretive methods lack the important element of legitimation. Formula apportionment based on unitary or consolidated accounts has been attacked as Utopian in the absence of a political basis for international agreement on principles or procedures. However, unitary taxation is now accepted (up to the water's edge) for U.S. state taxation, and either a unitary or consolidated basis is likely to become necessary in Europe: while formula allocation of fixed or overhead costs and a bargained division of profits has become the international practice. Still lacking are legitimating procedures and criteria.     

Social Trust,Rule of Law,and Economic Exchange: Evidence from China and Its Major Trading Partners

ABSTRACT

Using cross-country panel data and employing the instrumental variable generalized method of moments (GMM) method, this article examines the effect of social trust on economic exchange between China and its major trading partners over the period 2005–2013. Social trust significantly increases bilateral trade and foreign direct investment (FDI) between China and its partners, and this effect is much stronger in nonmember countries of the Organization for Economic Cooperation and Development (OECD) than OECD member countries. Further exploration suggests that the heterogeneity could be explained by the substitution relationship between social trust and the rule of law: social trust matters more in countries where the rule of law is weaker. We also .find that the impact of trust on trade and FDI is weaker in countries that have greater language similarity to China, are adjacent to China, or are common-law-origin countries. Based on these results, in implementing the Belt and Road Initiative, the Chinese government and companies should not only focus on each country’s legal norms but also attach importance to the role of social capital in international economic exchange.