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The Main Challenges of Public Sector Accounting Reforms and World Bank’s Public Sector Accounting and Reporting (PULSAR) Program

Dmitri Gourfinkel Governance Global Practice, World Bank Group, Washington, District of Columbia, USA  | 


Founded in 1944 at the United Nations Monetary and Financial Conference (commonly known as the Bretton Woods Conference), the World Bank officially began operations in June 1946. Its first loans were geared toward the postwar reconstruction of western Europe. 

The World Bank Groupgoal, that guides its works, is two-fold: (i): ending extreme poverty, through reducing extreme poverty in the world to less than 3 percent by 2030; and (ii) boosting shared prosperity by fostering income growth of the bottom 40 percent of the population in each country.

Drawing on its convening power and multidisciplinary expertise, the World Bank, through its Governance Global Practice2, is working with its clients and partners to help countries address complex governance challenges. The World Bank is an important part of the United Nations System and an international community of interests striving to improve the quality of governance and the effectiveness of institutions. In addition to supporting reforms at the country level, the World Bank operates also at the global level to shape global standards.

In turn, Public Sector Accounting and Reporting (PULSAR)3 is a regional and country-level Program that supports the development of public sector accounting (PSA) and financial reporting frameworks in beneficiary countries4. It was established in 2017 with support from Austrian and Swiss governments to scale up World Bank support of Public Financial Management (PFM) reforms in the Europe and Central Asia (ECA) region.

This article discusses the relevance of PSA reforms, their key approaches and challenges, and the role of the World Bank’s PULSAR Program in supporting the Western Balkan and Eastern Partnership countries in their efforts to strengthen their current PSA systems.

Relevance of the PSA reforms

Governments are entrusted to manage public resources and deliver a wide range of public services in a sound, cost-effective, and sustainable manner. However, many countries still face significant challenges in the quality of financial reporting, including its consistency and comparability, which are often caused by a lack of underlying accounting systems that comprehensively capture all economic activities.

In this context, the implementation of PSA reforms, based on a robust set of international standards for the public sector and good international practices, such as International Public Sector Accounting Standards (IPSAS), represents an opportunity for governments to not only improve the quality and reliability of their public financial information that could be used for decision-making, but also to:

  • Assess the financial position, financial performance, and cash flows of the governments.
  • Promote consistency and further comparability with peers at both regional and global levels.
  • Strengthen public investment planning and state assets management.
  • Achieve greater levels of fiscal transparency and accountability.

PSA reforms, due to improved decision-making that was enabled by the enhanced data availability, could also have the following indirect benefits: (i) improve the quality of public services provided; (ii) ensure fiscal stability and promote national economic growth; and (iii) improve the acceptability and credibility of governments.

Key approaches and challenges of the PSA reforms

According to the International Public Sector Financial Accountability Index 2021 status report, issued by the International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA)5, 30% of the governments currently report on accrual-based accounting, while 40% of governments are transitioning from cash to accrual-based reporting. Moreover, 57% of the governments that have already adopted accrual-based accounting are making use of IPSAS. It is also expected that by the end of 2025, 73% of the countries will report on an accrual basis and either use IPSAS as a reference point or apply IPSAS directly or indirectly.

In this context, the following approaches of the PSA reform implementation might be observed across the globe: (i) adoption of cash or accrual basis IPSAS; (ii) transition from cash to accrual-based accounting; (iii) development of national PSA standards, which might or not be aligned with the IPSAS or with the International Financial Reporting Standards (IFRS); and (iv) PSA harmonization between different levels of government (national vis-à-vis subnational).

Some of the main interconnected challenges, faced by the countries and different jurisdictions (i.e., subnational governments), and respective lessons learned are explained below.

1. Political support and willingness of the key stakeholders to initiate and carry out the reform. This, in some cases, might imply the support from the highest level of authorities, such as a President or a Prime Minister. In most of the cases, the Ministry of Finance (MoF) assumes the leading role in PSA reform implementation. Other key players, including the Treasury, Supreme Audit Institutions, and Professional Accounting Organizations (PAO), need to be also identified and involved to ensure the success of the reform process.

2. Agreement on a reform strategy and feasible implementation timeline. Usually, PSA reforms are ambitious and long-term initiatives that require a lot of planning and coordination. The governments should develop a comprehensive reform strategy through clear identification of the general and specific objectives and incentives of the reform, while taking into consideration country context and lessons learned from implementation of similar reforms in the past. Unrealistic objectives and timelines should be avoided, taking into consideration that implementation of PSA reform is usually taking, at least, three years, but in many cases, it would last for five or more years.

3. Establishment of proper reform coordination and management arrangements. The definition of the reform’s governance structure (i.e., agreement on the reform’s lead or champion and establishment of high-level steering and operational committees) is another critical element of the reform planning and implementation. Typically, the lead implementation role is assumed by the Ministry of Finance or another agency that is responsible for emission of PSA regulations.

4.  Availability of required resources, including financial and human. The governments should be aware that PSA reform, as any other reform, will have costs and will require considerable capacity building effort to train public sector officials that are affected by the reform. In some cases, additional personnel will need to be involved to ensure timely and smooth implementation of the reform, without jeopardizing the day-to-day operation of the current systems. The role of academia and PAO is crucial to ensure long-term supply of trained professionals.

5. Amendment of legal and regulatory frameworks. It will be necessary to assess the compatibility and compliance levels of the current legal and regulatory frameworks with the good international practices or the benchmark framework that is intended to be achieved. The development and enacting of a primary law on PSA are recommended. The delays in updating of the legal and regulatory frameworks might significantly compromise the overall success of the reform.

6. Definition of structure of the new PSA system. This includes definition of the standard-setting mechanism, as well as the roles and responsibilities of the accounting methodology and operational units within the MoF or other government agency to lead the reform. It worth mentioning that in some countries, the standard-setting function lays on an Intergovernmental collegial body that has been specifically created as part of reform implementation arrangements and is comprised of representatives from key stakeholders. The organization and structure of the accounting function (i.e., centralized vis-à-vis decentralized accounting) might be also agreed at this point.

7. Definition of risk management and mitigation mechanisms. As with any other reform, the leading agency or reform implementation team should design adequate risk management and mitigation mechanism to minimize, among others, the creation of bottle necks and the risk of implementation delays. The implementation delays could arise from any of the reform’s challenges, explained in this section, if they are not timely and properly addressed.

8. Development of change management and capacity building strategy. Resistance to change at different organizational levels is one of the main risks and reasons for failure of similar reforms. The benefits and implementation status of the reform should be effectively communicated to the key stakeholders. The leading agency should also develop and implement proper communication, dissemination, and training strategies to minimize the risk of the reform sabotage and disruption. Academy and PAOs represent main allies of the government to develop and implementation a comprehensive long-term capacity building program in connection with implementation of PSA reform. 

9.  Integration between different PFM functions and upgrading the existing or development of a new Integrated Financial Management Information System (IFMIS). PSA is an integrated part of the broader PFM system, which also includes, among other systems or modules, budgeting, treasury, revenue, debt, fiscal statistics, procurement, etc. The revised PSA system should be interconnected, ideally through an IFMIS, with the rest of the PFM systems. In practice, many countries employ obsolete and isolated systems that use different sources of information and frequently produce inconsistent data that need to be reconciled. Thus, to ensure proper integration between different PFM functions and systems, while improving the quality of financial information, it is recommended to consider updating or developing a new IFMIS in parallel with the implementation of the PSA reform.

10. Establishment of monitoring and evaluation arrangements. PSA reform is an ambitious and long-term effort. The existence of arrangements for continuous monitoring and evaluation of the reform’s progress is crucial to ensure achievement of the reform’s results and outcomes during and after the reform implementation is completed.

World Bank’s PULSAR Program

The main objective of the PULSAR Program is to support the enhancement of PSA and financial reporting frameworks of participating countries in line with international standards and in accordance with good practices, in order to: (i) improve government accountability, transparency, and performance; and (ii) provide a platform for knowledge sharing.

As could be seen in the figure 1, PULSAR program6 has two dimensions: (i) regional, which in turn has three subtasks; and (ii) country, which is subject to funding availability. 

Figure 1. PULSAR Program’s structure

The key goal of the first subtask is to raise awareness and build consensus on the reform agenda among stakeholders through: (i) taking stock of the current PSA and financial reporting environments; (ii) describing reform benefits, approaches, risks, and costs; (iii) highlighting relationship with other PFM reforms.

The main goal of the second subtask is to support conducting gap analysis, development of reform roadmaps, and strengthening legislative and standard setting enforcement through: (i) supporting government officials in developing reform strategies and roadmaps; (ii) helping governments develop and implement legislation, standards, and Information Technology (IT) tools; (iii) producing knowledge products and organizing face-to-face and virtual knowledge sharing events; (iv) establishment and operation of the Financial Reporting Community of Practice (FinCoP).

The goal of the third subtask mostly consists of promoting the development of public sector training, education, and continuous professional development (CPD) aligned with international standards and good practice through: (i) provision of training, education, certification, and CPD for finance and accounting staff; (ii) promoting professionalization of the finance function in the public sector; (iii) establishment and operation of the Education Community of Practice (EduCoP).

The country dimension of the PULSAR Program aims to provide more specific support to beneficiary countries on implementation of PSA related reforms. Currently, there is only one country level program in Albania.


Implementation of PSA reforms, based on the good international standards and practices, such as IPSAS, represents an opportunity for governments to significantly improve: (i) the quality, reliability, and comparability of their financial information; (ii) decision-making process of the high-level public officials; and (iii) the overall levels of fiscal transparency and public sector accountability and performance.

There are several main approaches of the PSA reform implementation that could be observed across the globe and in PULSAR beneficiary countries specifically, including adoption of cash or accrual basis IPSAS, and development of national PSA standards, which might or not be aligned with the IPSAS or IFRS.

In practice, many countries and different jurisdictions face multiple challenges associated with PSA reform implementation, including: (i) political support and willingness of the key stakeholders to initiate and carry out the reform; (ii) agreement on a reform strategy and feasible implementation timeline; (iii) establishment of proper reform coordination and management arrangements; (iv) availability of required resources, including financial and human; (v) amendment of legal and regulatory frameworks; (vi) definition of structure of the new PSA system; (vii) definition of risk management and mitigation mechanisms; (viii) development of change management and capacity building strategy; (ix) integration between different PFM functions, and upgrading the existing or development of a new IFMIS; (x) establishment of monitoring and evaluation arrangements.

In this context, the World Bank’s PULSAR Program represents a valuable source of knowledge generation and sharing, and also acts as catalyst for promoting PSA reforms in beneficiary countries. Its regional and country dimensions and their respective subtasks allow to raise awareness of PSA reform rationale as well as to support the design and implementation of financial reporting frameworks and the knowledge development of accountants and finance professionals. The support provided by the Program so far is highly recognized and appreciated by PULSAR beneficiary countries, Program’s donors, and international PSA community in general.

This article originally appeared in the Journal of Public Budgeting, Accounting & Financial Management of Emerald Publishing. The Author Accepted Manuscript version has been shared here under Emerald’s author rights policy.




1. The World Bank Group comprises five constituent institutions: (i) International Bank for Reconstruction and Development (IBRD); (ii) International Development Association (IDA); (iii) International Finance Corporation (IFC); (iv) Multilateral Investment Guarantee Agency (MIGA); and (v) International Centre for Settlement of Investment Disputes (ICSID). Further information about the World Bank Group structure could be found at the following link:
2.Governance Global Practice is one of sixteen IBRD’s Global Practices (GP). The list of all sixteen GP could be found at the following link:
3. Further information is available on the PULSAR website:
4. PULSAR’s beneficiary countries are Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Croatia, Georgia, Kosovo, North Macedonia, Moldova, Montenegro, Serbia, and Ukraine.
5. International Public Sector Financial Accountability Index 2021 status report is available at
6. PULSAR Program’s brochure is available at: