The International Federation of Accountants today praised the G-20 Finance Ministers and Central Bank Governors for addressing government borrowing and public debt sustainability at their recent meeting. It also applauded the European Commission (EC) report, issued this week, which called for “harmonized public sector accruals-based accounting standards” as a tool to build trust and financial stability.
IFAC CEO Fayez Choudhury said the two actions “provided an important impetus for transparent, comprehensive, reliable, and comparable public sector financial reporting.”
The G-20 recap and communiqué state that “(i)n pursuit of our goal of strengthening the public sector balance sheet, work is needed to better assess risks to public debt sustainability. This includes, inter alia, taking into account country-specific circumstances, looking at transparency and comparability of public sector reporting, and monitoring the impact of financial sector vulnerabilities on public debt.” It calls on the International Monetary Fund (IMF) and World Bank to further explore the issue and provide updates. Prior to the G-20 meeting, outgoing IFAC CEO Ian Ball addressed “The G-20 Agenda under the Russian Chairmanship,” organized by the Institute of International Finance and the Russian Federation Ministry of Finance, where he called on Russia to use its G-20 Presidency to strengthen global financial stability by supporting adoption and implementation of International Public Sector Accounting Standards (IPSASs).
The EC report states that “(t)he sovereign debt crisis has underlined the need for governments to clearly demonstrate their financial stability and for more rigorous and more transparent reporting of fiscal data.” It underscores the need for international comparability, as well as governments’ public interest obligation to owners of government debt securities, potential investors, citizens, and other stakeholders, to provide timely, reliable, and comparable information on their financial performance and position, in the same way that listed companies have obligations to equity market participants.
In addition, it recognizes IPSASs as the only internationally recognized set of public-sector accounting standards, and their foundation in the International Financial Reporting Standards, which are widely applied by the private sector.
“While there has been some progress on reforming public sector financial management and adopting accrual accounting and IPSASs, we need to quicken the pace of change,” Choudhury said. “IFAC’s efforts are strengthened when global organizations like the G-20, EC, IMF, and World Bank show leadership in this area.”
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
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