Global Conference on Accounting and Reporting by Governments The IPSAS journey in East Africa

Transcription

1 Global Conference on Accounting and Reporting by Governments The IPSAS journey in East Africa Bernard Ndungu, the National Treasury of Kenya

2 The East African Community 2

3 The foundation of IPSAS in the EAC The EAMU protocol Heads of EAC Partner States (Kenya, Uganda, Tanzania, Rwanda, Burundi)signed the East African Monetary Protocol (EAMU) on 30th November, The EAMU protocol contains articles related to harmonisation of PFM standards. These include: Article 8 on Fiscal Policies Article 16 on Financial Management, Accounting and Reporting Article 22 on Harmonization of Policies, Laws and Systems under General Provisions 3

4 Harmonization of regional PFM systems Main objective of regional PFM systems harmonization (i) Promotion of sound macroeconomic management; (ii) Minimization of risks of fiscal indiscipline; (iii) Support of fiscal convergence ahead of the monetary union; (iv) Facilitation of comparability to ensure effective monitoring; (v) Provision of a basis for regional surveillance mechanism; and (vi) To build a PFM system aligned with international best practices. 4

5 PFM Standards agreed by Partner States (i) Accounting and Financial Reporting The Partner States adopted the following standards: (IPSAS), accrual basis for central and local governments and non-trading State Owned Enterprises and regulatory bodies. International Financial Reporting Standards (IFRS) for trading State Owned Enterprises. The Partner States agreed to maintain the budget using cash basis. Good practices based on PEFA Indicators were agreed particularly in relation to having a target of at least a B score with respect to: Quality and timeliness of in year budget reports (PI 24); and Quality and timeliness of annual financial statements (PI 25). 5

6 PFM Standards agreed by Partner States (ii) Internal Audit The Partner States adopted the following standards: International Standards for the Professional Practice of Internal Auditing issued by the International Internal Audit Standards Board of the Institute of Internal Auditors. International Professional Practices Framework (IPPF) issued by the Institute of Internal Auditors Global to guide them in strengthening audit units. 6

7 PFM Standards agreed by Partner States (iii) Procurement The Partner States agreed to harmonize following areas: Preferential Treatment; Publication of procurement plans; E-Procurement; Green Procurement; Harmonized procurement standards in accordance with international best practices. 7

8 PFM Standards agreed by Partner States (iv) External Audit The Partner States agreed to harmonize following areas: Adopt International Standards for Supreme Audit Institutions issued by International Organization of Supreme Audit Institutions; International Standards on Auditing issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants. 8

9 Accounting, reporting, audit: Country analysis PFM Legal framework dimension KE UG TZ RW BR Accounting, reporting, audit of fiscal data a Adoption of International accounting standards (IPSAS) b Frequency of publication of in-year reports c Institutional coverage of in-year reports d Institutional coverage of end-year reports e f g Months after FY publication of unaudited annual accounts (within 4 Months) Months after FY audit report to parliament (within 6 months) Months after FY govt. response to audit (within 9 months) 9

10 Status of IPSAS implementation in the various EAC partner states Rwanda Since 2006, the GoR has been producing and progressively improving the quality of its annual financial statements according to a modified cash basis of reporting. Identification of gaps against IPSAS standards and monitoring of progress against the cash basis commenced in 2012/13 with TA from IMF. Remaining gaps for IPSAS cash basis are achievable. The road map requires full compliance to IPSAS cash basis by 30 June GoR has developed a road map that aims to achieve full compliance to IPSAS accrual basis by 30 June

11 Status of IPSAS implementation in the various EAC partner states Kenya New constitution promulgated in Required formation of a Public Sector Accounting Standards Board of Kenya which was formed in In July 2014, the board adopted IPSAS cash basis of accounting as the financial reporting framework for National Government (Ministries, Departments and Agencies) and County Governments. Board adopted IPSAS accrual for non-commercial state corporations and IFRS for commercial state corporations. The first government wide consolidated financial statements prepared for FY 2013/14 under the new reporting framework. 11

12 Status of IPSAS implementation in the various EAC partner states Uganda A legal framework adopting IPSAS as the financial reporting framework is yet to be adopted. However, the recently enacted PFAA 2015 gives the accountant general the powers to decide the accounting framework. The country is aiming for full adoption of cash basis IPSAS by the end of Financial year 2016/17, 12

13 Status of IPSAS implementation in the various EAC partner states Tanzania 2008 government adopted IPSAS cash basis. Effective FY 2014/15, all general government entities are applying accrual basis of accounting. Public Corporations are applying IFRS. First consolidated financial statements under accrual basis prepared for FY 2013/14. 13

14 Cross-cutting challenges Cost of implementing systems such as Asset Management and Inventory systems; Capacity of accountants across the region; Differing pace of understanding and commitments between Supreme Audit institutions and Accountant General offices; Differing financial year ends for public sector entities within member states; and Fear of change particularly towards accrual basis of IPSAS. 14

15 Opportunities Strong political will and commitment by member states; Coordinated effort driven by East and Southern Association of Accountant Generals (ESAAG); Growing number of qualified accountants across member states; 15

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