www.pwc.com Global Conference on Accounting and Reporting by Governments The global case for transparency Brian Quinn, World Bank Group
The Global Case for Transparency Brian Quinn Director World Bank Group
Transparency - Road Map Where were we? Lessons from Latin America What s the global message? Strategic decisions for IPSAS adoption Where are we now again? World Bank perspective Some final thoughts 3
Where were we? Sovereign debt safe no more 2008 financial crisis old news? Importance of understanding the fiscal position of governments Global inconsistency in reporting Lack of transparency & accountability Lack of monitoring and enforcement The burning platform really? Need for tenacity & optimism 4
Lessons from Latin America (1) Tremendous progress over the decade Initial focus on government reforms were needed to ensure macro-fiscal stabilization - Reduce inflation - Control budget deficits - Attract foreign direct investment Once achieved, shift towards management of public resources and delivery of services And ultimately a demand for accurate historic financial data/information 5
Lessons from Latin America (2) Higher growth rates since 2003 has contributed to: Lower poverty rates Expanding middle class More taxpayers Greater demands for improvements in the quality of public services Increased calls for transparency and accountability Virtually all countries in the region pursuing some kind of public sector accounting reforms, with the WB fulfilling a role of regional integrator/facilitator 6
What s the global message? (1) Budget is the single most important policy document of governments Budget & fiscal information important to politicians and key decision makers Accounting reforms get less attention Yet accounting & financial reporting are the foundations of proper budgeting and fiscal projections Implement budget reforms & accrual accounting simultaneously (Austria) Over time, gradual shift from lack of harmonization in preparing government information to Convergence at regional and international level 7
What s the global message? (2) Incentives and pressure to adopt accrual accounting standards Countries are motivated by the benefits of adopting IPSAS, but are aware of the obstacles to successful implementation Integration of fiscal statistics, budgeting information, and financial accounting is important Accrual accounting minimizes tendencies to work in silos, providing there is a will to do so 8
What s the global message? (3) Similarities in the challenges faced Universal need to better understand, document and optimize learn from others (Austria, UK, Malaysia, China) Solutions require engagement at both country and global levels: Country level harmonize laws, regulations, policies, and procedures to enable implementation across different levels of government Regional facilitate knowledge sharing and dissemination, and deepen collaboration to identify common, cost effective solutions 9
Strategic decisions for IPSAS adoption 1. Gradual implementation by sectors 2. Adoption process for IPSAS 3. Working alongside public sector entities 4. Collaboration with universities and audit firms 5. Dissemination and training programs led by government, universities and audit firms 6. Modify existing information systems 7. Partnership with MoF 8. Use of transitional arrangements for first time adoption 9. Where there is a will, there is a way 10
Where Are We Now Again? The Greek problem back in the news $369 billion declared debt (NYT, Jan 20, 2015) 175% of its $210 billion GDP No IPSAS here! Greece & Germany Veracity of data No accountability What will it take? 11
World Bank perspective Better quality loan portfolio Best practice/consistency/comparability Loan proceeds used for the purpose intended The fight against fraud & corruption Maintaining the relevance of financial reporting in a data revolutionary world Cash accounting is a good start; not an end game Political will & leadership Conditionality; need better metrics Transparency Open data & feedback loops with users 12
Some final thoughts IPSAS Conceptual Framework Implementation challenges (fair value; fixed assets; revenue recognition; employee benefits and SS programs) World Congress of Accountants, Rome, 2014 Governance of IPSASB formation of the PIC 13
Thank you