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Towards European Public Sector Accounting Standards (EPSAS)

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Presentation on theme: "Towards European Public Sector Accounting Standards (EPSAS)"— Presentation transcript:

1 Towards European Public Sector Accounting Standards (EPSAS)
Norwegian association for local government auditing Brussels, 15 January 2015 Towards European Public Sector Accounting Standards (EPSAS) Alexandre Makaronidis Head of Unit Task Force EPSAS, European Commission - Eurostat

2 Why harmonised accruals?
From an EU perspective the wide range of public sector accounting standards result in a lack of: transparency, and comparability in the financial reporting due to non-comparable, incomplete and inconsistent primary accounting data. This impacts on both General Purpose Financial Statements and Government Finance Statistics.


4 EY Study (2012) public sector accounting standards in the EU

5 Background: 2012 to mid-2013 Study on the suitability of IPSAS: Retrospective
Public consultation on IPSAS Report on suitability of IPSAS IPSAS cannot easily be implemented in EU Member States as it stands currently IPSAS would be a suitable starting point for the future development of a set of European Public Sector Accounting Standards Budgetary Frameworks Directive "… the Commission shall assess the suitability of the International Public Sector Accounting Standards for the Member States" Task Force IPSAS EPSAS Conference E&Y study on public sector accounting and auditing practices

6 Public consultation – suitability of IPSAS
Are IPSASs suitable for implementation in the EU Member States? Yes No Partly Uncertain Total Professional Association/Standard Setter 12 3 1 16 Ministry of Finance/Treasury 4 10 Private individual 6 Regional Audit Office 8 9 National Audit Office 2 Firm of Auditors or Accountants 5 Statistical Office Regional association or authority Social security/Pension Fund International Organisation National authority TOTAL 26 19 21 68 % share 38 28 31 NB: "NO" replies were concentrated - from a small number of MSs (DE, FR, AT, NL, PL)

7 Taking forward EPSAS: mid-2013 - onwards
Outputs from: TF EPSAS Governance Commission Communication TF EPSAS Standards Impact Assessment Public consultation on EPSAS governance Legislative proposal PwC study on behalf of Eurostat

8 Staged approach to EPSAS – outline (June 2014)

9 IPSAS study (2013) - Minor or no adaption
IPSAS 1 – Presentation FS IPSAS 2 – Cash flow IPSAS 3 – Fundamental errors and changes in policies IPSAS 4 – Changes in foreign exchange rates IPSAS 5 – Borrowing costs IPSAS 9 – Revenue from exchange transactions IPSAS 10 – Hyperinflation­ary economies IPSAS 11 – Construction contracts IPSAS 12 – Inventories IPSAS 14 – Events after the reporting date IPSAS 16 – Investment property IPSAS 19 – Provisions, con­tingent liabilities, contingent assets IPSAS 27 – Agriculture IPSAS 32 – Service concessions

10 IPSAS study (2013) - Adaption or selective approach
IPSAS 7 – Investments in associates IPSAS 8 – Interests in joint ventures IPSAS 13 – Leases IPSAS 15 – Financial instruments: Presentation IPSAS 17 – Property, plant and equipment IPSAS 18 – Segment report­ing IPSAS 20 – Related party disclosures IPSAS 21 – Impairment of non-cash- generating assets IPSAS 22 – Disclosure general government sector IPSAS 23 – Revenue from non-exchange transactions IPSAS 24 – Presentation of budget information IPSAS 25 – Employee benefits IPSAS 26 – Impairment of cash-generating assets IPSAS 31 – Intangible assets

11 IPSAS study (2013) - Needing amendment
IPSAS 6 – Consolidated financial statements IPSAS 28 – Financial instruments: Presentation IPSAS 29 – Financial instruments: Recognition and measurement IPSAS 30 – Financial instruments: Disclosure

12 PwC Study on behalf of Eurostat (2014)
Technical analysis of IPSAS confirms: The general technical suitability of existing IPSAS Classification of IPSASs in 3 categories for the future effective and efficient work on EPSAS High level cost estimate of EPSAS implementation Potential costs between 0.01% and 0.05 % of GDP Benefits would outweigh costs

13 PwC Study on behalf of Eurostat (2014)
Extrapolated costs at EU level spread over the reform period Scenario 1 – Adaptation of all existing IT systems between 1.2 billion and 2.1 billion EUR Scenario 2 – New IT systems for all entities with low IT maturity between 1.8 billion and 6.9 billion EUR IPSAS report (2013): costs of % of GDP PwC Study (2014): costs of % of GDP NB: To interpret with due care, taking into account the inherent limitations of such extrapolations.

14 European Commission (Eurostat) Task Force EPSAS: http://ec. europa

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