PracticeConsultingIFAC public sector guidelines under fire

IFAC public sector guidelines under fire

Financial reporting guidance condemned for Anglo-Saxon bias. John Stokdyk reports.

UK accountants have told the International Federation of Accountants (IFAC) to take its recent ‘Guideline for governmental financial reporting’ back to the drawing board.

Comments issued last week by the English ICA’s financial reporting committee expressed support for IFAC’s long-term goal to bring public-sector practices closer to the private sector by introducing accrual accounting for government entities in place of cash-based methods. But its submission said it regarded the IFAC guidance as ‘an elongated SWOT analysis’, and called for further clarifications.

The institute committee questioned whether IFAC had consulted widely enough with standards-setters and government accountants, as a result of which government departments had not attributed any status to the document. It noted an Anglo-Saxon bias, with no European Commission representatives on the IFAC public-sector committee.

‘The continental European view does not appear to be well represented and the choice of countries to illustrate use of the accruals basis seems highly selective,’ the submission noted. IFAC failed to acknowledge the limitations and subjective elements of accruals accounting, added the committee, which suggested IFAC put more effort into identifying those who used public-sector accounts and what their needs were.

On the technical front, the institute committee did not agree with IFAC’s presentation of four accounting models and said cash and accruals were the two main alternatives, with a spread of different hybrid approaches between the two ends of the spectrum.

The institute was not alone in picking out the four accounting models, said Stephen Walker, IFAC’s technical manager. ‘But cutting it back to just cash and accruals would be a fairly fundamental change; the public-sector committee would need to consider whether to re-expose the document,’ he said.

Extra consultation might mean IFAC will miss its self-imposed deadline to produce full guidelines by next October.

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