Public sector accounting reform lacks comparability across Europe
Ernst & Young study finds European governments switching to accrual accounting, but not adopting international standards
The move towards accrual accounting in governments across Europe is well
underway, but there is little drive towards comparability, an Ernst & Young
study has found.
Of 19 European jurisdictions reviewed by the firm, over half had already
switched to accrual accounting, with many others preparing to make the switch.
However, few are currently adopting International Public Sector Accounting
Standards (IPSAS), preferring instead to stick with local business rules and
using the standards for orientation and guidance.
“The debate among European public entities over whether to move from cash to
accrual accounting is over,” said Philippe Peuch-Lestrade, global government and
public sector leader at Ernst & Young. “However, a single accrual method is
not yet being adopted and IPSAS remains more of an aspiration than a feasible
destination. The global financial crisis would seem to be a ‘teachable moment’
for focusing the attention of leadership on the advantages of accrual accounting
generally, but public finance directors do not seem to have considered the
advantages of adopting a single set of accrual standards.”