In this public sector accounting guide we are going to see all the benefits of IPSA since its adorptation, but to begin let see the meaning or what is IPSAS
WHAT IS IPSAS
These are high quality global financial reporting standards developed by the international public sector accounting standard board (IPSASB) of the international federation of accountants (IFAC) to regulate financial reporting in the public sector and similar institutions (other than government business enterprise (GBEs) in the preparation of general-purpose financial statements.
Main Guide: INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS
Even though the public sector is regulated by diverse rules and regulations as well as political objectives of the government, these standards aimed at standardizing financial reporting in this sector to ensure harmonization and consistency in financial among governments in different countries.
Composition of the IPSASB
The IPSASB (formerly public sector committee (PSC)) is a board of IFAC formed to develop and issue under its own authority international public sector accounting standards (IPSASs).
The IPSASB comprises 18 members, 15 of whom are nominated by the member bodies of IFAC and three of whom are appointed as public members with expertise in public sector financial reporting.
Benefits of adopting the IPSAS
The adoption of high-quality accounting standard is essential for transparent financial reporting, strong accountability and good governance.
The credibility of government financial statements depends on the accounting standards that regulate them. Hence there is the need for government to adopt the use of IPSAS in the preparation of financial statements.
The following are the benefits a government stands to gain by adopting the IPSASs;
- It ensures improvement in internal control, transparency and governance in government financial reporting since the IPSAS required a more comprehensive and precise information on the use of resources and on the status of liabilities to be disclosed.
- It strengthened accountability in the usage of resources through a more frequent, accurate and complete finance reporting.
- It ensures improvement in organizational management, planning and budgeting throughout the organization due to more better accounting practices for estimated of income and expenditure as well as more comprehensive information on assets and liabilities.
- It strengthens the support for results bases management through the provision of more comprehensive information on costs
- It improves consistency and comparability of financial statement as a result of the detailed requirements and guidance provided in each standard.
- It ensures better financial information supports, that is better financial management, better information to donors and countries providing external assistance, better quality and credibility of financial reports. The adoption of IPSASs by governments will improve both the quality and comparability of financial information reported by public sector entities.
Problems on adaptation of IPSAS
- Cost to implement: Adoption of the IPSAS implies a substantial investment in rewriting public sector accounting manuals and instructions by the controller and accountant general department to be use by government entities incorporating the application of the IPSAS at the same time conforming to local regulations education and training will have to be carried out which would also constitute a substantial amount of government outlay as the nation prepares to adopt to IPSAS.
- Availability of Qualified accountants: most of the public sector and government agencies lack the necessary personnel who would carry out the implementation of the IPSAS and management of public accounts based on the IPSAS.
- Resistance: not all government systems and administrative machinery will support IPSAS currently most of the government agencies and departments have the budget and performance monitoring software (BEPEM) operating on cash basis of accounting. Their familiarity with the current system makes it difficult for them to welcome any changes in the government accounting system.
The credibility of government financial statements depends on the accounting standards that regulate them. There is a need for government to adopt IPSAS in the preparation of financial statements.
Adopting IPSASs will improve both the quality and comparability of financial information reported by public sector entities.