INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS (IPSAS)
The International Public Sector Accounting Standards (IPSAS) are set of accounting standards issued by the IPSAS board for use by Public Sector entities around the world in the preparation, presentation and disclosure of general-purpose financial statements. The IPSAS trace their roots from the International Financial Reporting Standards (IFRS), where the IPSAS are tailored for the Public Sector to satisfy requirements of public sector financial operations and reporting.
The standards apply to all Public Sector entities other than Government Business Enterprise (GBS) set up for commercial purposes. Its main objective is to improve the quality of general-purpose financial reporting by Public Sector entities, leading to better-informed assessments of the resource allocation decisions made by governments, thereby increasing transparency and accountability.
The International Public Sector Accounting Standards setting body the IPSAS Board (IPSASB) was established by the International Federation of Accountants, (IFAC) the global organization for the accountancy profession. The IPSAS Board has so far issued 42 Standards with over 100 countries across the globe adopting IPSAS. More than 15 countries in Africa are in various stages of implementing IPSAS. International Bodies such as the UN, African Union and Organization of America States have adopted IPSAS.
Benefits of IPSAS includes:
- Improves transparency by providing a complete view of government business and performance.
- High level of accountability by ensuring accurate recording of government performance and status.
- Greater credibility as governments uses the same accounting standard.
- More effective monitoring of the existence and value of assets and liabilities through effective asset and liability management.
- Better matching of cost to revenue including accounting for depreciation of assets.
- Support better decision making by using quality information.
- Harmonization of reports and statements across nations.
- A better comparison of financial statements among countries.
IPSAS in GHANA
Ghana announced the adoption of accrual-based IPSAS in 2014 as the framework for preparation, presentation and disclosure of the general-purpose financial statement. The implementation of the Standards is however scheduled to be completed in the year 2023. The implementation is to further strengthen the Public Financial Management (PFM) Reforms Strategy and the use of Ghana Integrated Financial Management Information System (GIFMIS). The Institute of Chartered Accountants Ghana (ICAG), as the regulator of accountancy practice in Ghana, is collaborating with CAGD in the IPSAS implementation.
The promulgated PFM Act 2016 (Act 921) provides legal backing for the accrual-based IPSAS financial reporting.
The Journey So Far To Coordinate IPSAS Implementation Across All Covered Entities:
- IPSAS Implementation Committee (IPIC) was established to provide policy direction in the implementation.
- IPSAS Secretariat established in Controller and Accountant –General’s Department.
- IPSAS Implementation Strategy and Work Plan developed to guide implementation.
- The capacity of Implementation Committee Members built to be able to provide policy direction.
- The capacity of Chief Directors on IPSAS was built through a training programme
- Liabilities and provisions included in financial statements since 2010.
- Fixed assets capitalized and depreciation thereof charged since 2012.
- Modified Accrual Accounting basis being used currently for production of Consolidated Fund (CF) financial statements.
- The World Bank and SECO are providing part of the funding for the implementation.
- CPD on IPSAS organized for Accounting Officers across the country.
- Accounting Officers of MDAs/MMDAs sensitized on IPSAS.
- A training programme was organized for the Budget Officers of the Ministry of Finance about the adoption of IPSAS in public Sector financial reporting requirements.
- Stocktaking and data capturing of Legacy Fixed Assets are ongoing in all MDAs.
- Upon the request of the Controller and Accountant-General (CAG), Fixed Assets Coordinating Units (FACU) have been formed in MDAs to pave way for efficient management of Assets.
- A GIFMIS-IPSAS gap analysis was undertaken to identify the gaps and prepare for the upgrade of the GIFMIS to be IPSAS compliant.