December 10, 2010Doug Hadden
Doug Hadden, VP Products
Another busy conference at the International Consortium on Governmental Financial Management in Washington this week. Lots of content uploaded to the ICGFM Blog – as my “second job” as VP Communications for the organization. International accounting standards in the public sector might not be top of mind for everyone. Yet, I wonder whether using the International Public Sector Accounting Standards (IPSAS) could provide the context we need to understand the debt crisis in Greece, Ireland or the United States. For one thing, government transparency is opaque if everyone is using different standards.
IPSAS was a major focus on the conference and the International Journal on Governmental Financial Management Volume 2 issue:
Many of the attendees at the conference came from developing countries. Many are adopting the cash-based IPSAS. Those from aid-dependent countries were vocal about the need for aid transparency and aid harmonization. There was some very interesting discussion from the presentation on the International Aid Transparency Initiative with takeaways from Malawi and Rwanda. Aid remains inefficient because of the lack of harmonization to country needs, high transaction costs and duplication. Panelists agreed that getting timely data was more important than full accuracy in data. Otherwise, budget planning and budget execution are interrupted.
The ability to provide transparent data via the web was selected in the ICGFM poll as having the greatest impact. This is reflective of the appetite for transparency in developing countries.
Developing country governments are seeing economic and stability benefits to transparency. And, many are leaping ahead of developed countries through the use of E-Government technology, budget/procurement/human resources transparency and adoption of international standards. (This is the crux of my argument from my article in the November Cutter IT Journal, E-Government Development and Public Sector Transparency Trends in Emerging and Developing Countries )
As one participant pointed out, many governments in developed countries do not want to change national standards for sovereignty reasons or because they feel their standards are superior. This makes it difficult to compare national debt across multiple countries. We may see a leap forward as countries like Georgia and Honduras move ahead of the G7 in support of standards – then move ahead in accural accounting and performance management.
We’re seeing this trend with many of our customers. The sophistication of the Chart of Accounts in Sierra Leone remains a wonder – in my opinion, much better than the COA used by most donors. Timor-Leste continues to advance transparency with a portal from FreeBalance and is forging ahead with performance management functionality for managers and ministers. Kosovo has rapidly adopted International and European standards.