The Impact of International Public Sector Accounting Standards (IPSASs) on the Public Budget Statement

International Journal of Research and Scientific Innovation (IJRSI) | Volume VII, Issue X, October 2020 | ISSN 2321–2705

The Impact of International Public Sector Accounting Standards (IPSASs) on the Public Budget Statement

 Zivanai Mazhambe

Post Doctoral Research Department, Bright Africa Consultancy Training

Abstract—
The IPSAS budget statement prescribed by the scope and conceptual framework discloses financial information useful for stakeholder decision making. This scientific study purpose is to assess the impact of IPSAS on the public budget statement in Africa. The study methodology adopted is mixed research methodology, through researcher administered questionnaires and interviews on PAFA accountants in public sector practice across Africa. The findings revealed that an IPSAS compliant publicly approved budget, after consultation with the public is objective and useful for user decision making, enhancing transparency and accountability for the benefit of users, including added stakeholder’s trust and confidence thereby making an overall impact contribution to the Gross Domestic Product. The findings also identified implementation challenges of the IPSAS compliant budget as technical complex and beyond the comprehension of the average user, lack of political will, and resistance to change in the Finance Ministries and among legislatures

Keywords— IPSASs, Public Sector Budget, Government accounting, IPSASs Implementations, IPSAS in Africa, PAFA, IPSASs Challenges

1. INTRODUCTION

The IPSASs public budget statement within the precinct of the national legal framework is arguably useful for user decision making. The IPSAS budget statement prescribed by the scope and conceptual framework discloses financial information useful for stakeholder decision making, thereby promoting public trust and confidence. The interplay of the publicly adopted budget between economic substance and legal form through fair presentation is a key component for accountability and transparency. This study therefore seeks to analyse the impact of the IPSAS on the public budget statement.

2. LITERATURE REVIEW

The International Public Sector Accounting Standards Board (IPSASB) recognizes the rights of national governments and accounting standards setters, especially in cash based IPSAS, to establish national jurisdiction guidelines and standards for financial reporting in guided by IPSAS pronouncements (IPSAB, 2018). The consolidated publicly approved budget statement with comparatives provides aggregate financial information useful for the evaluation of the public entity’s performance, especially in terms of efficiency and effectiveness of service costs with clearly defined milestones (IPSAS 1; IPSAS 35).

The legally adopted budget should be prepared (IPSAS 1; IPSAS 35) in compliance to IPSAS accounting policies disclosing comparatives, financial limits, variance analysis, appropriations, supplementary information and explanatory notes is likely to enable the attainment of the public sector objectives. The consolidated financial statements and the publicly approved budget should be jointly prepared by the head of the central finance agency (Controller General) and the Finance minister with comparatives, budget limits and disclosure notes summarising the accounting policies, variance analysis, appropriation limits explanations and authorising legislations (IPSAS1; IPSAS, 24). The financial statements and budget statement shall only be be described as IPSAS compliant if its complies with all the standards of IPSAS (Mazhambe, 2020).

Public financial management in government and its entities is aimed at disclosing financial information to the citizens and other users, through constant consultation and communication of financial and non financial information to ensure accountability and transparency (Wynne, 2007). The implementation of IPSAS in the United Nations system organisation (Biraud, 2012) revealed numerous benefits which were : standardization, harmonization and consistency (57.9%); quality (52.6%), comparability (47.4%) and improved transparency (84.2%).

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