GOVERNMENT will by end of this year comply with cash basis International Public Sector Accounting Standards (Ipsas), a development which will require full disclosure in public finance reporting and improve transparency and accountability.
Report by Gamma Mudarikiri
Finance directors and senior officers in all government ministries met in the capital last week at a workshop conducted by the Ministry of Finance in collaboration with the Public Accountants and Auditors Board (Paab) to adopt and implement the new system of public finance reporting.
Ipsas are international accounting standards set for use by public sector entities in preparation of financial statements and are based on the International Financial Reporting Standards (IFRS).
These standards are aimed at improving financial reporting in public sector entities as they require full disclosure to ensure transparency and accountability.
Finance directors who attended the workshop however, said the adoption and implementation of the new system is likely to face resistance from key stakeholders especially politicians as they will be required to make full disclosure of information which in the old system of reporting has been kept confidential.
Speaking on the new development, Paab chairman Wesley Sibanda said there was a positive correlation between the quality of financial reporting, the level of economic development and investment attraction in the country.
He said robust financial reporting of public accounts would give a true reflection of government’s financial position and hence help in decision-making, especially with regards to allocation of resources.
“Governments with poor accounting practices are unable to make fully informed decisions about the allocation and use of scarce resources,” said Sibanda.
“Practices that result in comprehensive and reliable reporting of the performance and position of government, and that are audited, enhance accountability and transparency.”
To help government implement Ipsas, Sibanda said his organisation established a Public Sector Accounting Standard Committee which started working at the beginning of this month.
He added that the adoption of Ipsas would remedy reporting deficiencies in government, although this was dependent upon politicians’ will to improve transparency and accountability in public finance.
Sibanda said while government has been strict on financial reporting standards for the private sector, it has failed to impose similar discipline in public finance accounts.
Ipsas has been adopted in countries like South Africa, Spain, and Switzerland which are regarded as the best in terms of public sector financial reporting and disclosure.
The government, however, will face a myriad of challenges to implement the new system.
Financial constraints and skills gap remain major challenges facing the government, a situation that could see the implementation of the new standards taking longer than expected.