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OECD accruals symposium spring 2017

Paris, 2 and 3 March 2017

EPSAS update

Alexandre Makaronidis

Head of Task Force EPSAS, European Commission - Eurostat

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Context

General Purpose Financial Statements should provide a true and fair

view of the financial position and performance of reporting entities for

accountability and decision making purposes, whether they are private

or public sector.

But, no common financial accounting standards for the public sector -

contrast to the private sector.

No common underlying set of public sector accounting standards - risks

for the transparency and comparability of entity-level financial accounting

data.

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EPSAS way forward

A more voluntary and progressive approach:

• Increased fiscal transparency in the short to medium term

• Comparability in the medium to the longer term

Phase 1: Increasing fiscal transparency in the Member States in the

short to medium term by promoting accruals accounting, e.g. IPSAS,

in the period from 2016 to 2020, and in parallel developing the

EPSAS framework (i.e. EPSAS governance, accounting principles

and standards).

Phase 2: Addressing comparability within and between the Member

States in the medium to longer term, implementing EPSAS by 2025.

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Increasing fiscal transparency first, comparability later

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Activities in 2016

• Encouraging and supporting the modernisation of public

accounting systems on accruals basis in the Member States

• Drafting the concrete proposal on the EPSAS framework

(governance, principles, standards)

• EPSAS issues papers

• Communication with stakeholders

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Activities in 2016

Support of voluntary accruals implementation included:

• Draft final report Cell FTI guidance

• 5 grants agreed with MS were finalised: Hungary, AT-Burgenland,

Cyprus, Malta, DE-Hesse

• 2 others are ongoing: AT-Salzburg, Portugal

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MS which have modernised

MS which are considering modernising

MS which are modernising

MS which do not want change

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EPSAS Working Group

The first EU network of public sector accounting standard-setters at the

core of EPSAS development and implementation consisting of

representatives from all Member States and invited observers.

Discussion points in the WGs:

• Reports from the EPSAS Cells

• Progress reports from EPSAS grant beneficiaries

• Updates on stakeholders activities

• Discussion of EPSAS issues papers

• Reviewing current developments in the MS

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Cell on First Time Implementation

The Cell met five times and presented the revised draft final report to

the WG in Rome

• The guidance aims to support improvements to fiscal transparency

while preparing the ground for implementing EPSAS at a later

point in time

• First draft of FTI guidance is foreseen to be issued in spring 2017

• The guidance is expected to be updated periodically as deemed

necessary

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The Cell presented the draft final report to the WG meeting in Rome. It

identified and defined the meaning of following governance principles:

• Professional independence and integrity

• Legitimacy

• Transparency and openness of procedures

• Competence and capacity

• Efficiency and effectiveness

• Accountability

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Cell on Principles underlying EPSAS Governance

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Cell on Principles related to EPSAS standards

The Cell presented an interim report to the WG meeting in Rome. The Cell

• outlined possible structure for an EPSAS approach to principles

consisting of:

• High level objectives and high level general principles, in line with the scope

of the work of the Cell on Governance principles;

• Qualitative characteristics (QCs) and constraints;

• Application principles.

• tabled for discussion a first outline of CF/principles definitions

Common meeting with the Cell on governance principles planned for March. 11

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EPSAS issues papers

Eurostat commissioned 10 issues papers on key public sector

accounting topics under the 2016 contract with EY:

Small and less risky entities Social benefits

Options in IPSAS Infrastructure assets

Taxes Segment reporting

Heritage Military assets

Employee benefits (pensions) Social contributions

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Communication with stakeholders in 2016

Follow-up seminar for the Sub-Committee on Statistics of the

Economic and Financial Committee (EFC-SCS)

European Parliament

• Meeting of the EP Committee on Budgetary Control (CONT)

in Brussels in February

• Opinion of EP CONT for the Committee on Economic and

Monetary Affairs (ECON) in April

• European Parliament resolution in June

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Next steps for 2017 -- building on 2016 work

TF.EPSAS and the EPSAS WG will:

• Continue supporting the modernisation of public accounting

systems on an accruals basis in the Member States;

• Continue developing the elements of the EPSAS framework and

the preparations for future EPSAS standards;

• Commission a further set of EPSAS issues papers;

• Collect more information for impact considerations;

• Continue communicating with stakeholders;

Eurostat will host in Luxembourg IPSASB in June 2017.

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Next steps for 2017 -- contract with PwC

Task 1 – Drafting of 10 papers on specific accounting issues

Task 2 – Collection of additional and updated information related to

the potential impacts of implementing accruals accounting in the

public sector:

• lessons learnt from experiences of accruals implementation;

• capacity issues in the Member States;

• how could EPSAS support financial audit and control in the MS

• methodology for measurement and monitoring of the transparency

of public sector financial reporting in MS.

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European Commission (Eurostat) Task Force EPSAS:

http://ec.europa.eu/eurostat/web/government-finance-

statistics/government-accounting

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