PUBLIC SECTOR FINANCIAL REPORTING IN THE CZECH REPUBLIC – TECHNICAL POINT OF VIEW

OECD Paris, France March 3-4, 2014

Michal Svoboda Head of unit

Department of Accounting and Audit Ministry of Finance, Czech Republic

Pre-phase before 2010 • Several legal forms with their own rules and exceptions • Financial reporting for central government (since 1970´s) • Mix of cash and accrual base • Traces of chamber accounting • Lack of comparability, relevance, completeness, faithful

representation – COULD NOT FIT ACTUAL USERS´ DEMANDS

• Accountants insist on what their already know: „why do you change something what has been working well since decades?“

Initial phase

• 2007 – Political decision on public sector accounting reform • start in 2010 • both central and local governments involved • more than 17 000 accounting entities • Conceptual direction: IPSAS

• 2008 – conceptual rules set by the act on accounting • 2009 – most of technical rules set by the decree

and standards • January 1, 2010 – START, some rules and methods

postponed up to 3 years – decreasing shock • Environment of continental European law system

– need for very detailed and in-depth rules

Conceptual issues • Fully accrual based (pension benefits in following years)

statements of • financial position, financial performance, changes in

equity, cash flow (indirect method now, direct in the near future), notes

• IPSAS not implemented, but very close to • Consolidation (multi-level) – pilot starts 2014 • Financial statements approval – started 2013

• Accountability tool • Pull in deputies and other representatives

Technical solution

• Central System of Accounting Information of the State (CSSAI) – gathering of financial data • Financial statements – quarterly • Statistical reports – quarterly • Operating data (central govt.) – monthly • Budget statements – quarterly and monthly

• Defined users of CSSAI: • Central govt., esp. MoF • Czech National Bank, Czech Statistical Office • CZ SAI and other control bodies • GENERAL PUBLIC

• Defined interface (XML), NOT unique SW

ENTRIES ENTITIES

CSSAI

Central System of State Accounting Information (CSSAI)

Reporting area

Data quality check

CR/DT Entries

+ Entries for central bank

Central government

Local government

Operational reports

Central bank reports

Public portal

“Monitor”

Statistical reports

Financial statements

Regional offices audit

Ministry office audit

ALL ENTITIES

SIGINIFICANT ENTITIES

+ Entries for STAT

Statistical reports (1)

• Effective since Q3/2012

• Reporting for Eurostat (ESA 95,…) and Czech National Bank ensured using analytical accounts – information obtained within making initial entries

• Reporting < 10 % of public sector entities, but > 85 % of assets covered

• Significant change caused significant expenses • Not only more reports, but a brand new system

Entities providing full range of records

no % ASSETS COVERED [%]Central Government 490 490 100% 100%Local Government 16 563 937 6% 72%TOTAL 17 053 1 427 8% 86%

as of Sept. 30th, 2013 TOTALPROVIDING ADDITIONAL ENTRIES

no % ASSETS COVERED [%]Central Government 453 360 79% 99%Local Government 16 597 896 5% 73%TOTAL 17 050 1 256 7% 86%

PROVIDING ADDITIONAL ENTRIESTOTALas of Dec. 31st, 2012

Statistical reports (2)

• Direct connection between financial and statistical reporting

• 17 dynamical reports based on balance sheet and P/L incl. related entities´ recognition and reporting

• almost no need for additional statistical surveys and estimates

• no need for new semi-statistical financial reporting standards to fulfill STAT requirements

Data validity basis

Web application „Monitor“ • Portal for general public • Accrual next to budget data • Drill-down approach • „Duel“ – 1 to 1 municipalities´ KPI comparison • Open data compliant • Dynamical reports and analysis tool

(drag&drop pivot tables and charts, time series) • Available also in ENGLISH

• http://monitor.statnipokladna.cz/en

Further development • Nowadays a routine operation • Step-by-step towards IPSAS, esp. towards IPSAS CFW • Broader and deeper education and methodological

support • Stress on publicity – general public incl. abroad • Getting known about further users´ information needs • Brand new webpage with all methodological and

technical info, also in ENGLISH, launch 2Q/2014

• Uncertainty about EPSAS

Contact email:

michal.svoboda@mfcr.cz