Posted by Abdul Khan
“Politicians will not be forgiven by future generations if liabilities and obligations incurred today are hidden from them today, but paid for tomorrow,” cautioned Mike Hathorn, the Chair of the International Public Sector Accounting Standards Board (IPSASB). Speaking at a seminar organized by the Fiscal Affairs Department of the IMF on May 22, 2009, he indicated that the IPSASB believes that transparency and accountability are crucial to explain to citizens the range of actions governments are taking in response to the financial crisis. In a frank assessment of the current state of affairs in public sector financial reporting, he said that, in his opinion, “most governments do not have the financial reports necessary to communicate to citizens in a transparent way….”
Earlier, in her opening remarks, Ms. Adrienne Cheasty, Senior Advisor at the Fiscal Affairs Department, who was chairing the seminar entitled Global Financial Crisis:
Implications for Public Sector Accounting, highlighted the importance of the topic in the current testing times by noting that “while the work of public sector accountants has always been important, it has probably never been sexier.”
Mr. Hathorn explained that the IPSASB is working on a number of projects to help governments meet this challenge. First, IPSASB is finalizing the standards on financial instruments, based largely on private sector standards. This will facilitate the reporting of financial assets and liabilities acquired by governments as a result of their actions. Second, IPSASB is proceeding with its work on long term fiscal sustainability reporting, an area of increasing interest in the light of the massive increase in government commitments in response to the financial crisis. Finally, IPSASB is working on developing a conceptual framework for public sector financial reporting.
The seminar also heard from Messrs. Robert Dacey, Chief Accountant of the U.S. Government Accountability Office (GAO), and Roberto Perli, Deputy Associate Director in the Monetary Affairs Division at the Federal Reserve Board, who discussed some of the US Government and Federal Reserve initiatives in response to the crisis and the related accounting, financial reporting, and policy challenges. The appropriate accounting treatment of some of the interventions made by the US government is still being developed by officials, and the first set of audited financial statements of the US government that will report these transactions will be for the year ending September 30, 2009. The Federal Reserve, which is not consolidated as part of the federal government reporting entity, has already published its audited financial statements for 2008.
Earlier in the week, the IMF had hosted the IPSASB board meeting, which takes place three times a year, the first occasion on which the board has met in Washington DC.
Download Remarks by Mike Hathorn
Download Mike Hathorn's Presentation
Download Remarks by Adrienne Cheasty
Download US Accounting Fiscal Response to Crisis Presentation
