IPSAS: Guidelines And Realism Needed for Developing Countries
IPSAS adoption both in the OECD and the developing world has been discussed extensively in recent years, including on this blog. However, while many experts have expressed opinions on these standards, few practitioners have provided so far an account of the questions raised by the adoption of IPSAS in their countries, and feedback on the main issues faced in implementing these standards. The guidance note presented in this post, written by Sylva Okolieaboh, is of general relevance to countries wanting to introduce IPSAS. It sets out lessons learned from the ongoing experience in a number of African countries including Nigeria, and aims to provide true-to-life insights.
The full note can be found here. Among the issues it raises are the following:
First, IPSAS implementation should not be considered as a stand-alone reform. The impact of other important features of the PFM system (such as the comparability between the accounting system and budget reporting, the production of financial statistics, or the requirements of debt management) should be assessed and addressed during the earliest stages of introducing new accounting standards.
Second, the transition to IPSAS can hardly be implemented in one-step. The selection of an inappropriate timeline for the transition may lead to cost overruns, or a complete failure of the reform. The transition to IPSAS also needs to be undertaken by public entities one-by-one, and only after each entity has successfully completed the transition will it be possible to undertake a consolidation of the government’s financial statements. In short, countries should not rush into producing consolidated financial statements, and should pay due attention to the specific issues that may be faced at the entity level for implementing the IPSAS.
Third, the note emphasizes that full IPSAS compliance is an ambitious target which few countries have managed to achieve yet. Plenty of time needs to be allowed to absorb the new methods and procedures, and to build capacity among the government’s accountancy service. Capacity building is a challenging task in many developing countries.
Finally, statistics on IPSAS implementation do not always convey all the necessary nuances about the real situation in-the-field. Many developing countries are presented as “IPSAS adopters”, but their circumstances may differ widely, from governments that have only expressed an intention to adopt the standards to those at various stages in the implementation process. The note usefully reminds us that transitioning to IPSAS should therefore not be considered as an all-or-nothing project, and should be tailored to a country’s specific political economy circumstances and capacity.
 Deputy Director, Fiscal Accounts Division and GIFMIS PFM Team Leader, Office of the Accountant General of the Federation, Nigeria.
 Technical Assistance Advisor, PFM2 division, FAD.
Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.