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June 2015

June 29, 2015

A Very Short Introduction to Accounting

Posted by Tim Irwin[1]

Snap3

Christopher Nobes’s Accounting: A Very Short Introduction (Oxford University Press, 2014) is about private not public financial management, but it may be of interest to people working on PFM.

For one thing, there are many similarities in the accounting problems faced by firms and governments, even if there are also crucial differences in their objectives, their functions, and their influence on the economies in which they are located. Moreover, Nobes offers a succinct and persuasive explanation of why private-sector accounting developed as it did, in response to the changing needs of businesses and their investors (e.g., why accounts payable and receivable were shown on balance sheets before cash and inventory). That explanation may prompt thoughts about how government accounting should develop.

For another, Nobes’s comments on the rise of International Financial Reporting Standards (IFRS) suggest interesting parallels with the development of International Public Sector Accounting Standards. He writes (pp. 75–76),

  • The UK’s joining the EU was “the main spur to the setting up by accountants of the IASC [International Accounting Standards Committee, the forerunner of the IASB, or International Accounting Standards Board] to try to keep accounting out of the control of governments.”
  • “The EU had always been opposed to the IASC, as a Trojan horse of Anglo-American accounting, but eventually it accepted IFRS as the only practical way of getting harmonized standards for EU capital markets.”
  • “The inability of governments in Roman law countries (e.g. France) to give up control of accounting has led to constant attempts at interference from the EU in the operations of the IASB.”

Nobes also presents interesting data on the number of members of each of several national accounting bodies (pp. 5–6). The chart above expresses these numbers as percentages of each country’s population in 2013, rounded to the nearest decimal point. Nobes notes that international comparisons are “fraught with difficulties” (p. 7) and that there are accountants who are not members of accounting bodies. Nevertheless, the differences are striking. If they reflect differences in the influence of accountants in each country, they may help explain why the Australian and New Zealand governments were among the first to adopt private-sector-like accounting, while the German government has shown little interest in doing so.


[1] Senior Economist, PFM1 Division, Fiscal Affairs Department, IMF 

 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.

June 25, 2015

Developing Fiscal Risk Statements in Central Asia and the Caucasus

Posted by John Zohrab[1]

The new fiscal risk[2] provisions of the IMF’s revised Fiscal Transparency Code (English, العربية , Español, Français, Português) are resonating in Central Asia and the Caucasus. They are stimulating increased efforts to improve and expand fiscal risk disclosure.

Armenia, Georgia, the Kyrgyz Republic and Tajikistan present fiscal risk statements to parliament in their annual budget documentation. These statements – which are typically published on the ministry of finance websites – are a substantial step forward in meeting international good practice (see table below).

  Snap2

To be specific:

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June 04, 2015

Finance Ministries in the 21st Century

Posted by Aarti Shah and Neil Cole[1]

Finance ministries throughout the world have a number of things in common. They are custodians of a country’s public finances. They also manage complex political processes and tend to attract smart people. Unsurprisingly, the job of a finance ministry official does not lend itself to popularity or friends amongst the public service fraternity. That may explain why when senior budget officials from a diverse range of countries are brought together, they have much to talk about.

Surprisingly, little has been written about how finance ministries operate, evolve, and adapt to ever-changing challenges. As part of a broader collaboration, three institutions currently thinking about capabilities (CABRI, ODI and the South African National Treasury) co-hosted a conference with the theme ‘Finance Ministries in the 21st Century’ in Johannesburg on 25 and 26 March 2015. Fifty-five participants from government, bilateral and multilateral development partners and other organizations[2] shared their experiences from over 20 countries on how finance ministries operate as organizations, and how they could do better.

Here are some highlights.

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June 03, 2015

Job Offer! Public Financial Management (PFM) Advisors, based in Africa (Job Number: 1500535)

Description

The Fiscal Affairs Department (FAD) of the International Monetary Fund is looking for qualified candidates to fill positions as Public Financial Management (PFM) Advisors to be based in Africa. The initial appointment term would be for a period of one year, on a renewable basis, subject to satisfactory performance.

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June 02, 2015

JICA’s Technical Cooperation in PFM: Key Principles

Jica

Posted by Tomoaki Tanaka[1]

The Japanese International Cooperation Agency (JICA) is the world’s largest bilateral development institution, with a budget in 2013 of more than one trillion yen. Out of this budget, 177 billion yen was disbursed on technical cooperation (TC), the remainder on overseas development loans and grants.[2] JICA’s operations cover a variety of sectors, such as Planning and Public Administration, Public Works (infrastructure), Agriculture, Education, Health & Medical Care, and Energy, Commerce & Tourism. JICA is represented in over 150 countries and regions, and has more than 100 overseas offices. Much of JICA’s TC is focused on South and South-Eastern Asia, but other regions where it is active include the Pacific, Latin America, the Middle East, Africa, and Eastern Europe.

Public financial management (PFM) has become one of JICA’s most important areas of TC. In JICA’s view, effective PFM systems are fundamental to the development process. If such systems are not in place, the flow and control of financing for key development projects may be jeopardized.

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