May 03, 2016

Dispelling Fiscal Illusions

Fiscal illusions

Posted by Tim Irwin[1]

There’s a lot talk these days about government balance sheets. You can find them mentioned, for instance, in the April 2016 editions of the Fiscal Monitor, the Global Financial Stability Report, and the World Economic Outlook. The issues discussed there include the sensitivity of government balance sheets to currency depreciation, their links to the balance sheets of banks, and the value of testing how they would stand up to severe economic shocks.

But how much progress have governments made in actually compiling and publishing their balance sheets?

Continue reading "Dispelling Fiscal Illusions" »

April 28, 2016

No More “Government Business Enterprises” in IPSASs


Posted by Guohua Huang[1]

Government Business Enterprises (GBEs) used to be an important concept in International Public Sector Accounting Standards. Previously, these standards applied to all public sector entities other than GBEs. The IPSAS Board (IPSASB) stated that GBEs applied International Financial Reporting Standards (IFRSs), which apply to profit-oriented entities, and are issued by the International Accounting Standards Board (IASB).

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April 25, 2016

Saluting 40 Years of Accounting Reform in India


By Suhas Joshi[1]

1976 marked a major step in the Indian accounting reform process with the creation of a new organization called the Controller General of Accounts (CGA). The CGA, as the head of the governmental accounting profession, is the principal advisor to the government on all accounting matters. He is also primarily responsible for establishing and administering a technically sound management accounting system across the government, and for the compilation of the government’s accounts and their submission to the Parliament. The CGA heads the Indian Civil Accounts Service (ICAS), which was carved out from the Indian Audit & Accounts Service in 1976, following the separation of the accounting and auditing functions in India.

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February 22, 2016

The Whole Elephant: A Proposal for Integrating Cash, Accrual, and Sustainability-Gap Accounts


Posted by Tim Irwin[1]

Government finances are affected by many kinds of changes. Most obviously, there are cash inflows and cash outflows. But even in the absence of such flows, government finances are rarely static: the government may be accumulating unpaid bills, for instance, or it may hold shares and bonds whose value is surging or plummeting.

Even if there are no changes in the value of the government’s financial assets and liabilities, the government may be developing or running down its physical assets. It may be building new roads, for instance, or allowing them to deteriorate through lack of maintenance.

Continue reading "The Whole Elephant: A Proposal for Integrating Cash, Accrual, and Sustainability-Gap Accounts" »

January 11, 2016

Consultative Advisory Group Will Improve IPSASB Governance


Posted by Svetlana Klimenko and Delphine Moretti[1]

The process of strengthening the governance and oversight of IPSASB was launched in 2014, and led to the creation of the Public Interest Committee…

As announced previously on this blog, a global consultation was conducted in early 2014 to gather the views of the public on the future directions for the governance and oversight of the International Public Sector Accounting Standards Board (IPSASB).

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July 13, 2015

Seychelles Moves Toward Cash-basis IPSAS


Posted by Johann Seiwald[1]

According to Seychelles’ Public Finance Management Act (PFMA) as of 2012, the government is required to prepare its financial statements in accordance with international public sector accounting standards (IPSAS). The government recently reached an important milestone on this path by producing a set of financial statements for the fiscal year 2013 which comply with many of the requirements of the cash basis IPSAS. Seychelles is a front runner among the 18 countries in Africa which have announced plans to align their accounting systems with international standards. These countries include Mozambique, Nigeria, Rwanda, Swaziland, and Zimbabwe.

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June 29, 2015

A Very Short Introduction to Accounting

Posted by Tim Irwin[1]


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.

January 15, 2015

PFM Reform: Lessons, Promises and Tears

Cambodia Conferece

Posted by Suhas Joshi and Sandeep Saxena[1]

If you don’t know where you are heading you will not understand why you are walking. This was the key message that emerged from the Asia Regional PFM Conference, held in Phnom Penh, Cambodia on November 25-26, 2014. The event was jointly organized by the Cambodian Ministry of Economy and Finance and the Fiscal Affairs Department of the IMF. Around 180 participants from 15 countries discussed the wide range of PFM reforms undertaken in the region and elsewhere in the world, the reasons behind their success and failure, and the lessons that could be learnt from such failure.

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January 09, 2015

Efficient Debt Management through SALM

Balance Sheet







Posted by Yasemin Hurcan and Fatos Koc[1]

A recent paper by Fatos Koc discusses the benefits and challenges of adopting a sovereign asset and liability management (SALM) framework in debt management.[2] The paper draws on the experience of countries such as New Zealand, Denmark and Turkey, all of which have adopted the SALM approach, in various forms.

The SALM framework is based on a balance-sheet approach. It is designed to identify and effectively manage the key financial exposures of the public sector as a whole. SALM entails monitoring and quantifying the impact of movements in exchange rates, interest rates, inflation, and commodity prices on both sovereign assets and liabilities in a coordinated way. On the liability side, the aim is to minimize debt service costs subject to a prudent level of risk. On the asset side, the aim is to accumulate an adequate level of net foreign assets, including foreign exchange reserves, in order to conduct effective monetary and foreign exchange policies, and provide a buffer against external shocks.

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January 05, 2015

Accrual Budgeting in Estonia










Posted by Eliko Pedastsaar

FAD recently interviewed Ivar Sikk, a Senior Advisor in the Executive Director’s Office of the World Bank, and a former Deputy Secretary (Budget) in the Estonian Ministry of Finance, about the government’s decision to introduce accrual budgeting.

Why has Estonia decided to adopt accrual budgeting (AB)?

Macroeconomic and fiscal pressures are likely to remain or grow over the medium term as a result of an aging population, the challenge of maintaining a liberal trade policy, and ensuring a favorable investment and business climate. Maintaining or increasing the quantity and quality of public services will become more and more difficult in this environment of restrained resources, and requires new approaches to budgeting and fiscal policy. The government’s decision to introduce AB will transform the budget from a statement of flows to a statement of fiscal impact, and will help identify the true cost of public services. The preconditions for the introduction of AB are good. Estonia is a small country with solid budgetary institutions and a strong track record of implementing budgetary reforms.

What are the expected benefits of this change, and the challenges likely to be faced?


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December 08, 2014

IPSAS: Guidelines And Realism Needed for Developing Countries


Posted by Sylva Okolieaboh[1] and Delphine Moretti[2]

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.

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October 31, 2014

Governance of the IPSASB: Latest Developments


Posted by Delphine Moretti

As discussed previously on this blog, the IPSASB Governance Review Group (“the Review Group”) conducted an online global public consultation, from January 17 to April 30, 2014, to garner views from the public at large on the future directions for the governance and oversight of the International Public Sector Accounting Standards Board (IPSASB). The summary of answers to the consultation has now been published.

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March 25, 2013

Is Europe Ready for EPSAS?

Posted by Franck Bessette[1]

The sovereign debt crisis has underlined the need for governments of the European Union (EU) to clearly demonstrate their financial stability and for more rigorous and more transparent reporting of fiscal data. The EU promotes a system of harmonized accruals-based accounting standards for all entities of the government sector. IPSAS is currently the only internationally recognized set of standards. It is founded on the international financial reporting standards (IFRS), widely applied by the private sector, and at present comprises 32 accrual-based accounting standards, plus one cash-based standard. A recent report by the European Commission assesses the suitability of IPSAS for the Member States.  

The report notes that 15 out of 27 EU Member States already make some link to IPSAS. Of these countries, nine have national standards based on or in line with IPSAS, five make some references to it, and one country uses IPSAS in accounting at the local government level. However, despite recognition of the high value of IPSAS, no Member State has implemented the standards in full. Fully harmonized accrual-based public-sector accounting would provide a firmer basis for evaluating the financial position and performance of government activities at all levels.

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January 16, 2013

Are We Entering a New Era in PFM: “Rule of the Accountants”?

Posted by Renaud Duplay[1]

Accountants—especially at parties—may sometimes feel like no one is paying attention to what they have to say. A recent research paper by Jens Heiling, a Technical Manager with the International Public Sector Accounting Standards Board (IPSAS), and James Chan, Professor Emeritus of Accounting at the University of Illinois, should reassure them.

Based on individual experiences from different countries, the authors draw a pattern of the evolving relationship between accounting and budgeting in the public sector. Their findings describe a five-stage process of development during which accountants exert an increasingly strong influence on the budgeting process in addition to their traditional responsibilities for government accounting systems and financial reporting.

In stage 1, budgeting and accounting live in separate worlds. The authors assume that in this stage accounting information would generally be poor, inaccurate or take too long to produce. In stage 2, accounting supplements budgeting by providing up-to-date information on revenues and spending that allows internal budgetary control within the fiscal year. However, complete data on budget execution that can be matched to the original budget are often still lacking. This is provided at stage 3, where financial reporting appears but still follows the rules and standards, essentially cash-based, on which the budget is prepared. It is only at stage 4 that accounting starts to develop the own accrual-based standards that provide a broader picture of public finances, but the budget continues to be prepared and presented on a cash basis. At this point, accountants (and the external auditor) may start criticizing the methods used to prepare the budget, and press the government to provide a reconciliation of cash-based budget execution data and accrual-based financial reports. This process is extended in stage 5 where both the budget and financial reports are prepared on an accrual basis, and the budget includes comprehensive information on the government’s operating statement and cash flow, as well as its assets and liabilities.

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November 26, 2012

Accounting Reforms on the Agenda in Azerbaijan

Posted by Mark Silins

The Treasury Community of Practice (TCOP) of PEMPAL[1] conducted a highly interactive three-day workshop entitled “Public Sector Accounting Policies and Practices” from November 6–8, 2012.  Treasury heads and specialists from 18 TCOP-member countries, as well as representatives of the Ministry of Finance of France, took part in the workshop held in Baku, Azerbaijan. The workshop was supported by experts from the World Bank, OECD, SECO and the Slovenian Centre of Excellence in Finance.

The general objective of the Baku event was to provide an opportunity for TCOP members to exchange experiences in implementing public sector accounting and reporting reforms. The event was designed to deepen participants’ understanding of the conceptual, institutional and operational challenges associated with the implementation of accounting reforms, particularly transition to the use of accruals and alignment with IPSAS. The event involved some very informative presentations by officials from participating countries on good practice and practical tips and traps associated with this area of reform, supplemented by input from a small number of international experts. This approach provided a useful basis for a range of dynamic group discussions by TCOP-member countries. As the host country, Azerbaijan also provided detailed information on its broader economic and PFM reforms to date, along with its plans for the future.

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September 28, 2012

Public Prominence and “Muscle” — the Role of the French Court of Accounts

Posted by Maximilien Queyranne and Delphine Moretti

Supreme Audit Institutions (SAIs) are the national bodies, found in many countries around the globe, responsible for reviewing public expenditure and providing an independent opinion on government financial reporting. The Court of Accounts (Cour des Comptes) in France is one of these bodies but has a wider range of responsibilities, and a more prominent place in public life and political debates than in other countries.

The Court is part of the judicial system and consequently operates independently of the executive and legislative branches of government. Since a ruling by the Supreme Court (Conseil Constitutionnel) in 2001, the Court’s independence as well as its institutional relationship with the executive and legislative branches has been protected by the Constitution. A revision of the Constitution in July 2008 incorporated these important principles (article 47-2).

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September 20, 2012

Government Accounting Tricks Designed to Conceal Rather Than Reveal

Posted by Tim Irwin

Working paper logo
It’s well known that governments sometimes use accounting devices to make their reported deficits smaller than, in some sense, they really are. But how do these devices work? And how can they be revealed?  A new IMF working paper by FAD’s Tim Irwin—Some Algebra of Fiscal Transparency: How Accounting Devices Work and How to Reveal Them—discusses these issues.  

One way to answer the questions is to consider future deficits. Deficit devices, unlike genuine changes in fiscal policy, reduce this year’s deficit only at the expense of future ones. And their use can therefore be revealed if governments also produce good fiscal forecasts.

This paper takes a different approach. It starts by defining the deficit as the decline in the government’s net worth and then shows how deficit devices can be analyzed as transactions involving assets and liabilities that are not recognized on the government’s balance sheet. For example, many governments do not include nonfinancial assets such as land and buildings on their balance sheets, so they can reduce their reported deficit by selling these assets, even though this doesn’t really improve their finances. It would seem, then, that accounting devices can be prevented by ensuring that all assets and liabilities are recognized on the balance sheet.

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September 18, 2012

“IPSAS Explained” – Second Edition [1]

Posted by Delphine Moretti

The recent publication of the second edition of “IPSAS Explained” is good news for readers who do not have time to plough through the two volumes and daunting 1,500 pages of the International Public Sector Accounting Standards (IPSAS) Board’s Handbook. The book is written by Thomas Mueller-Marques Berger who is himself a member of the IPSAS Board.

The main asset of the book is its very clear and concise presentation of the standards, which, as the author notes in his foreword, are “sometimes complex and inapprehensible”, especially to non-accountants. As was the case with the first edition, the new book fully succeeds in providing the reader with essential information – compressed into 5-10 pages - about each of the 32 standards. For this we are indebted to the author’s comprehensive knowledge and understanding of the field. For each standard, a brief chapter describes factually the objective of the standard, the international financial reporting standard (IFRS) on which it is based, together with an assessment of its scope and content, definitions used, relevant accounting rules and principles, and application date. The coverage of existing and recently published standards and exposure drafts includes a section on the much awaited IPSAS 32 “Service concession arrangements: grantor” together with a discussion of the exposure draft on reporting the long-term sustainability of finances of public sector entities. A third edition of the volume is to be expected as the on-going process of aligning the IPSAS with their IFRS counterparts should bring further changes to the IPSAS framework very soon, and some major additions to the framework are scheduled in the years ahead.

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June 14, 2012

The Adoption of the Cash-based IPSAS by Developing Countries: Detour or Good Foundation?

Posted by Guilhem Blondy and Kris Kauffmann

In advising countries on the appropriate government accounting reforms PFM specialists often have different views. Developing countries are often encouraged to adopt the cash-IPSAS standard as a first step to modernizing government accounting; others see this as a detour to improving accounting practices. Our colleagues Kris Kauffmann and Guilhem Blondy discuss this issue, first disagree and then reach tentative agreement…it seems. Comments welcome!

Guilhem. In my view, the adoption of the cash-IPSAS standard tends to distract developing countries from more important accounting reforms rather than to help them:

Continue reading "The Adoption of the Cash-based IPSAS by Developing Countries: Detour or Good Foundation?" »

June 08, 2012

Accounting and the Budget Framework

Posted by Julie Cooper

For decades the debate has raged on about the applicability for government of what is often referred to as private sector accounting methodology.  Those who argue against its use in government offer up the differences in management focus between the private and public sectors to support their position. They argue that because the private sector is focused on profit generation the underlying concepts of accounting are not valid for government purposes. This argument is simplistic and fails to recognize the overarching purpose of all accounting systems.

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s activities. Providing information about how an organization performs is an important aim of accounting. This is true for both private and public sectors. Another similarity between the two sectors is that they both focus on the efficient allocation of resources to realize their goals. The difference between these two sectors lay in how that information is reported and used not the accounting per se.

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June 04, 2012

Transición a la contabilidad en base de devengo: Notas Técnicas y Manuales del FMI

Publicada por Abdul Khan

La contabilidad en base de devengo es un tema candente en la actualidad, y muchos países han manifestado interés en adoptar este tipo de régimen contable. En una Nota Técnica de septiembre de 2009 elaborada por Abdul Khan, del Departamento de Finanzas Públicas del FMI, y por Stephen Mayes, ex funcionario de la institución, se presentan recomendaciones sobre el diseño, la planificación y la implementación de un régimen de contabilidad en base de devengo. La Nota aborda una serie de cuestiones relacionadas con la implementación de la contabilidad en base de devengo, y tiene por objeto establecer las pautas generales sobre las condiciones previas necesarias para una transición exitosa a la contabilidad en base de devengo, la secuencia adecuada de las medidas de reforma y los hitos que podrían servir como indicadores de los avances.

Las directrices de la Nota están concebidas para su aplicación principalmente en departamentos y unidades del gobierno general dentro de jurisdicciones nacionales, provinciales/estatales y locales. Se supone que las empresas estatales que participan en actividades comerciales ya preparan los presupuestos, llevan su contabilidad y presentan informes en base de devengo completo.

Haga clic aquí para descargar el texto íntegro de la nota en inglés o español

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May 30, 2012

What Accounting Standards for Governments of the Global South?

Posted by Andy Wynne,

Timely, clear and open annual financial statements play an essential role in the accountability of governments to parliament and their citizens. However, there are no widely adopted international standards that reflect existing good practice. Virtually all developing countries currently use the modified cash basis. But there is no internationally accepted guidance that details the standards and good practices which should be adopted for this approach.

The only available international standard is the Cash Basis International Public Sector Accounting Standard (IPSAS). This was first issued in January 2003, but although it has been widely promoted by the donor community, PEFA and IFAC, not a single government in the world has actually been able to adopt this standard. This is not from want of trying, many governments have looked at the standard, but recognised that it is not practical to implement its key requirements. It is estimated, for example, that at least 31 governments in Africa have tried to adopt this standard. One international consultant recently estimated that he had worked in around 30 countries trying to adopt the standard, but that its key requirements had not proved practical.

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March 05, 2012

“Give time some time”: A Proposed Strategy for Implementing Financial Accounting in the WAEMU Member Countries

Posted by Guilhem Blondy and Xavier Rame

The directives establishing the harmonized fiscal framework in the West African Economic and Monetary Union (WAEMU) in 2009 state that “the government shall keep budgetary accounts and financial accounts” and that implementation of the latter must be completed by January 1, 2019 at the latest.[1]

To attain that objective, this post proposes a sequenced strategy aimed at gradually, over the course of seven years (2012-2018), improving the financial information generated by financial accounting.

To understand the necessity of choosing a gradual approach, it will be helpful to recall the three basic innovations associated with the introduction of financial accounting:

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« Donner du temps au temps » : une proposition de stratégie pour la mise en œuvre de la comptabilité générale dans les Etats-membres de l’UEMOA

Posté par Guilhem Blondy et Xavier Rame

Les directives portant cadre harmonisé des finances publiques au sein de l’Union Economique et Monétaire Ouest-Africaine (UEMOA) de 2009 prévoient que « l’Etat tient une comptabilité budgétaire et une une comptabilité générale » et que la mise en oeuvre de cette dernière doit être effective au 1er janvier 2019 au plus tard.[1]

Pour atteindre cet objectif, ce post propose une stratégie séquencée selon une logique d’enrichissement progressif sur 7 ans (2012–2018) de l’information financière produite par la comptabilité générale.

Pour comprendre la nécessité de privilégier une approche progressive, il est nécessaire de rappeler les trois innovations fondamentales associées à l’introduction de la comptabilité générale :

Continue reading "« Donner du temps au temps » : une proposition de stratégie pour la mise en œuvre de la comptabilité générale dans les Etats-membres de l’UEMOA" »

February 22, 2012

Accrual Accounting Essential for Government Transparency and Accountability!

Posted by Ian Ball [1]

In this post Ian Ball, CEO, International Federation of Accountants, argues that it is time for governments to take their accounting responsibilities seriously and to modernise their financial management practices. The eurozone debt crisis has highlighted widespread financial reporting failures and must lead to extensive reform, including adoption of accrual accounting and budgeting practices. Politicians and Ministries of Finance must be pressured to implement these reforms before the next crisis hits.  

The sovereign debt crisis has emphasised the seriousness of the results of poor financial management and financial reporting. Obviously, government actions to limit the impact of the global crisis have exacerbated their financial positions, as many governments acquired significant assets and liabilities, gave guarantees of various kinds, and engaged in massive fiscal stimulus programmes. But the situation now would not be as dire if so many governments had not already made commitments that they did not account for properly, and may not be able to meet.

Governments in general are clearly accounting very poorly for their financial performance and position. This could, and should, lead to significant reform. We saw how financial reporting failure in the private sector a decade or so earlier led to dramatic action, including the passage of the Sarbanes-Oxley Act 2002 in the United States, and the creation of regulatory bodies for private sector audits in most major countries.

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December 09, 2011

Enhancing the Role of the Accountant General’s Department in the Caribbean - A Challenge from the Sidelines!

Posted by Mark Silins

In the Caribbean, and in many English-speaking countries for that matter, the State Treasury is called the Accountant General’s Department (AGD). In this post I will explore what the main tasks and functions of the AGD should be, and what minimum functionality should be expected from them.

The AGD is, one could say, the engine room that supports effective public financial management, or at least it should be. Ensuring the completeness of all financial information in the accounting system each day ensures that key financial reports are available to support timely decision making. The AGD is also the processing centre for expenditures and receipts.  Its systems should support the proper classification of all financial stocks and flows of government and provide reports on these for all different stakeholders, including parliamanent.   


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October 26, 2011

Whole of Government Accounts – What’s the Big Deal, Robin!

Posted by Andy Wynne

In a recent blog post (Whole of Government Accounts, Batman!), Richard Hughes declares that the  publication of what are called Whole of Government Accounts “represents a major milestone in UK fiscal reporting and public sector accounting practice in general”. The article suggests that this is the Olympics of accounting and the UK has just set new world records in the consolidation and accrual events. The UK seems to have “leapfrogged from the bottom to the top of the government accounting class”.

There is, however, no reason for the UK to be self-congratulatory. In my view government accountants should provide useful information on government finances to facilitate the budget process and provide accountability for the use of public resources; this information needs to be produced as efficiently as possible and presented in line with the budget presentation. On both counts the Whole of Government Accounts exercise scores rather badly. What useful additional information is really provided by this consolidation exercise and from the accrual accounting approach itself? Importantly, what are the costs involved of this “whole of government” operation.

Continue reading "Whole of Government Accounts – What’s the Big Deal, Robin!" »

September 06, 2011

Lao PDR: Better Accounting to Help Growth

Posted by Suhas Joshi

The desire to sustain its recently achieved strong growth performance[1] by developing confidence in investors and making Lao a more attractive investment destination has motivated the government’s intention to move towards an international accounting standard that is recognized and accepted worldwide.

Recently, at the government’s request, I, working along with the World Bank, conducted a workshop in Vientiane on "Accounting Reform: International Experience and Implications for Laos”. The workshop, aimed at fostering the acceptance of IPSAS-based accounting standards[2] as a basis for developing Laos accounting standards. The move towards modern accounting standards had been initiated sometime back in Lao PDR and received a new impetus with the conduct of this workshop which was attended by nearly 50 decision-makers in the government, public, and private sectors. The workshop was inaugurated by Dr. Viengthong Siphandone, Vice Minister for Finance, and was closed by the Director General of the Accounting Department. At the close of the workshop the Director General announced that the government has decided to move towards IPSAS cash basis of accounting, as a first step.

The workshop comprised four sessions, the first was on the implications of adopting international accounting standards in the public sector and the second on the ongoing accounting and auditing reforms in Laos. These were followed by a session on cash basis IPSAS and drew upon international experiences in this area. Lastly the workshop discussed the Laos road map to accounting reform.

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July 22, 2011

Whole of Government Accounts, Batman!

By Richard Hughes

After 10 years of preparation, pilots and dry-run processes, last week the UK Treasury finally published the first set of Whole of Government Accounts (WGA) for financial year 2009-10. While a long-time in the making, the publication of Britain’s first ever consolidated government income statement and balance sheet represents a major milestone in UK fiscal reporting and public sector accounting practice in general.

From the Bottom to the Top of the Accounting Class

While the UK Office of National Statistics (ONS) has published consolidated fiscal statistics for the whole public sector for decades, the UK has lagged behind most countries in the world in the preparation of consolidated end-of-year accounts. Indeed, up until last week, the UK did not even produce consolidated, audited accounts for central government. The only audited government financial statements that existed were for individual government departments, local governments, and other public entities.

Continue reading "Whole of Government Accounts, Batman!" »

June 14, 2011

Discussions of PEM PAL Treasury Community of Practice on Public Sector Accounting and Reporting Reforms

Posted by Anila Çili (Director, Central Harmonization Department on Financial Management & Control
Ministry of Finance, Albania) and Deanna Aubrey (Budget, Treasury and Internal Audit Community Facilitator, PEM PAL CEF Secretariat, Center of Excellence in Finance, Slovenia)

From 18-22 April 2011, 41 participants from Ministries of Finance and Treasuries from 15 European and Central Asian countries[1] met in Ljubljana, Slovenia to discuss public sector accounting and reporting reforms as part of the ongoing network activities under the Public Expenditure Management Peer Assisted Learning Program (PEM PAL) program.[2]  This program has 21 member countries from across the Europe and Central Asia (ECA) region who regularly meet in ‘communities of practice' to discuss reform issues in the areas of budget, treasury and internal audit ( The event was also linked to a conference on international trends in public sector accounting reforms organized by the Center of Excellence in Finance, Ljubljana Slovenia held on 20-22 April.[3] The conference involved discussions on the increased role of accounting in the public sector, especially in the post financial crisis era, its evolution in the recent years and the lessons learned.

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February 21, 2011

A Whole System Approach to Strengthening PFM (CIPFA Conference)


Posted by Alan Edwards, International Director, CIPFA

Imagine a UK without CIPFA (or a USA without CPA or Nigeria without ICAN or…) and the Permanent Secretary at the Treasury (or…) inviting an overseas institute of public finance to help create a new qualification for public sector finance staff. That is the analogy we have been using when examining the issues to address when asked to provide PFM and professionalization support in other countries. I find that helps illustrate the scale of challenge involved and the need to think through the whole system impacts of change.

CIPFA’s Whole System Approach to PFM is a more formal and comprehensive analysis of all the key players and processes. CIPFA with the support of DFID has produced this paper to assist with the design of holistic PFM improvement programmes.

Continue reading "A Whole System Approach to Strengthening PFM (CIPFA Conference)" »

February 17, 2011

Brasil: Desafios Na Implantaçäo Do Sistema De Custos No Governo Federal

Por Victor Holanda e Mário Pessoa

Como parte da reforma da gestão pública no Brasil, o governo federal implantou de forma inovadora um sistema de informação de custo (SIC) na área pública. Um dos principais objetivos é melhorar a decisão alocativa dos recursos orçamentários, mas isso ainda não foi alcançado. A ênfase é na mudança do papel do setor público como agente de uma gestão pública mais eficiente. O governo federal, espelhado na experiência bem sucedida do sistema integrado de administração financeira (SIAFI), decidiu criar um grande sistema de informação que permite que todos os gestores públicos tenham as informações financeiras necessárias a produção de informações de custo nas dimensões institucional (unidades Administrativas) e programática (por programa de governo), porém com a flexibilidade para definir centros de custos e atividades em um nível mais detalhado de acordo com as especificidades e necessidades de cada entidade.

Continue reading "Brasil: Desafios Na Implantaçäo Do Sistema De Custos No Governo Federal" »

February 14, 2011

Brazil: Challenges in Implementing a Costing System for the Public Sector

By Victor Holanda and Mario Pessoa

As part of the public management reforms in Brazil, the federal government implemented in 2010 an innovative cost information system (SIC) in the public sector. A major goal is to improve budget allocation decisions but it is early days to see any tangible results. The emphasis of the system is on improving the efficiency of the public sector by changing the behavior of the public sector managers. The federal government, following the successful implementation of the integrated financial management information system (SIAFI) providing budgetary data, has created a large information system that allows all public sector managers to produce cost information according to two dimensions: institutional (administrative units); and programmatic (government programs), but with the flexibility to define cost centers and activities at a more detailed level according to the peculiarities and needs of each public entity.

Continue reading "Brazil: Challenges in Implementing a Costing System for the Public Sector" »

December 30, 2010

A Wealth of Information

Posted by Tim Irwin

The US federal government has recently issued its financial report for the year ending September 2010. As in earlier years, the report fails to get a clean bill of health from its auditor, the GAO (and on a superficial note isn’t typeset and formatted with the care that might be thought appropriate for the report of the world’s largest reporting entity). But it is also extremely impressive for the kind of information it contains, including—among much else—an accrual-based measure of the fiscal deficit to supplement the mainly cash-based budget measures, a balance sheet, and a statement of social insurance, showing an estimate of the net present cost of projected cash flows for Social Security and Medicare. For the first time, the report also includes comprehensive 75-year fiscal projections, which take account of not just social insurance but all government spending and revenue.

As for the numbers, the accrual deficit is $2.1 trillion, compared to $1.4 trillion for the cash-based budget deficit. Net worth is a negative $13.5 trillion, compared with negative $11.5 trillion the year before. The estimated net present cost of social insurance (on which GAO this year declined to express an opinion) is $30.8 trillion, a reduction of $15.0 trillion compared to the previous year—“much of this decrease” being “attributable to the estimated effects of the Affordable Care Act (ACA) on the Medicare program.” There is much to analyze and discuss in this report in the coming months.

Continue reading "A Wealth of Information" »

December 21, 2010

Korea Hosts International Workshop on Fiscal Policy Issues

Posted by Ian Lienert

Against the backdrop of a severe fiscal crisis in some European countries, the Korean Institute of Public Finance (KIPF) hosted an International Fiscal Experts Forum in early December 2010. A major aim was to promote an exchange of views on fiscal policy issues, countries’ responses to the crisis, and relevant issues for Korea. The workshop brought together a number of prominent speakers, scholars, and practitioners from various countries. The topics covered included: fiscal policies after the crisis, budget performance management, accrual accounting, the impact of the crisis on subnational governments, and recent issues in legal frameworks for budget systems.

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December 10, 2010

The “Accounting First” Approach to PFM Reform Sequencing: The Case of the Democratic Republic of Congo

Posted by Franck Bessette

In a recent and much commented on PFM blog post, Sanjay Vani introduced what could be called the “Accounting First” approach to PFM reform sequencing. The naming is a reference to the widely-known “Basics First” approach to PFM sequencing originated by Allen Schick. The “Accounting First” hypothesis is this: NO significant PFM reforms are likely to succeed unless a robust and functioning accounting and reporting system is in place. This approach is bound to be controversial as there is a strong body of opinion among PFM experts that the budget formulation process is the core of any well-functioning PFM system, as it necessitates high value inputs, strategic thinking and coordination between various actors, and constitutes the channel through which policies have a chance to be implemented. In comparison, public accounting is often considered a low-value activity, passive by nature and void of any strategic function. It is even sometimes considered that some good software could take care of it all. In 1995, A. Premchand could write “although government accounting has existed for more than two millennia, it has not received its due. In fact, accounting has been looked down upon and viewed by nonusers as a set of archaic rules that have long since ceased to be relevant or effective.” This viewpoint is probably still prevalent today.

Continue reading "The “Accounting First” Approach to PFM Reform Sequencing: The Case of the Democratic Republic of Congo" »

August 04, 2010

Sustainability Reporting: Can the Triple Bottom Line Thrive in the Public Sector?

Posted by Dimitar Vlahov

It’s common knowledge that today’s global economy is facing multiple challenges and imbalances. From the recent financial crisis, to concerns about distribution of wealth, to the ever-more-dangerous clashes between economy and environment, there are many reasons to pause and examine the whole system. Some experts have suggested that a large chunk of this ill condition can be attributed to the same cause – the problem of bad performance measurement. Businesses and governments alike, the argument goes, have been employing short-sighted measures of success that do not account for all medium- and long-term consequences of their organizations’ activities. Therefore, they need to expand their reporting to include social and environmental indicators of performance, and not just financial ones. With a better warning system, many of the present-day issues could be mitigated or avoided altogether. This post serves as a basic introduction to this approach and its main applications to date.

Continue reading "Sustainability Reporting: Can the Triple Bottom Line Thrive in the Public Sector?" »

June 28, 2010

Interactive Financial Data and XBRL: the Way Forward?

Posted by Dimitar Vlahov 

Today’s means of exchanging financial data have entered a process of global synchronization and standardization. Intuitively, this makes sense given the interconnected and interdependent nature of economic and business entities around the world, coupled with advances in computing power. In practice, the trend is evidenced by the rapid spread of XBRL, a novel set of programming rules for recording and reporting financial data electronically. Over the last several years this new freely-available open standard has been employed by more than 550 major companies, organizations and governments, including many central banks, finance ministries, the International Accounting Standards Board (IASB), the U.S. Securities and Exchange Commission (SEC), and the Tokyo Stock Exchange. A Forbes report estimates that XBRL encoding is used by companies representing more than 75% of the world's market capitalization. So popular has XBRL become that one can now even buy “XBRL for Dummies” on Amazon. This note provides a quick account of what XBRL is and why it is relevant for public financial management.

Continue reading "Interactive Financial Data and XBRL: the Way Forward?" »

June 25, 2010

IFAC Recommends Adoption of Accrual-based Accounting for the Public Sector

Posted by Sanjay Vani 

The International Federation of Accountants (IFAC) has recently issued a  letter to G-20 participants, who are meeting on June 26‐27, 2010 in Toronto, Canada. This letter is a follow-up to their previous submissions to the G‐20 in 2009 addressing the global financial crisis. In this letter, IFAC is recommending adoption of accrual-based accounting for governments and public sector entities. The full text of the recommendation is as follows:

"The G-20 should strongly encourage all governments to provide greater transparency and accountability in public sector finances.

Continue reading "IFAC Recommends Adoption of Accrual-based Accounting for the Public Sector " »

June 18, 2010

New Issue of International Journal of Governmental Financial Management (IJGFM) Now Online

Posted by Andy Wynne, Editor of the IJGFM

The first issue, for 2010, of the International Journal of Governmental Financial Management is now available for download from:

As usual the Journal covers a wide range of issue relating to public financial management especially in developing countries.

The first paper provides an insightful critique of the draft conceptual framework recently issued by the International Public Sector Accounting Standard Board. Petri Vehmanen of the University of Tampere, Finland observes that whilst the prime aim of private sector financial statements is to provide information for investors to make decisions about the entity, the prime purpose of public sector financial statements is to enhance accountability. This should be recognised and would result in the definitions of such prime elements as assets and liabilities being revised. His paper also recasts the qualitative characteristics of public sector financial statements. Petri concludes by saying that his proposals “are by no means radical”, but they do suggest that the specific characteristics of public sector financial reporting needs greater consideration.

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June 02, 2010

India: Public Financial Management Performance Assessment Report

Posted by Pratap Ranjan Jena (, National Institute of Public Finance and Policy, New Delhi

The PFM Performance Assessment Report for India (Download INDIA_PEFA2010[1]) at the central Government level (carried out during the period March 2009 to June 2009) provides a comprehensive assessment of the current status of the PFM system following the Public Expenditure and Financial Accountability (PEFA) framework. The performance of PFM systems, procedures, and practices are assessed based on six critical dimensions of the PEFA framework; credibility of the budget, comprehensiveness and transparency, policy-based budgeting, predictability and control in budget execution, accounting, recording and reporting, and external scrutiny and audit. Some of the major assessment results are summarized here. The assessment indicates both the strengths and weaknesses of the existing PFM system and serves as a baseline against which progress on PFM performance can be measured over time.

While the role of PFM systems in contributing to fiscal discipline, strategic resource allocation through better programme management, and improving service delivery has gained attention in India in recent years, the focus and implementation of reform initiatives in this regard leaves much to be desired. The initiatives to improve the PFM systems and processes in recent years include the introduction of outcome budget in 2005-06 to move to clearly defined outcomes of all government programmes, adoption of rule based fiscal management by enacting the Fiscal Responsibility and Budget Management (FRBM) Act, appointing a Task Force to suggest reform measures to strengthen internal audit, initiating the process to move to an accrual based accounting system, revising the responsibilities and duties of the Financial Advisors placed in spending departments in a system of delegated financial powers, and tightening cash management through monthly expenditure limits. However, the intents did not match the outcomes due to discontinuities and indifferent implementation. The achievement of economy, efficiency, and effectiveness in PFM systems has remained elusive.

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May 26, 2010

Prioritizing PFM Reforms: A Robust and Functioning Accounting and Reporting System is a Prerequisite

Posted by Sanjay Vani, Lead Financial Management Specialist, World Bank 

Much has been written about prioritizing and sequencing PFM Reforms, including Allen Schick’s often-quoted 1998 article, Why Most Developing Countries Should Not Try New Zealand's Reforms.  While working on the OECD-DAC Report on the Use of Country Systems in PFM a year or two ago, I was struck by how much more we know about what does not work than about what does work. For example, almost all PFM professionals would agree that introducing a medium-term budget formulation or performance budgeting in an environment of poor budget execution is not likely to be effective; and attempting performance audit without agreed performance benchmarks and proper systems to record and track performance is equally unlikely to be effective.

Here I would like to develop a hypothesis that, I am convinced, deserves serious attention from the community of PFM professionals. The hypothesis is this:  NO significant PFM reforms are likely to succeed unless a robust and functioning accounting and reporting system is in place.  In other words, a robust and functioning accounting and reporting system is a prerequisite to other PFM reforms.

Continue reading "Prioritizing PFM Reforms: A Robust and Functioning Accounting and Reporting System is a Prerequisite " »

April 26, 2010

The “Sarkozy Commission” Critiques GDP as a Measure of Well-being

Posted by Dimitar Vlahov

It has become increasingly common over the last decade or so to come across reports of various studies comparing standards of living or satisfaction with life across countries, as in this article or this one. Such rankings come in multiple flavors, depending on the concept to be measured and the methodology employed. Some – such as the Human Development Index, the Quality of Life Index, and the Genuine Progress Indicator – rely solely on the crunching of already existing national statistics and data from academic publications. Others tend to utilize direct surveys or a combination of direct surveys and observed data.  Examples of the latter type include the Happy Planet Index, the Legatum Prosperity Index, or Bhutan’s Gross National Happiness idea (a fascinating story which I encourage you to google further).

Despite the multitude of such initiatives and approaches, however, the academic community, governments and other policy makers continue to use and cite GDP as the main indicator of economic prosperity. Needless to say, we’re all constantly exposed to news reports on the latest GDP figures, coupled with all-important projections for the next quarter or year.

But is GDP good enough as a measure of overall societal well-being? If not, what’s wrong? The president of France, Mr. Sarkozy, has displayed a lot of interest in researching and answering these questions. In February 2008 he asked renowned economists Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi to assemble “The Commission on the Measurement of Economic Performance and Social Progress” (CMEPSP) with a few goals in mind: to point out the limitations of GDP as an indicator of economic performance and social progress; to suggest additional information that could be used to construct better measures of social progress; and to address the feasibility and potential usage of alternative measurement tools. The Commission responded in the fall of 2009 with a publicly-available 291-page report (attached below).

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March 24, 2010

IPSAS: A True Global Standard for Government Accounting?

Posted by Sailendra Pattanayak 

The cornerstone of any government financial reporting system is accurate, consistent, and timely reporting of government expenditures and revenues, and assets and liabilities. Only then can financial reporting serve its purpose of accountability to parliament and the public at large for the appropriate use of public money. Most countries have laws, rules, and regulations defining their government accounting and reporting systems, but these usually reflect each country’s legal/regulatory/administrative tradition as well as its specific needs.

As part of the discussions the IMF has with country authorities on modernizing government accounting systems, a number of questions regularly emerge. Are accounting systems capable of producing financial statements/reports that can provide a valid assessment of the government’s financial performance and financial position? In an era of increasing globalization in which the governments are rated on their creditworthiness, can governments produce financial statements that are understandable and comparable across countries? Can we standardize the preparation of government financial statements across all countries? This is an ongoing discussion with and within countries. The development of the International Public Sector Accounting Standards (IPSAS) is an attempt to address some of these questions.

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February 22, 2010

Colombia: A Success Story in Implementing Accrual Accounting in the Public Sector

Posted by Mario Pessoa and Maria Eugenia Benavides 

While many countries are still struggling to adopt accrual accounting standards, Colombia has had considerable success with this reform. The main motivation to adopt the international accrual accounting standards was the desire to meet the information needs arising from economic globalization. The Colombian public sector accounting standards (PSAS) are now broadly in line with the International accrual-basis Public Sector Accounting Standards (IPSAS - International Public Sector Accounting Standards). It is the most advanced practice in Latin America. In the case of Colombia, this process did not involve a traumatic change throughout the public sector because the PSAS was already significantly aligned with accrual-based standards particularly in the state-owned enterprise sector. The changes consisted mainly of conceptual redefinitions, accuracy, capacity building, dissemination, and development of detailed written instructions.

The greatest challenge for the Colombian National Accounting Office (Contaduría General de la Nación orCGN[1]) was implementing the accounting standards. In 1995, the first General Chart of Accounts for the Public Sector (GCoAPS) entered into force. It was developed with the participation of a large number of accountants of different government entities in order to encompass all of the operations of the public sector. One of the most difficult tasks was to determine the value of assets and liabilities, especially for some local authorities that did not have all the supporting documentation. Initially this situation impacted the quality of the information and consequently the reliability of the consolidated financial statements. Hence, CGN proposed legislation under the name "Accounting Improvement Law" (Ley de Saneamiento Contable) which required public entities to standardize, reconcile, streamline, and improve accounting procedures.

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March 07, 2008

Secrets of Public Accounting in Brazil are Revealed!!!

(unfortunately only in Portuguese)

Posted by Mario Pessoa

If you are interested in understanding how the public accounting system in Brazil works and what are the concepts behind the government financial information system (SIAFI), you have a good guide through the book Public Accounting in Brazilian Central Government (“Contabilidade Publica no Governo Federal” in Portuguese). (Click the link to access the book and the spreadsheet exercises.)

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February 15, 2008

David Walker (GAO): Long-Term Fiscal outlook--Action is Needed to Avoid the Possibility of a Serious Economic Disruption in the Future

Davewalker5x7_2 Posted by Michel Lazare

Further to our January 29, 2008 post on "David Walker (GAO head): The USA is Living beyond its Means -- Difference between Accrual and Cash," here is below the summary of David Walker's testimony before the Committee on the Budget of the U.S. Senate: "Long-Term Fiscal Outlook--Action is Needed to Avoid the Possibility of a Serious Economic Disruption in the Future."

(link to the full text of David Walker's testimony: Download gao08411t_longterm_fiscal_outlook.pdf )."

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February 08, 2008

Transition to Accrual - A Stepwise Approach

Posted by Bill Dorotinsky

As countries struggle with implementing accrual counting, more and more resources are emerging to assist with their efforts. In an October 15 blog, we posted an IMF FAD Technical Guidance Note on Transitioning to Accrual Accounting. A blog reader kindly brought to our attention another useful reference, "A Stepwise Approach to Transition from a Cash, Modified Cash, or Modified Accrual Basis of Accounting to a Full Accrual Basis for Developing Countries," published in the February 2007 issue of Public Fund Digest (available on-line at the link above). The Public Fund Digest is a publication of the International Consortium of Government Financial Management (ICGFM) -- a recent December 2-4, 2007 conference on which we also blogged about.

The article, written by Jesse Hughes, Professor Emeritus of Accounting at Old Dominion University, provides a succinct series of steps and issues to be addressed in transitioning to an accrual basis:

  1. Identifying and classifying government reporting entities -- not an easy task, as the  article notes, compounded by the wide variety of governmental and quasi-governmental bodies and varying degrees of government control.
  2. Accounting for Cash -  deemed relatively easy in the article, as many governments already have some procedures in place to start with. However, as the note points out, transfers between entities need to be netted out, which is far more challenging than might at first seem the case.
  3. Compiling asset and liability information for reporting entities - a challenge for any country, and an optional disclosure item under the Part 2 of Cash IPSAS.
  4. Other optional IPSAS Cash Basis Part 2 Disclosure Items -- really many elements, including disclosure of administered transactions, transactions of related parties, comparison of actual versus budgeted revenues and expenditures, disclosure of ownership interest in controlled entities, and joint ventures.

Two of the most useful aspects of the article appear as Appendices -- a decision-tree for determining the level of control of another entity for financial reporting purposes (Appendix 1) and a detailed spreadsheet action plan for implementing the transition (Appendix 3).

January 29, 2008

David Walker (GAO head): The USA is Living beyond its Means -- Difference between Accrual and Cash

Posted by Michel Lazare

The YouTube video below is a presentation on long-term fiscal issues in the US made by David M. Walker, the US Comptroller General and head of the U.S. Government Accountability Office (GAO)

Continue reading "David Walker (GAO head): The USA is Living beyond its Means -- Difference between Accrual and Cash" »

December 26, 2007

Two-years after the "Big Bang:" an update on France's PFM Reforms

Posted by Francois Michel

In 2001, France enacted a new organic budget law, including many reforms such as program budgeting, empowerment of the line ministries, increase of parliamentary controls, extension of commitment authorizations, and introduction of multifaceted accounting reforms. The law envisioned four years to plan the reform, with full implementation planned over a decade. Two years into implementation, many lessons are emerging from implementation of these significant transformations.

On December 7, 2007, the IMF Fiscal Affairs Department (FAD) hosted a high-level seminar with senior officials from the French government to explore the intricacies of the reform, and to try to identify the challenges that still lay ahead. Speakers were Messrs. Hürstel and Mordacq, respectively Assistant Director at the Budget Directorate and General Director of State Modernization, and Mrs. Morin, Deputy Director of the Accounting Directorate.

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