The IMF presentation explained the requirements of the cash IPSAS standard in detail and described the presentation and disclosure requirements of part 1 of the standard. It explained how financial statements should be presented under IPSAS cash basis accounting to achieve suitable comprehensiveness and transparency in financial reporting of cash receipts, payments, and balances. It discussed the mandatory definitions, presentation and disclosure requirements, the explanations required on specific accounting issues and details of financial statements. The presentation also discussed administrative and agency transactions and the qualitative characteristics of statements. The IMF also presented a possible path towards IPSAS cash basis of accounting leading, in the fullness of time, to full accrual accounting under IPSAS. This was followed by a discussion on the international experience in implementing IPSAS by several countries and some international organizations, the strategies employed by them, and the lessons learnt from their experiences.
Laos faces severe constraints in terms of available accounting personnel. It enacted an accounting law in 2007 to ensure accounting becomes more relevant and help meet the challenges of globalization and trade liberalization. It also modernized its audit law in the same year to foster transparency and help promote local and foreign investments. Yet the lack of qualified accountants in Laos meant that most financial statements were not audited. In addition, the Ministry of Finance, which sets accounting and auditing standards in Laos, did not have the technical expertise to completely fulfill all its responsibilities in this area.
Laos is now working with donors to improve availability of qualified accountants and set standards aimed at strengthening the quality of financial reporting in the country. Under a World Bank grant to strengthen the accountability of public and private financial reporting it has embarked upon a project to improve its legal framework and develop accounting courses. The country is trying to set the direction for the accounting and independent audit reform with an aim to improve financial reporting quality in compliance with the international standards to ensure accuracy and transparency of the data so that it can be tool for the micro- and macro-financial management, and to contribute to its poverty reduction effort. As part of this effort, it plans to elaborate upon the accounting law and develop further legal instruments necessary for the adoption of periodic financial reporting standards in compliance with the international standards and the local socio-economic growth. It also plans to set financial reporting standards for different enterprise types, defining a transition period so that each enterprise has sufficient time to plan a gradual improvement to its accounting system to fully comply with the financial reporting standards. Simultaneously, it also plans to facilitate the adoption of international standards on audit and accounting and is working on two decrees to bring that to fruition. Finally it also plans courses for accountants at the University level so that capacity constraints do not hamper their long term plans to improve accounting and auditing in Laos.
The recent workshop in Vientiane was another attempt to fulfill these ambitions. It brought together different leaders in the accounting filed in Laos and enabled the formation of a consensus that Laos needs to adopt IPSAS standards. Given existing capacity constraints it will first move towards compliance with IPSAS cash standards and gradually, as capacity both human and technical improves, move to full accrual accounting.
[1] Lao PDR is the most heavily bombed country in history. Vietnam War-era bombings from 1964-1973 left nearly half of Laos contaminated with vast quantities of unexploded ordnance. It is a tribute to the resilience of its people that its economy has grown at an average rate of 7 percent over the last decade, and the incidence of poverty has fallen from 27.7 percent in 2003 to 20.4 percent by 2010.
[2] International Public Sector Accounting Standards (IPSAS) are a set of accounting standards issued by the IPSAS Board for use by public sector entities around the world in the preparation of financial statements. These standards are based on International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
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