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February 04, 2011

International Journal of Governmental Financial Management

Posted by Andy Wynne

The second issue of the International Journal of Governmental Financial Management for 2010 is now available.

In the first paper of this issue, Frans van Schaik considers the issue of materiality in government auditing in the context of the development of public sector specific guidance on this subject by INTOSAI, the international body for public sector external auditors, based on the private sector standards.  The paper finds significant evidence for the materiality level in the public sector to be different to that in the private sector, despite this evidence, such differences are not clearly documented in the auditing standard.  In the process, van Schaik reviews the key considerations for materiality for public sector auditors.

In our second paper, Doug Hadden provides a case study of public financial management reforms in Kosovo. This post-conflict country has sequenced legal reform, improved governance, and achieved international public financial management standards under difficult conditions.  Hadden points out that there are numerous lessons in the Kosovo experience linking reform to context that can be leveraged by governments around the world.

Rocky J. Dwyer argues that a credible demonstration of public sector impacts depends on understanding the distinction between inputs, outputs, outcomes and indicators.  The first aim of his paper is to provide an enhanced understanding of the current literature, reports and documentation on estimating the impacts and results of government programming and policies.  Secondly, he shares the definitions and guidelines used to demonstrate economic impacts.  Finally, he presents current best practices in measuring incremental impacts.  All of which, Dwyer contends, provides new ways of approaching measurement and accountability that are more effective, strategic, comprehensive and credible to the public.

Pawan Adhikari and Frode Mellemvik argue in their paper that developing countries have few alternatives other than to accept the rules and standards developed and prescribed by international standard setters, so as to ensure external legitimacy and financial support.  Their paper explores Nepal’s move towards the implementation of International Public Sector Accounting Standards (IPSAS). This study shows an interesting case of how public sector accounting in developing countries is being influenced by international organizations, particularly the World Bank and professional accounting institutions.  However, it is not clear from this study that such an approach is ensuring that public financial management reforms are focussed on the key areas in Nepal.

Similarly, in our penultimate article, Caroline Aggestam considers the need to adopt a project management perspective with the adoption of accrual based IPSAS.

Moving from cash or modified accrual based accounting to full accrual accounting under International Public Sector Accounting Standards (IPSAS) can be a challenging endeavor. Ensuring proper convergence to accrual based IPSAS entails not only a vast amount of work in the accounting arena of any given public sector entity or government but also often major changes in business processes and practices. By using a project management approach in adopting IPSAS an organization/government can make certain that, for example: the project gets necessary support from top management; a sound governance structure is put in place; communication and training plans are developed and managed; new accounting policies are written; and necessary alignment of business processes will take place in a timely manner.

In the final paper for this issue, Rizvana Zameeruddin considers new guidance on accounting and financial reporting for intangible assets from the Government Accounting Standards Board (GASB) in the USA.  Zameeruddin considers that when Statement 51 is appropriately used in conjunction with existing guidance, a more faithful representation of the services capacity of intangible assets, particularly in the areas of recognition, initial measurement, and amortization results.  This should improve financial reporting by clarifying the classification of intangibles as capital assets and establishing guidance for internally generated intangibles. 

The editors welcome comments on these papers and suggestions for future issues of the Journal.  Each of these papers and previous issues of International Journal of Governmental Financial Management are available for free download from: www.icgfm.org/digest.htm

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.

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