« Accrual Accounting and the Government’s Intertemporal Budget Constraint | Main | Tracking COVID-19 Operations in Francophone Africa »

September 17, 2020

IPSASs Implementation – ‘Walk’ and ‘Talk’

Tobias
Posted by Tobias Polzer, Pawan Adhikari and Levi Gårseth-Nesbakk[1]

Substantial investments have been made by governments worldwide to adopt the International Public Sector Accounting Standards (IPSASs) and translate them into native languages. Does the ‘implementation walk’ (actual implementation) match the ‘talk’ (announcement of a decision to adopt IPSAS)? And, do these efforts eventually deliver value for money, and improved public sector governance and accountability?

A recent study[2] attempts to answer these questions. It finds that there have been three major accrual accounting reform waves in OECD countries: first, Anglo-Saxon countries (late 1980s to the mid-1990s), second, Nordic countries (1990s to the early 2000s), third, some non-Nordic European countries (since the late 2000s). The advanced economies (e.g., Australia, New Zealand, United Kingdom) that introduced accrual accounting reforms before the development of IPSASs in the early 2000s have generally resisted making any subsequent changes to their accounting policies and rules, even where these policies may not be fully consistent with IPSAS.

The situation is less clear for emerging economies and low-income countries. While some of these countries (e.g., in Asia and sub-Saharan Africa) have embarked on reforms to implement the cash basis IPSAS, many Latin American countries have attempted, or are attempting a transition to the full accrual basis IPSASs. Given the political opposition to enhanced transparency and accountability – a fundamental concept of IPSASs – in parts of Latin America, the study argues that these reforms might remain superficial, or even detrimental to development.

In several countries, a decoupling of the reform ‘walk’ and ‘talk’ can be observed. For instance, in Nepal, progress in implementing the cash basis IPSAS adopted in 2009 has been confined to experimentation by a few central ministries. For some countries, IPSASs adoption might be viewed as an exercise in seeking legitimacy. In the Nordic countries, for example, issues such as the usefulness of IPSAS for decision-making and lack of interest among users (politicians and public sector managers) in adopting the standards appear to be common struggles. The research highlights that it can take a long time to persuade critics of the merits of IPSAS and to ensure that the new standards are being implemented effectively.

In countries that have experienced better results, IPSASs have often been introduced as part of a larger public financial management reform program (e.g., in Austria) or where there is a powerful political pressure for change (e.g., in Iceland). The study finds that countries with the greatest difficulties and worst results appear to be those that have been subject to coercive external pressures (such as from donors), most commonly in low-income countries (e.g., Benin). Finally, arguments about the alleged high costs of implementation compared to the perceived benefits are commonly brought forward by countries that have been reluctant to adopt IPSASs.

 

[1] Tobias Polzer is an Associate Professor at the University of Sussex, UK. His research interests include public financial management and public governance. Pawan Adhikari works as Associate Professor at the University of Essex, UK. He is interested in accounting change in emerging and advanced economies. Levi Gårseth-Nesbakk is a Professor at the Nord University. His research centres on how global phenomena are translated into national and local practices.

[2] https://www.emerald.com/insight/content/doi/10.1108/IJPSM-03-2019-0071/full/html

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.

Comments

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Back to top of page
©2007 IMF. All Rights Reserved. About Us | Terms of Use