Deloitte member firms comment on European IPSAS proposal
May 22, 2012
The European Union member firms of Deloitte have submitted a comment letter to EuroStat on the public consultation paper about the suitability of accrual-accounting International Public Sector Accounting Standards (IPSAS) for European Union (EU) Member States. The comment letter concludes that IPSAS are suitable for implementation in the EU Member States.
The comment letter notes that IPSAS would be "a considerable improvement over the home-made accounting practices followed in many countries" and includes the following observations:
We consider IPSAS to be high-quality accounting standards for governments, which in many respects, as amended to reflect specific public sector requirements, follow IFRS which provided consistency to international reporting in the private sector. Their adoption by all EU Member States would lead to improved consistency and comparability of financial statements as a result of the extensive requirements and guidance provided in IPSAS.
The comment letter also makes the following points:
- The main advantages of IPSAS adoption would be international comparability (including outside the EU), quality improvement and transparency of public sector financial statements
- Given the effort required to adopt accrual accounting, it may be necessary for Member States currently using the cash-basis to adopt a basic form of accrual accounting as an intermediate step before moving to full IPSAS
- Governance of the IPSASB, the need for a possible endorsement process for IPSAS, and differences to government statistics are seen as challenges
- The adoption of IPSAS is seen as one mechanism to enhance financial stability within Europe and retaining confidence in the Euro.
The Institute of Chartered Accountants in England and Wales (ICAEW) has also released its comment letter on the proposals. The ICAEW comment letter echoes many of the points outlined above, although the ICAEW strongly emphasises the transitional process and notes that accordingly "it would be some time before it was necessary to move to a full set of high quality, internationally accepted standards, [and so] the decision on whether to use IPSASs does not need to be taken immediately".