In a cover letter attached to the response to the December 2013 consultation, which mainly focussed on EPSAS governance principles and structures, FEE has added general thoughts on the development and implementation of EPSAS for the EU.
FEE states that it has always supported accruals-based accounting in the public sector and fully supports its implementation at all levels of government. FEE also believes that a single set of high quality principle-based standards could greatly contribute to stability and sustainability of public finance. Yet FEE points out that international standards in this area already exist: International Public Sector Accounting Standards (IPSAS). These are based on International Financial Reporting Standards (IFRS), which have been endorsed for use in the EU, and have been developed through a thorough due process including public consultation that also offers stakeholders in Europe the opportunity to participate.
Nevertheless, an earlier consultation led to the conclusions that (1) it seemed that IPSAS cannot easily be implemented in EU Member States as it stands currently and (2) the IPSAS standards represent a suitable framework for the future development of EPSAS. Therefore, the European Commission suggested proceeding with the development of these EU-focussed separate standards.
FEE sees this way forward with some concern and after due consideration and debate with the profession across Europe notes the following points related to the development and implementation of EPSAS:
- It does not seem to be efficient to duplicate the organisation and the effort of creating public sector standards for the EU when global standards are already available. FEE believes there might be other, more time- and cost-efficient solutions available for making accruals accounting mandatory in the EU and ensuring that Member States use the same model - among them an EU endorsement of IPSAS.
- Given that the EU's legislative process requires that 28 Member States need to agree to any new legislative acts, the development of a timely and harmonised solution seems doubtful. It also seems likely that as consequence of compromises a large number of Member State options would be included in the final EPSAS.
- Developing EPSAS within the EU's legislative process would also make the standard setting process vulnerable to political tinkering as representatives from Member States might want to push forward their domestic agenda regarding public sector accounting.
In addition to these general concerns, FEE also voices concerns regarding the EPSAS governance structure proposed by the European Commission. These are included in the answers to the questionnaire that is attached to the cover letter. Please click for the cover letter and questionnaire on the FEE website.