European consultation on public sector standard setting

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  • IPSASB (International Public Sector Accounting Standards Board) (mid gray) Image

02 Dec 2013

The European Commission and its directorate-general Eurostat, have released a public consultation paper dealing with the possible future implementation of 'European Public Sector Accounting Standards' (EPSAS) in European Union (EU) member states. The report focuses on the issue of governance, and outlines views about the future governance arrangements and underlying key principles that might apply in the development of EPSAS.

The report follows an earlier consultation on the suitability of International Public Sector Accounting Standards (IPSAS) for EU member states, which lead to the publication of a report in March 2013. This report found that whilst IPSAS as they stood could not be implemented in EU member states, they could form a strong starting reference for EU harmonised European Public Sector Accounting Standards (EPSAS), to be applied by all general government public entities.

Following the release of the IPSAS report, Eurostat organised a conference in Brussels in May 2013 to discuss the EPSAS project, and one of the key issues identified for follow up was that of governance. The IPSAS report noted that the governance of IPSAS "suffers from the insufficient participation in practice of EU public-sector accounting authorities".

The consultation paper outlines the key principles related to the EPSAS governance structure and process, including professional independence, impartiality, legitimacy, transparency, competence and capacity, cost effectiveness and accountability. In terms of the EPSAS standards themselves, the paper posits the following principles: reliability, relevance, coherence and comparability, and accessibility and clarity.

The proposed implementation of EPSAS would be rooted in a legal basis for EPSAS through a EPSAS Framework Regulation that would:

  • Define EPSAS governance and establish an 'EPSAS Committee'
  • Define the due process to adoption EPSAS standards, the central element of which would be newly established EPSAS Committee
  • Define the principles underlying EPSAS governance, including providing a basis to ensure direct participation of national standard-setters and government accounting authorities in the standard setting process, and providing oversight by the European Commission, as well as by the Council, the European Parliament and the European Court of Auditors
  • Set core requirements of EPSAS, e.g. based on accrual accounting and using double-entry
  • Confirm IPSAS as the starting point for the development of EPSAS.

The EPSAS Committee would be chaired and represented by the European Commission and be comprised of high-level member state representatives, with a limited number of non-voting observers. The committee would put in place a work programme for the development of EPSAS and would be directly involved in the decision making process. EPSAS Standards Working Groups would also be established to support the committee's work, and involve technical accounting experts from public sector standard setters and government accounting authorities - these working groups would be involved in the drafting of EPSAS standards and also resolve interpretation requests in an authoritative manner.

The report also entertains two optional components of any EPSAS governance structure, namely a 'EPSAS Governance Advisory Board' (EPSAS GAB) which might be entrusted with specific EPSAS oversight tasks, and an 'EPSAS Technical Advisory Group', which could liaise with a wide range of stakeholders including the International Public Sector Accounting Standards Board (IPSASB), government finance statisticians, supreme audit institutions, public and private accounting experts, academics and end users.

The consultation paper is open for comment until 17 February 2014, and comments are requested to be submitted in the form of questionnaire. The questionnaire asks specific questions on the relevance of the key governance principles, the institutional arrangements proposed for governance oversight, the desirability of the possible EPSAS GAB and EPSAS Technical Advisory Group and how these might be structured, and whether, and if so how, an interpretation function should be considered.

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