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14th Annual OECD Public Sector Accruals Symposium Paris, 3-4 March 2014

EPSAS - Update

Keith Hayes Task Force EPSAS, Eurostat

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1. Retrospective2. The EPSAS project3. Current state of play4. EPSAS governance5. Key challenges ahead

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EPSAS

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1.1 Retrospective, to mid-2013

Public consultation on

IPSAS

Study on public sector

accounting and auditing practices

EPSAS Conference

QIV 2011 QI 2012 - QIV 2012 QII 2013

Budgetary Frameworks

Directive "… the Commission

shall assess the suitability of the International Public Sector Accounting Standards for the Member States"

QI 2013

Report on suitability of

IPSAS IPSAS cannot easily

be implemented in EU Member States as it stands currently

IPSAS would be a suitable starting point for the future development of a set of European Public Sector Accounting Standards

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Task Force IPSAS

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1.2 EPSAS conference, May 2013

Conclusions• Political support growing• Necessary tool for further fiscal and budgetary

integration in EU• Ambitious project with medium-term scope• Envisaged: Commission Communication, Framework

Regulation• Governance is a priority to follow up

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2.1 EPSAS – what is it?

• A suite of accruals-based European standards for public sector accounting and GPFR

• Grounded and legislated on the basis of the EU Treaties

• Common to all public entities belonging to General Government for all EU Member States

• Based on strong EU governance, subject to internal control and independent audit

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2.2 EPSAS aims - 1

• Improve the comparability of the reporting of the economic, financial position and performance in the EU MS

• Improve the efficiency, effectiveness and accountability of public sector management, in particular where accruals accounting is not yet in place

• Produce reliable and timely financial and fiscal data

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2.3 EPSAS aims - 2• Increase fiscal transparency, necessary for

macroeconomic stability and for coordination, surveillance and policy advice

• Reduce the incoherencies between the micro level primary public-sector accounting and reporting framework and the ESA macro level reporting framework

• Facilitate the securing of liquidity in global financial markets

• Improve the efficiency and effectiveness of public audit7/26

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2.4 EPSAS implementation

• Gradual, possibly phased, in all MS in the medium term (by 2020)

• Strong EU governance• Taking into account the need for:

• Accruals-based accounting• Double entry book-keeping• Harmonised financial reporting• Consistency with ESA principles

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2.5 The "E" in EPSAS• Proposal by the Commission (legal basis: primary law,

e.g. 338 TFEU)•Council and Parliament adopt EPSAS Framework Regulation• Framework Regulation defines governance and key

principles• Confers standard-setting powers on to Commission• Commission consults Member States, and• Adopts EPSASs as binding acts

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3.1 Current state of play - outline

Taking forward the EPSAS project• Stage 1 (mid-2013–mid-2014): Commission Communication

• Stage 2 (mid-2014 – end-2015): Framework Regulation:

• Governance structures and procedures• Impact Assessment• Mid-term Work Programme

• Stage 3 (end-2015 – 2020): endorsement and stepwise implementation

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- TF EPSAS Governance

- TF EPSAS Standards- Public consultation on

EPSAS governance

- External study (PwC)

3.2 Current state of play – main activities

Commission Communication

Framework Regulation

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3.3 Current state of play - Governance

Public consultation on future EPSAS governance principles and structures

• Closed 17/02/2014 • Questionnaire and consultation document

Task Force EPSAS Governance• Possible future governance arrangements • Underlying key principles

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3.4 Current state of play - Standards

TF EPSAS StandardsTechnical aspects of the accounting standards• MSs’ perspectives and experiences on the IPSAS

standards• Standards for smaller and less risky government

entities• Staged approach to EPSAS standard-setting• EPSAS core framework (principles), first EPSAS

standards

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3.5 Current state of play – External study

External study (Oct 2013 – Jul 2014)• Potential costs and benefits of implementing accruals

accounting in the public sector in the EU MSs

• Further evaluation of IPSAS standards and analysis of their application in the EU MSs

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4.1 EPSAS Governance – principles

EPSAS governance• Professional independence • Impartiality • Legitimacy• Transparency• Competence and capacity• Cost effectiveness • AccountabilityEPSAS standards

• Reliability• Relevance• Coherence and comparability• Accessibility and clarity

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4.2 EPSAS Governance – possible structure

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• Provisional results based on online questionnaire, email,

mail and fax and some responses may still to be added

• Raw results, inconsistencies to be fixed

• Only statistical tables and graphs

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4.3 Public consultation: preliminary overview of responses (28 Feb 2014)

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4.4 Responses by country

Country Number PercentageAustria 2 1.0%Belgium 3 1.5%Bulgaria 2 1.0%Croatia 1 0.5%Czech Republic 3 1.5%Denmark 1 0.5%Finland 4 2.0%Germany 142 70.0%France 6 3.0%Hungary 1 0.5%Italy 3 1.5%Ireland 1 0.5%Latvia 1 0.5%Malta 1 0.5%Netherlands 2 1.0%Poland 5 2.5%Portugal 2 1.0%Romania 3 1.5%Slovakia 1 0.5%Slovenia 1 0.5%Spain 2 1.0%Sweden 4 2.0%United Kingdom 6 3.0%Brazil 1 0.5%Other 5 2.5%Total 203 100%

*Provisional results as of 28 February 201418/26

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4.5 Responses by type of respondent

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Type of respondent Number PercentagePublic accounting authority/standard setter 40 19.7%Public audit authority 13 6.4%National Statistical Institute 5 2.5%Other national public institution 95 46.8%Private financial (accounting/audit/consulting) company 3 1.5%Private other 2 1.0%International institution or organisation 6 3.0%Academic 4 2.0%Individual 18 8.9%Other 17 8.4%Total 203 100%

*Provisional results as of 28 February 2014

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4.6 Relevance of principles

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No Partly Yes0102030405060708090

100A

nsw

ers

*Provisional results as of 28 February 2014

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4.7 Oversight function - Governance Advisory Board

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No Yes0102030405060708090

100

Ans

wer

s

*Provisional results as of 28 February 2014

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4.8 Formal representation of stakeholders – Technical Advisory Group

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No Yes0

20

40

60

80

100

120

Answ

ers

*Provisional results as of 28 February 2014

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4.9 Governance and advisory roles in a single group?

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No Yes0102030405060708090

Answ

ers

*Provisional results as of 28 February 2014

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4.10 Interpretation function

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No Yes0102030405060708090

100

Answ

ers

No, 52 43%

Yes, 68 57%

9a. Do you consider that this in-terpretation function

should be kept separate from the standard setting function?

*Provisional results as of 28 February 2014

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5 Key challenges ahead

• Role of IPSAS in EPSAS• Do we really need EPSAS?• Governance - Legal basis for EPSAS• Governance - Roles of stakeholders• Governance - Standard-setting powers in practice• Standard-setting and implementation costs

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Useful links

Assessment Report, Staff Working Document and Inventory of MS accounting and auditing practices:http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/government_accountingConference webpage: http://epp.eurostat.ec.europa.eu/portal/page/portal/conferences/introduction/2013/epsasPublic Consultation on future EPSAS governance:http://epp.eurostat.ec.europa.eu/portal/page/portal/public_consultations/consultations/epsas