Ernst & Young and CIPFA to Increase Transparency and Comparability of Public Sector Finances
Accounting firm Ernst & Young and the Chartered Institute of Public Finance and Accountancy (CIPFA) have formed an alliance to help organizations and governments around the world to improve their public financial management (PFM) systems and arrangements.
CIPFA is the professional body for people in public finance. Its 14,000 members work throughout the public services, in national audit agencies, in major accountancy firms, and in other bodies where public money needs to be effectively and efficiently managed.
This alliance focuses particularly on offering public and not-for-profit organizations support with the implementation of International Public Sector Accounting Standards (IPSAS). IPSAS have been developed and are maintained by the Independent Public Sector Accounting Standards Board (IPSASB). Like IFRS in the private sector, they constitute a comprehensive suite of modern international standards for governments and other similar entities.
This initiative brings together Ernst & Young’s experience working on IPSAS projects around the world and CIPFA’s experience in professional capacity development and certified financial management training.
Thomas Müller-Marqués Berger, Ernst & Young Global Head of International Public Sector Accounting, said: “The global financial crisis has exposed the seriousness of sub-standard reporting by governments. Decisions made are suffering due to short-term reporting cycles, archaic accounting and the hidden costs of social provisions. Governments are beginning to recognize that IPSAS represent the future of PFM and can help to alleviate these economic pressures by better decision making as well as allowing public money to be better tracked and spent more efficiently.”
Ian Carruthers, CIPFA Director of Policy and Technical, commented, “This initiative is about creating a unique resource for the international public sector. The global financial crisis has demonstrated the urgent need to strengthen public sector accounting standards and financial management around the world.
“Our alliance brings together the expert professional skills needed to deliver complex change programs successfully with real tangible benefits for public sector organizations, the people who rely upon their services and wider society.”
Ernst & Young’s recent Toward Transparency study of national governments financial statements showed that, while there is a clear trend toward IPSAS, the majority of national financial reporting standards are still distinctive, making true financial comparisons between governments very difficult. This is a concern given the demands of investors for timely and comparable information.
In its Fixing the Foundations campaign, CIPFA argues for a step-change in public financial management as an urgent and necessary response to the sovereign debt crisis.
This alliance is aimed at providing an integrated service for public organizations that want to modernize their accounting methodologies and continue the momentum towards widespread use of IPSAS.