How to succeed in your IPSAS journey
Many African countries have committed to implementing International Public Sector Accounting Standards (IPSAS). The right tools and support will increase the chances of success in what is a tricky transitional period, says Stephan van der Merwe (CA) SA, Product Manager, CaseWare Africa.
Stephan explains that accrual-based accounting like IPSAS improves public sector reporting by taking the rights and obligations of financial transactions into account, not just the transactions themselves. This accords well with the reality that governments are not in business to make profits, but to deliver public services. Making the link between money spent and results achieved more transparent thus reflects better what governments are doing, and builds citizen and investor confidence.
In addition, the fact that a government’s financial reporting uses internationally comparable standards, such as IPSAS, makes it easier for foreign investors to assess the economy’s stability and potential.
“We should not underestimate the potential pitfalls when moving to IPSAS. Many government entities will be converting from frameworks like International Financial Reporting Standards (IFRS), which has a for-profit basis or cash accounting, which have limited recognition for rights and obligations. This conversion process is greatly aided by partnering with CaseWare because our templates have been refined through numerous global implementations, and thus can enable a smooth transition process,” he says. “CaseWare will also ensure that the maximum amount of automation occurs, thus reducing the time commitment of staff and enhancing accuracy.
“To realise the benefits of IPSAS, one needs to look beyond compliance for compliance’s sake to what the outcomes are intended to be. Using CaseWare will make that possible because it embeds the spirit as well as the letter of the standard into the entity, and gives staff the tools they need.”
Most governments have mandated a staggered transition to allow the conversion process to be taken carefully. For example, the Zambian government has indicated that government ministries, provinces and spending agencies will have to use IPSAS for financial statements for periods ending on or after 31 December 2022, while non-governmental public sector entities and not-for-profit organisations must comply two years earlier, by 31 December 2020.*
A further important consideration is that no set of standards is static. IPSAS is constantly being updated as new issues emerge and thinking changes. CaseWare is constantly updating its software to ensure that these changes are incorporated into the software.
“We go further than simply staying abreast of changes. We also spend a lot of time ensuring that the specific requirements of a country, for example, additional disclosure due to other legal requirements, are also considered in our development.
“Partnering with a global leader like CaseWare will not only make the transition to IPSAS much easier and more successful, it will ensure that the organisation is future-proofed as well. IPSAS is important: make sure it’s a success, now and into the future,” he concludes.
* Zambia Institute of Chartered Accountants, “Accounting Pronouncement: 2018/3—Applicability of International Public Sector Accounting Standards (IPSAS) in Zambia”.
Ahava Consulting Limited is CaseWare Africa Channel partner in Zambia and provides all necessary technical support and staff training.
Contact: Nkhatya Mbewe
Email: [email protected]