International Public Sector Accounting Standards (IPSAS), which are issued by the International Public Sector Accounting Standards Board (IPSASB), are meant to improve the quality of financial reporting by public sector entities.

The application of IPSAS leads to better informed assessment of the resource allocation decisions made by governments, thereby increasing transparency and accountability.

There are 31 standards on the accrual basis of accounting and one standard on the cash basis of accounting.

Worldwide, 84 countries have committed to adopting IPSAS. The countries that have committed to the adoption include developed economies such as Australia, New Zealand, Singapore and Japan, which have adopted full accrual accounting standards consistent with IPSAS.

In France, the accounting standards are based on both IPSAS and French accounting regulation for the public sector. In Italy, a process is in place to adopt accruals IPSASs. In Spain, the Ministry of Economy and Finance is implementing accruals IPSAS for public sector financial reporting. In Switzerland, the Federal government adopted IPSAS, effective from 2007 and the state governments adopted with effective dates of 2008 to 2013.

The public sector in the United Kingdom applies accounting guidance that is broadly consistent with IPSAS while the United States of America applies accounting standards that are broadly consistent with IPSAS.

However, only a handful of African countries have adopted IPSASs. They include Rwanda, Tanzania, Uganda, Zambia, Algeria, Ghana, Nigeria, South Africa, Liberia, Morocco and Mauritania. Others include member states of East and Southern African Association of Accountants General whose aims include adoption of IPSASs.

Each of the African countries is at different stages in the adoption of IPSAS. For instance, Ghana has adopted the cash basis IPSAS and is transitioning to the accruals basis IPSAS. Tanzania adopted cash basis IPSAS for the central government in 2008, with a plan to shift to the accrual basis in 2010. Arrangements to commence the transition from modified cash basis of accounting to adoption of full accrual basis IPSAS are underway In Uganda while Zambia has put a process in place to adopt cash basis IPSAS. Algeria designed a project for financial management reforms that include adoption of IPSAS.

Liberia adopted the cash basis IPSAS and plans to migrate to accruals basis over a five year period. Mauritania has also adopted IPSAS and is in the process of implementing this decision. In Morocco, the institution building includes adoption of IPSAS and Nigeria is in the process of adopting cash basis IPSAS and will move to adopt accruals basis. South Africa is also in the process of adopting accruals IPSAS with local amendments. 

Rwanda has already adopted modified cash basis of accounting and has plans to transition to accruals basis IPSAS in the future. The adoption of IPSAS by the Government of Rwanda will improve the quality of financial information reported by its departments and agencies. In recognition of the importance of adopting IPSAS, the Institute of Certified Public Accountants of Rwanda is currently running a series of workshops on IPSAS.

These workshops and the initiatives already undertaken by the Government are key in taking the country to the next level of adopting global best practices in public sector financial reporting.

The author is a Senior Manager with PricewaterhouseCoopers Rwanda.
Email: florence.w.gatome@rw.pwc.com