IPSAS / EPSAS

The transition to new accounting standards is a challenge for any organisation. Often, the transition does not only affect the accounting area, but has consequences for the entire business entity.

The International Public Sector Accounting Standards (IPSAS) are becoming increasingly important and provide for worldwide improvement and comparability of public financial reporting. Uniform accounting standards are intended to facilitate the preparation of consolidated financial statements as well as the raising of capital. Being close to the International Financial Reporting Standards (IFRS), they are a set of rules that can be understood worldwide.

Especially for supranational organisations and non-profit organisations (NPO), IPSAS therefore offer a valuable framework for globally transparent financial reporting, as they compete for public and private funds. Voluntary financial reporting can pave the way for the development of new sources of financing and create trust and transparency.
The ownership structure can also be the trigger for the transition if the application of IPSAS is mandatory in this respect. This arises primarily when umbrella organisations impose binding requirements on their members.

Transition projects are currently taking place in many countries. To date, the IPSAS framework has not been available in German. To improve understanding, KPMG has published the IPSAS in a German translation authorised by IFAC.

The discussion about harmonising international accounting standards is gaining new momentum in the wake of the sovereign debt crisis. In March 2013, the EU Commission officially endorsed the introduction of the European Public Sector Accounting Standards (EPSAS).

According to the EU Commission, the EPSASs are to be developed on the basis of the existing International Public Sector Accounting Standards (IPSAS) and considerably improve the data basis for budgetary policy monitoring at EU level.

That experts expect the EPSAS to be introduced is shown by a snap survey conducted by the KPMG Institute for the Public Sector among participants of an expert event on international accounting in the public sector. 48 percent consider EPSAS to be important for their own professional practice in the future.

The transition to external financial reporting oriented towards the communication of actual circumstances requires a project-based approach, taking into account the effects on adjacent areas. This refers both to transitions from cameralistics to IPSAS/EPSAS and from double-entry accounting or the HGB to IPSAS/EPSAS.

KPMG will be able to assist you in the transition. Our interdisciplinary project team provides detailed advice on accounting and reporting issues and supports you in redesigning your processes and IT landscape. Through an integrated project approach, the effects on adjacent areas, such as planning and controlling instruments, are taken into account.

Our integrated approach can be tailored to the client’s individual needs and is based on tried and tested methods and procedures. This helps to enable faster and better results. Those responsible for the transition can thus make better decisions during the transition phase.

Whether we simply offer coaching or whether we manage the entire project, all variations and combinations of service are conceivable. Partial involvement in particularly complex transition areas, such as asset accounting and consolidation, is also possible.

The IPSAS have detailed specifications for group accounting and can influence the development of public-sector consolidated financial statements within the framework of reform projects in Germany.

In the context of the reform projects of the German public accounting system, the focus has so far been on the individual entity financial statements. Public-sector consolidated financial statements have only played a minor role so far. This will change in the coming years, as the preparation of public-sector consolidated financial statements is mandatory, depending on the respective federal state. The objective of the public-sector consolidated financial statements is to provide a true and fair view of the financial position, cash flow and financial performance of the group, regardless of where public services (core administration, type II spin-off) are provided.

The challenges within the framework of the reform projects relate to determining the scope of consolidation, ensuring uniform accounting and valuation methods throughout the group and the actual consolidation (capital, debt, expense and income consolidation as well as elimination of inter-company results). The implementation of the consolidation steps requires a system-side adjustment of the IT landscape.

KPMG will support you in designing your public-sector consolidated financial statements. We also advise you on the design of sub-group consolidated financial statements of type II spin-offs, which must prepare consolidated financial statements in accordance with HGB. The Accounting Modernisation Act (BilMoG) also presents new requirements for group accounting.

Our involvement with your project team can be individually customised: Whether we simply offer coaching or whether we manage the entire project, all variations and combinations of service are conceivable.

• Use of proven tools ensures efficient processes and adherence to deadlines.
• Interdisciplinary teams ensure high-quality advice.
• The integration of our consultants into your project team contributes to the rapid transfer of knowledge and a high level of acceptance within the administration.
• A coordinated division of tasks makes it possible to limit project costs.
• High customer satisfaction through appropriate project organisation and continuous feedbacks