Harmonisation%20of%20Accounting%20and%20Statistical%20Systems

1
Harmonisation of Accounting and Statistical
Systems
1

• Tim Youngberry
• First Assistant Secretary
• Department of Finance and Deregulation
• Australia

2
The background

• Australian legislation requires all Budget
  reports at the consolidated level - to be
  prepared on two bases.
• First, based on accounting standards applicable
  to the public sector (GAAP or AAS)
• Second, based on statistical systems used for
  national accounts (GFS)

3
Background (continued)

• Australia uses accrual accounting in financial
  statement preparation, for both budget and
  actual. Additionally it uses cash indicators in
  budget reports.
• Budget reports are not audited so there can be
  departures from GFS as long as they are warranted
• The Australian Government also produces
  consolidated whole of government financial
  statements on an AAS basis which are audited
  any material departure from AAS standards would
  result in audit qualification. AAS are based on
  the standards prepared by the IASB (private
  sector)

4
The problem

• Two sets of accounts were not a huge problem for
  the compilers
• expertise in GFS was concentrated in the centre
  and
• - the chart of accounts in the central system
  was set up to identify points of difference
• The bigger problem was confusion for the readers
  of having two statements. Which one was right ?

5
The solution

• The Australian financial reporting oversight
  group directed the accounting standard setting
  body (AASB) to develop a standard for the
  harmonisation of the two systems
• Initially covering the General Government Sector
• Then whole of government reporting and the other
  two sectors
• Then individual entities
• Then possibly considering sundry bodies such as
  universities and bodies owned by more than one
  government

6
Challenges along the way

• The two systems started out very differently,
  with a large number of differences between the
  two
• Accounting standards moved closer to GFS over
  time as they moved toward greater use of fair
  value (matching GFS market value)
• Engagement with statistical people at both
  national and international level has resulted in
  a number of changes or potential changes to GFS
  which reduce the differences
• There were approximately 16 major issues on which
  it was not possible to reconcile

7
The outcome

• Accounting standard issued September 2006 (for
  GGS) and December 2007 (for whole of government
  and other sectors)
• This goes a long way further than, say, IPSAS 22
  (although is not inconsistent with IPSAS 22)
• In summary, requires
• Use of GFS measurement rules where this is
  permissible under AAS
• Otherwise requires use of AAS rules with a
  reconciliation to GFS in the notes
• Presentation in GFS format uses terms
  consistent with GFS such as fiscal balance, net
  worth, net debt, and has a two part operating
  statement (in some ways not unlike the revised
  IAS 1)

8
The benefits

• A single set of financial statements that satisfy
  budget and accounting needs
• Less need to consider different accounting
  treatments when determining government accounting
  policies
• A single set of budget aggregates reducing
  confusion and reducing the ability to select the
  aggregates that support a particular view
• Less time taken to produce reports as the two
  systems are less different from each other than
  they once were
• Agencies are still able to prepare statements in
  AAS format (at present) meaning specialised
  systems and training are not required and
  accountants can be recruited from the private
  sector and be productive from day one

9
The Future

• We are currently working out detailed disclosures
  for implementation at GGS and whole of government
  levels for 2008-09.
• Some residual issues of detail such as which
  reports will be audited timing of reports given
  different statutory timeframes audit of variance
  explanations.
• Agency level adoption is still to be considered
  (by 2010).
• AASB will have to develop a process for
  maintaining the system to accommodate future
  changes to both AAS and GFS.