Recent financial crisis underscored the importance of comprehensive, reliable, and timely financial reporting by governments.
Recent financial crisis revealed substantial shortcomings in financial reporting practices in the public sector. The necessity to improve governments’ understanding of their fiscal position and prospects therefore became widely acknowledged, as well as the need to provide legislators, markets, and citizens with the information they need to make efficient financial decisions, and to hold governments accountable for their performance.
Establishing and disseminating high quality accounting standards for the public sector were considered as an important step for bringing about this change towards more fiscal transparency.
International Public Sector Accounting Standards (IPSASs) have a role to play in improving the quality of government financial reporting.
For the last 15 years, the International Public Sector Accounting Standards Board (IPSASB) has done considerable and commendable work in developing and disseminating a comprehensive suite of standards and guidance materials.
However, despite the IPSASB’s efforts, implementation of IPSASs by national governments remains, so far, limited. Consultation exercises, such as the ones undertaken by the Monitoring Group (MG) of the International Federation of Accountants (IFAC) and Eurostat , found that concerns about the governance and oversight of the IPSASB were some of the reasons cited by national authorities for not implementing IPSASs.
The Public Interest Committee (PIC) was created after a public consultation aimed at strengthening the governance arrangements of the IPSASB.
The IPSASB Governance Review Group (“the Review Group”) was formed to propose future governance and oversight arrangements for the IPSASB.The Review Group was chaired by individuals from the World Bank, International Monetary Fund (IMF), and Organization for Economic Cooperation and Development (OECD), and includes representatives from the Financial Stability Board (FSB), the International Organization of Securities Commissions (IOSCO) and the International Organization of Supreme Audit Institutions (INTOSAI). Eurostat and IFAC served as observers to the governance review.
The Review Group held its first meeting in Paris on 31 May 2013 to agree on the Terms of Reference for this review, and scope and content of a public consultation to garner views from stakeholders and the public at large on the governance and oversight of the setting of accounting standards for the public sector.
The responses to the public consultation conducted from January 17, to April 30, 2014 were summarised and discussed by the Review Group at its meetings on May 31, 2013 and September 22, 2014. This process concluded with the publication of a set of recommendations regarding the future governance of the IPSASB that led to the creation of the Public Interest Committee (PIC) in 2015.