The recent financial crisis revealed substantial shortcomings in financial reporting practices in the public sector underscoring the importance of comprehensive, reliable, and timely financial reporting by governments. There is currently an urgent need to improve governments’ understanding of their fiscal position and prospects, and 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 are critical to 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. Despite the IPSASB’s efforts however, adoption of IPSASs by national governments remains low. Consultation exercises, such as the ones recently 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 are some of the reasons cited by national authorities for not adopting IPSASs.
In response to these concerns, the IPSASB Governance Review Group (“the Review Group”) was formed to propose future governance and oversight arrangements for the IPSASB. The Review Group is chaired by representatives 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 are serving 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. This initial meeting was followed by another meeting in the spring of 2014 to consider the responses to the consultation with a view of forming a final set of recommendations by the end of 2014.