Differential reporting in the public sector—financial reporting for small- and medium-sized entities

IMPACT

According to the International Public Sector Accounting Standards Board (IPSASB), public sector entities should apply the IPSAS when they fulfill certain criteria, such as the delivery of public services or financing by taxes. Size is currently not a matter for the application of IPSAS and smaller public sector entities have to apply the full suite of IPSAS. Based on an empirical study, this article shows that differential reporting is a suitable approach to overcome the accounting challenges that small- and medium-sized public sector entities (SMPSEs) are facing. The authors explain the potential advantages and disadvantages of differential reporting in the context of SMPSEs’ accounting challenges.

ABSTRACT

With the growing number of standards, the requirements of the accrual basis International Public Sector Accounting Standards (IPSAS) have significantly increased in the past 10 to 15 years. Small- and medium-sized public sector entities (SMPSEs) often do not have the necessary capacities and skills to cope with the requirements of the full suite of the accrual basis IPSAS. This article presents a systematic overview of the design of the accounting frameworks for SMPSEs in a number of OECD countries, as well as selected developing/emerging countries, and identifies possible approaches that will be helpful in addressing those challenges.

KEYWORDS:

• Differential reporting
• EPSAS
• financial reporting
• International Public Sector Accounting Standards (IPSAS)
• micro entities
• public sector
• small- and medium-sized public sector entities

Acknowledgements

The views expressed in this article belong solely to the authors, and not necessarily to the authors’ employer.

Disclosure statement

No potential conflict of interest was reported by the author(s).