Governmental Accounting Maturity Toward IPSASs and the Approximation to National Accounts in the European Union

ABSTRACT

International Public Sector Accounting Standards (IPSASs) are a good reference for a harmonized microaccounting system allowing more transparency and quality in public sector accounting across EU member-States. However, questions remain concerning IPSASs contribution to the convergence between Governmental Accounting (GA) and the National Accounts (NA). This article assess how the proximity to an IPSAS-based accounting system in GA has impact on the diversity and materiality of GA-NA budgetary deficit/surplus adjustments, hence analyzing whether IPSASs might contribute to GA-NA reconciliation. Main findings show that IPSASs do not make considerable difference in terms of GA-NA adjustments, so IPSASs-based EPSASs will hardly contribute to approaching GA-NA.

KEYWORDS:

• Adjustments
• central government
• deficit/surplus
• governmental accounting
• national accounts

Notes

^1. E.g. EU Council Directive 2011/85/EU, November 8, 2011, on requirements for budgetary frameworks of the member-States; and IFAC October 11, 2011, Recommendations for the G-20 Nations—Meeting of November 3–4, 2011.

^2. Council Regulation n.448/98; Commission Regulation n.1500/2000; Parliament and Council Regulation n.2516/2000; Commission Regulation n.95/2001; Parliament and Council Regulation n.2258/2002; and Commission Regulation n.113/2002.

^3. Regulation (EU) 549/2013 of the European Parliament and of the Council, of 21 May 2013—European System of National and Regional Accounts in the European Union. Published in the Official Journal of the European Union, L174, Vol.56, 26.06.2013.

^4. http://epp.eurostat.ec.europa.eu/portal/page/portal/esa_2010/introduction.

^5. This is Sector S.13—GGS, following the definition of institutional sectors in ESA.

^6. EDP Consolidated Inventory of Sources and Methods—available to all EU member-States at http://ec.europa.eu/Eurostat.

^7. Reporting of Government Deficit and Debt Levels each EU member-State discloses twice a year (April—1st Notification, and October—2nd Notification), available in http://ec.europa.eu/Eurostat.

^8. Budgetary balance of other entities not included in the subsector State is reported for the whole of those entities and is added to the State deficit/surplus (“working balance”).

^9. Following the EU Council Directive 2011/85/EU, November 8, 2011, a consultation process was carried out between February and May 2012, in order to assess the suitability of IPSASs for EU member-States. Additionally a staff commission was created to assess the current status of GA systems across EU, who prepared a “staff working document” accompanying the Report from the Commission to the European Council, on March 6, 2013 (European Commission, 2013a).

^10. Further details on this score will be provided in section 3.1.2, as it will be used in the empirical study.

^11. Reporting of Government Deficit and Debt Levels, 2st Notification, October 2014, from all 28 EU member-States, available at www.ec.europa.eu/Eurostat.

^12. It might be noticed that Category D1 (Working balance’ (+/-) of entities not part of Central Government) as Table 1, is not reported by any country in the EDP Notification analyzed. We suppose these entities are already included in Table 2 “working balance”, according to the new ESA2010 rules.

^13. Several cluster analyses were performed with different clustering methods and measures of distance and all results supported this number of groups.