ACCA's 5 th International Public Sector Conference Financial Reporting for an open world Inmarsat Conference Centre, London, 5 December 2013 EUROPEAN PUBLIC SECTOR ACCOUNTING STANDARDS (EPSAS) Developments and Challenges Alexandre Makaronidis, Eurostat D4 GFS Quality Management and Government Accounting Alexandre Makaronidis, Eurostat D4 GFS Quality Management and Government Accounting

Eurostat Outline I – Study on the suitability of IPSAS II – EPSAS conference III – Next steps of EPSAS project 2/18

Eurostat I – Study on the suitability of IPSAS: Retrospective Public consultation on IPSAS Study on public sector accounting and auditing practices EPSAS Conference QIV 2011QI QIV 2012QII 2013 Budgetary Frameworks Directive "… the Commission shall assess the suitability of the International Public Sector Accounting Standards for the Member States" QI 2013 Report on suitability of IPSAS "… IPSAS cannot easily be implemented in EU Member States as it stands currently" "… the IPSAS standards represent an indisputable reference for potential EU harmonised public sector accounts" 3/18 Task Force IPSAS

Eurostat Commission Report - COM(2013) 114 Although IPSAS, as it stands currently, could not easily be implemented in EU Member States, the IPSAS standards would be suitable as a reference framework for the possible future development of EPSAS It would be advisable to create a set of EPSASs, which would ally strong EU governance with standards adapted to the context of the EU and its Member States Costs would depend on the degree to which each MS has implemented accrual accounting as well as on the robustness of the control systems. Standards for small (less risky) public entities should be simplified 4/18 I – Study on the suitability of IPSAS

Eurostat "Towards implementing European Public Sector Accounting Standards" 5/18 II – EPSAS Conference

Eurostat "Towards implementing European Public Sector Accounting Standards" More than 200 participants (Min. Finance, Courts of Auditors, National Statistics Institutes, private accountants, academics, …) High level speakers including President Van Rompuy, Commissioner Šemeta, W. Radermacher, European Parliament, President Vítor Caldeira from ECA Wide range of speakers (EP, ECA, ECB, EUROSAI, IFAC, IMF, IPSASB, FEE, MoF, DG BUDG, DG MARKT, DG ECFIN, academics) 6/18 II – EPSAS Conference

Eurostat Four sessions The political context – sovereign debt crisis, economic governance, transparency and trust in fiscal data Fiscal transparency and public accounting Suitability of IPSAS and national experiences of reforms Accounting standards, governance, the way forward 7/18 II – EPSAS Conference

Opening remarks "It is hard to understand why after 500 years we are not using double entry book-keeping in the public sector" Walter Radermacher – Chief Statistician of the European Union (The picture on the screen in the background is of Luca Pacioli, who published the first description of double-entry book-keeping in 1494) 8/18 II – EPSAS Conference

Europe needs harmonised public sector accounts "There are no sound fiscal policies without good government finance statistics based on good public accounting." "The importance of the reliability of government accounts has been illustrated by some dramatic episodes of inaccurate reporting of deficits and debts..." "As we continue on our road towards deeper European integration, towards a genuine economic and monetary union, we will increasingly need fully comparable public sector accounts covering all sub- levels of general government." 9/18 II – EPSAS Conference

Eurostat Conclusions of the conference Political support is growing EPSAS: a necessary tool for further fiscal and budgetary integration in EU Ambitious project with medium-term scope Next steps envisaged: a Commission Communication, followed by a Framework Regulation Governance is a priority to follow up after the conference 10/18 II – EPSAS Conference

Eurostat Taking forward the EPSAS project Stage 1 (mid-2013–mid-2014): Commission Communication Stage 2 (mid-2014 – end-2015): Framework Regulation: Governance structures and procedures Impact Assessment Mid-term Work Programme Stage 3 (end-2015 – 2020): endorsement and stepwise implementation 11/18 III - Next steps of EPSAS project

Eurostat Outputs from: -TF EPSAS Governance -TF EPSAS standards -Public consultation on EPSAS Governance -Study PwC Commission Comunication Framework Regulation 12/18 III - Next steps of EPSAS project

Eurostat Task Force EPSAS Governance (1st meeting: 2 October 2013) possible future governance arrangements underlying key principles Public consultation on future EPSAS governance principles and structures Until 17/02/2014 On-line questionnaire accompanied by a consultation document 13/18 III - Next steps of EPSAS project

Eurostat Scope of external study (Oct 2013 – Jul 2014) Potential costs and benefits of implementing accruals accounting in the public sector in the EU MS Evaluation of IPSAS standards and analysis of their application in the EU Task Force EPSAS Standards 1st meeting: planned for early 2014 To work on the technical aspects of the accounting standards 14/18 III - Next steps of EPSAS project

Eurostat Issues to be addressed in the Commission Communication Legal basis EPSAS Governance Key principles of EPSAS Next steps for EPSAS implementation (road map, impact assessment, monitoring, issues needed further analysis) 15/18 III - Next steps of EPSAS project

Eurostat Issues to be addressed in the Framework Regulation Establish the principles (accrual, double entry, …) Confirm the reference to IPSAS as starting point Define the governance arrangements Lay down the process of adoption of individual EPSAS standards 16/18 III - Next steps of EPSAS project

Eurostat EPSAS stepwise implementation Gradual, possibly phased, in all MS in the medium term (by 2020) Strong EU governance Taking into account the need for: Accruals-based accounting Double entry book-keeping Harmonised financial reporting Consistency with ESA principles 17/18 III - Next steps of EPSAS project

Eurostat Useful links Assessment Report, Staff Working Document and Inventory of MS accounting and auditing practices: cs/government_accounting Conference webpage: 13/epsas Public Consultation on future EPSAS governance: ations/epsashttp://epp.eurostat.ec.europa.eu/portal/page/portal/public_consultations/consult ations/epsas 18/18