Katarína Kaszasová FCCA Governmental Financial Reporting Public Sector Accounting Reform in Slovakia Katarína Kaszasová FCCA Ministry of Finance of the Slovak Republic World Congress of Accountants Istanbul, November 2006

Agenda Why Slovakia introduced public sector accounting reform What are main components of reform and their status of realization What we have learned and what we need to solve in forthcoming years

Public Finance Management Reform To strengthen the institutional capacity for budgeting, expenditure management and the financial management of government operations Program budgeting Multi-annual budgeting State Treasury Agency for Debt and Liquidity Management

Public Finance Management Reform The present system of public sector accounting provides neither the full extent of needed financial information, nor financial information with following qualities: relevant, reliable, comparable, timely, understandable.

Public Sector Accounting Reform Objective Public Sector Accounting is the information system that records, analyses, classifies, summarizes and communicates public sector entity financial and economic events, and their impacts, in terms of both: The provision of information required by management and senior executives for planning, organizing and control, and The preparation and provision of financial statements and fiscal reports under specific accounting and reporting standards for external users

Public Sector Accounting Reform Components New accounting and reporting standards “MoF must produce, in line with new definition of public finance accounting, specific formats and content for several public finance accounting and reporting methodologies, consistent with the standards and trend in other countries.” Implementation of IPSAS into national accounting standards Introduction of consolidation procedures Introduction of conversion procedures

Public Sector Accounting Reform Components System support to implementation “MoF must re-specify the basic operability criteria of, and its access to, public finance accounting systems to promote functionality of public finance accounting and reporting and to be consistent with the standards and trend in other countries.” System of the State Treasury New module for consolidation Financial and administration centers for local government

Public Sector Accounting Reform Components Training of accountants “MoF should develop a clear and comprehensive vision and strategy how public finance accountants will be able to obtain appropriate levels of training and experience to meet the needs of users of public finance accounting information.” Series of trainings for 6,500 public accountants Cooperation with universities and professional associations Communication

Public Sector Accounting Reform Timetable Key activities Project management 2005 - 2009 New standards preparation 2005 - 2006 Trainings 2005 - 2007 System support pilot projects 2006 - 2007 Adoption of new standards and new systems 1.1.2008 First consolidated financial statements April 2010

Lessons learned Preconditions for success Recognition that accrual accounting is part of reform process Broad consultation and acceptance Adoption/development of accounting standards Participation of accountancy profession Existence of robust audit process

Information and contacts Ministry of Finance of the Slovak Republic Štefanovičova 5 P.O.Box 82 817 82 Bratislava 15 Slovak Republic www.finance.gov.sk