1
Harmonisation of Accounting and
Statistical Systems
Tim Youngberry
First Assistant Secretary
Department of Finance and Deregulation
Australia
The background
• Australian legislation requires all Budget reports –
at the consolidated level - to be prepared on two
bases.
• First, based on accounting standards applicable to
the public sector (GAAP or AAS)
• Second, based on statistical systems used for
national accounts (GFS)
Background (continued)
•
Australia uses accrual accounting in financial statement
preparation, for both budget and actual. Additionally it uses cash
indicators in budget reports.
•
Budget reports are not audited – so there can be departures from
GFS as long as they are warranted
•
The Australian Government also produces consolidated whole of
government financial statements on an AAS basis which are
audited – any material departure from AAS standards would result
in audit qualification. AAS are based on the standards prepared by
the IASB (private sector)
The problem
• Two sets of accounts were not a huge problem for
the compilers
– expertise in GFS was concentrated in the centre
and
- the chart of accounts in the central system was set
up to identify points of difference
• The bigger problem was confusion for the readers
of having two statements. Which one was right ?
The solution
The Australian financial reporting oversight group directed the
accounting standard setting body (AASB) to develop a
standard for the harmonisation of the two systems:
• Initially covering the General Government Sector
• Then whole of government reporting and the other two
sectors
• Then individual entities
• Then possibly considering sundry bodies such as
universities and bodies owned by more than one government
Challenges along the way
• The two systems started out very differently, with a large
number of differences between the two
• Accounting standards moved closer to GFS over time as
they moved toward greater use of fair value (matching GFS
market value)
• Engagement with statistical people at both national and
international level has resulted in a number of changes or
potential changes to GFS which reduce the differences
• There were approximately 16 major issues on which it was
not possible to reconcile
The outcome
• Accounting standard issued September 2006 (for GGS) and
December 2007 (for whole of government and other sectors)
• This goes a long way further than, say, IPSAS 22 (although
is not inconsistent with IPSAS 22)
In summary, requires:
• Use of GFS measurement rules where this is permissible
under AAS
• Otherwise requires use of AAS rules – with a reconciliation to
GFS in the notes
• Presentation in GFS format – uses terms consistent with
GFS such as fiscal balance, net worth, net debt, and has a
two part operating statement (in some ways not unlike the
revised IAS 1)
The benefits
•
•
•
•
•
A single set of financial statements that satisfy budget and
accounting needs
Less need to consider different accounting treatments when
determining government accounting policies
A single set of budget aggregates – reducing confusion and
reducing the ability to select the aggregates that support a particular
view
Less time taken to produce reports as the two systems are less
different from each other than they once were
Agencies are still able to prepare statements in AAS format (at
present) meaning specialised systems and training are not required
and accountants can be recruited from the private sector and be
productive from “day one”
The Future
•
We are currently working out detailed disclosures for
implementation at GGS and whole of government levels for
2008-09.
•
Some residual issues of detail such as which reports will be
audited; timing of reports given different statutory timeframes; audit
of variance explanations.
•
Agency level adoption is still to be considered (by 2010).
•
AASB will have to develop a process for maintaining the system to
accommodate future changes to both AAS and GFS.