Alsopp ipsas a case for accounting reform at the oas

IPSAS: A case for Accounting Reform at the OAS 2010 ICGFM Winter Conference Practical Uses of New Standards to Enhance Transparency and Program Performance December 6-8, 2010 Enrique Iglesias Conference Center Inter-American Development Bank 1330 New York, Avenue Washington, DC 20577 USA

Table of Contents Pages ,[object Object],3-6 ,[object Object],7-10 ,[object Object],11-23 ,[object Object],24-25 ,[object Object],26-28

Member States ,[object Object],[object Object],[object Object],[object Object],[object Object],(1) On June 3, 2009, the Ministers of Foreign Affairs of the Americas adopted resolution AG/RES. 2438 (XXXIX-O/09) , that resolves that the 1962 resolution, which excluded the Government of Cuba from its participation in the inter-American system, ceases to have effect in the Organization of American States (OAS). The 2009 resolution states that the participation of the Republic of Cuba in the OAS will be the result of a process of dialogue initiated at the request of the Government of Cuba, and in accordance with the practices, purposes, and principles of the OAS. (2) On July 5, 2009, the Organization of American States (OAS) invoked Article 21 of the Inter-American Democratic Charter, suspending Honduras from active participation in the hemispheric body . The unanimous decision was adopted as a result of the June 28 coup d ’é tat that expelled President Jos é Manuel Zelaya from office. Diplomatic initiatives are ongoing to foster the restoration of democracy to Honduras.

OAS Funds THE NEED FOR CONVERGENCE: ,[object Object],FUND DESCRIPTION ACCOUNTING STANDARDS Operating Fund (“Regular Fund”) ,[object Object],[object Object],[object Object],[object Object],Special Revenue funds (“Specific Funds”) - Contributions for specific projects/objectives. ,[object Object],[object Object],Fiduciary funds ,[object Object],[object Object],- US GAAP Internal service fund - Indirect cost recovery, common costs. - B & F rules

International Drivers ,[object Object],[object Object],[object Object],[object Object],[object Object],AFRICA Many African governments in the process of adopting cash basis IPSAS. LATIN AMERICA Governments have mandated or in the process of adopting IPSAS. Institutions that support it: World Bank, IMF, Asian and Inter American Development Banks. * Source : http://ec.europa.eu/budget/library/documents/implement_control/conf_accounting_1008/bergmann_en.pdf UN/OAS MOVE TO IPSAS - UN: 2006 - OAS mandate to explore: 2007 - OAS mandate to adopt: 2010

OAS Case Study ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],* Analytical framework derived from the Financial Management Reform Process Model.

IPSAS Guidance ,[object Object],[object Object],[object Object],[object Object],[object Object],UN IPSAS Taskforce IPSAS Board OAS guidance

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Implementation Challenges

Impacted areas Employee Benefits (terminations, annual leave) Expense Recognition (obligations, travel/accountable advances) Investments (fair value) Financial Statements (cash flow, disclosures, budget reports) Financial Statement Consolidation Fixed Assets (capitalization, depreciation) Revenue (quotas / pledges/ specific fund agreements) IPSAS

Reporting Entity ,[object Object],Current Treatment IPSAS Treatment OAS currently has other affiliated entities and specialized organizations. OAS prepares financial statements for some of these. Most are prepared in accordance with US GAAP. Consolidation based on power and benefit criteria. All transactions, balances, revenue, expense between entities within the controlling entity are eliminated.

Reporting Entity Implementation Challenges BEFORE ADOPTION AFTER ADOPTION ,[object Object],[object Object],[object Object],[object Object],Impact of consolidation in fund balance.

Revenue Recognition Eg: Quotas, Voluntary Fund pledges, Specific Fund contributions, interest income. Current Treatment IPSAS Treatment Revenue Recorded upon receipt of cash in all funds. Fully reserved receivables created for all agreements. Binding agreements will trigger revenue recognition and recording of receivables Other income (e.g., interest) accrued as earned

Revenue Recognition Implementation Challenges BEFORE ADOPTION AFTER ADOPTION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Expense Recognition Eg: Purchase Order obligations. Current Treatment IPSAS Treatment Commitments fully recognized as expense at the point of the purchase order. Recording of these expenses is not dependent on the good/service actually being received. Delivery principle : Expenses would not be recorded until the underlying good or service has actually been received/performed and then, only the amount applicable to that period is recognized.

Expense Recognition Implementation Challenges BEFORE ADOPTION AFTER ADOPTION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Employee Benefits ,[object Object],Current Treatment IPSAS Treatment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Employee Benefits Implementation Challenges BEFORE ADOPTION AFTER ADOPTION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Property Plant and Equipment ,[object Object],Current Treatment IPSAS Treatment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

PP&E Implementation Challenges BEFORE ADOPTION AFTER ADOPTION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

IPSAS at OAS: Where are we? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],ONGOING Coordination Communication strategy. Training IPSAS ADOPTION: ON THE ROAD TO 2012

Moving Forward ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Overarching themes

Alsopp ipsas a case for accounting reform at the oas

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Alsopp ipsas a case for accounting reform at the oas