Presentation given by Ian Ball, IFAC chief executive officer, at the Financial Focus Breakfast in Brussels, January 2012.

1. Accounting Standards for
Governments
Ian Ball
CEO International Federation of Accountants
Finance Focus Breakfast
26 January 2012
Bruegel, Rue de la Charité 33, 1210 Brussels

2. Accounting Standards for Governments

3. Accounting Standards for Governments

4. Accounting Standards for Governments
“IFAC is concerned that the standards and
regulations governing sovereign issuers are
not of sufficient quality to protect investors and
ensure the stability of capital markets…”
“…looking at potential measures that could
improve the quality and reliability of
information disclosed by sovereign issuers and
therefore increase the protection of investors
and improve the stability of capital markets.”

5. Accounting Standards for Governments
Latin American sovereign debt
Number of years in default, 1824-2004 Latest
period of
default
0 20 40 60 80 100 120
Ecuador 116.0 1992-90
Mexico 85.0 1984-97
Peru 75.0 1995-97
Venezuela 65.0 2001-04
Argentina 50.0 1983-90
Chile 45.0
1983-94
Brazil 45.0 1986-97
Bolivia 40.0
2003
Uruguay 25.0

6. Accounting Standards for Governments
Countries with Sovereign Restructuring between 1990-2005
(Agreement Date)1
Algeria (07/1996) Pakistan (12/1999)
Argentina (04/1993, 04/2005) Panama (05/1996)
Brazil (04/1994) Peru (03/1997)
Bulgaria (06/1994) Philippines (12/1992)
Chile (12/1990) Poland (10/1994)
Cote d'Ivoire (03/1998) Russia (08/2000)
Croatia (07/1996) South Africa (09/1993)
Dominican Rep.(08/1994, 05/2005) Ukraine (04/2000)
Ecuador (02/1995, 08/2000) Uruguay (05/2003)
Mexico (05/1990) Venezuela (12/1990)
Morocco (09/1990) Vietnam (12/1997)
Nigeria (12/1991) Serbia & Montenegro (07/2004)
Source: Cruces J and Trebesch C, Sovereign Defaults: The Price of Haircuts (Preliminary Paper) December 2010

7. Accounting Standards for Governments
Government-issued financial instruments represented
3/4 of NYSE trading volume
NYSE 2010 Trading Volume = $1425 trillion
16% Equities
7%
Mortgage backed
0%
securities
77% Mutual funds
US Government
securities

8. Accounting Standards for Governments

9. Accounting Standards for Governments

10. Accounting Standards for Governments

11. Accounting Standards for Governments
New Zealand Government net worth
70.0 120,000
105,514
60.0 96,827 99,515
94,988 100,000
52.0 57.8
83,971 56.4 53.9
50.0
50.2 80,000
40.0 35.2
54,240 60,000
30.0 27.3
20.9 39,595
18.0 40,000
20.0 28,012
12.9 22,825
15,450 20,000
10.0
0.0 0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Net Worth ($ millions) Net Worth (as % of GDP)

12. Accounting Standards for Governments

13. Accounting Standards for Governments
Members of the IPSASB are nominated by IFAC member bodies and, for public
members, through nominations from member bodies, other organizations, and the
general public.
David Bean, Deputy Chair United States Ron Salole Canada
Thomas Müller-Marqués Berger Germany Adriana Tiron-Tudor Romania
Ian Carruthers United Kingdom Isaac Umansky Uruguay
Marie-Pierre Cordier France Ken Warren New Zealand
Rachid El Bejjet Morocco Tim Youngberry Australia
Kenji Izawa Japan
Hong Lou China Public Members
Masud Muzaffar Pakistan Andreas Bergmann, Chair Switzerland
Anne Owuor Kenya Mariano D'Amore Italy
Jeanine Poggiolini South Africa Sheila Fraser Canada

14. Accounting Standards for Governments
“1.1 In relation to the need for high-quality and timely accrual-based
financial reporting, IFAC recommends that the G-20 actively
encourages and facilitates the adoption of accrual-based
accounting by governments and public sector institutions.”

15. Accounting Standards for Governments
“1b. Member States shall move to adopt
International Public Sector Accounting
Standards within three years of this
Directive coming into force.…”

16. Accounting Standards for Governments
To quote the American colonial revolutionary
Patrick Henry:
“The liberties of a people never were, nor ever will
be, secure, when the transactions of their rulers may be
concealed from them.

17. Accounting Standards for Governments