International Accounting Standards
INTERNATIONAL ACCOUNTING STANDARDS HELP KEEP SA COMPETITIVE
“International accounting standards have a key role to play in helping South Africa become more competitive—and will help us as a nation to seize the opportunities raised by our membership of the Brazil, Russia, India and China (BRIC) group of nations,” says Faith Ngwenya, technical & Standards Executive, South African Institute of Professional Accountants. “When it comes to the public sector, these standards will also prove to be invaluable in helping donors and citizens alike to assess the performance of public-sector entities and their long-term sustainability. They will also play a role in enabling a culture of greater accountability and transparency which is particularly important given the extent of the delivery challenges the country faces—and the growing number of service delivery protests we are seeing.”
Basically speaking, the International Public Sector Accounting Standards are based on International Financial Reporting Standards (IFRS). However, these standards are not applied holus-bolus; due consideration is taken of South Africa’s position as a developing country. The work of adapting the international standards is undertaken by the Accounting Standards Board, which is a statutory body created in terms of the Public Finance Management Act to set accounting standards for all public sector entities in South Africa. The Act actually requires the Accounting Standards Board to take into account best accounting practices both internationally and locally.
The Board also takes cognisance of the conditions “on the ground” and modifies the international standards as needed. In practice, this might mean reducing the complexity of some standards, or creating provisions for certain public-sector organisations to make the transition in a phased manner.
“What’s really exciting is the realisation internationally that financial statements are actually part of a much bigger puzzle,” Ngwenya observes. “The International Public Sector Accounting Standards Board is now proposing a conceptual framework for the public sector that will go beyond conventional financial statements to produce a general-purpose financial report.”
This new framework would require public-sector organizations to report on their long-term financial sustainability by balancing long-term cash outflows against cash inflows from taxation and other sources. It would also report on service delivery, reporting on inputs versus outputs. “This type of reporting will play a key role in aligning government activity with its strategy, but it will also help in our ability to forge strong trading and other alliances with, for example, our BRIC partners,” argues Ngwenya. “Economic co-operation will only be enhanced by our ability to provide financial information that is compiled according the same standards and can thus be more readily understood and assessed. In addition, by adhering to international standards, the public sector would be in line with the private sector where the transactions are the same—this in turn will create a platform for greater accountability and enable better private-public cooperation.”
About SAIPA (South African Institute of Professional Accountants)
SAIPA (https://www.saipa.co.za) is a professional accountancy organisation of professional accountants in practice, commerce and industry, government and academia. The majority of its members are in public practice, offering accountancy and allied services, excluding auditing, to the general public and the business community, especially in the SMME sector. SAIPA is a full member of IFAC (http://www.ifac.org/) which is a global organisation for the accountancy profession.
ISSUED ON BEHALF OF SAIPA BY PR REPUBLIC. FOR MORE INFORMATION CONTACT LEANDRI SMITH ON 079 523 8374 OR AT firstname.lastname@example.org.