Dwi_brunei Slides Final

ACCRUAL ACCOUNTING WOULD THE ECONOMY BENEFIT IF GOVERNMENTS ADOPT IT ndash LESSON FROM INDONESIA

Hekinus Manao amp Dwi MartaniMember of Government Accounting Standard Board Indonesia

University of Indonesia Jakarta(hekinusgmailcom) and (martaniuiedu)

The 16th ASEAN Federation of Accountants (AFA) Conference

Brunei Darussalam December 8-9 2009

2

ROLE OF GOVERNMENTROLE OF GOVERNMENT

bull Government gives a lot of contribution in economic by creating policy amp regulation spending government expenditure to create multiplier effect and deliver public services

bull Improvement the quality of financial management in government become the center point of public interest to establish new public governance

bull Credible financial information will increase transparency and accountability and the information will be used in decision making and controlling the operation

3

3 BASIC ISSUES IN PUBLIC 3 BASIC ISSUES IN PUBLIC FINANCIAL MANAGEMENTFINANCIAL MANAGEMENT

1 Aggregate Fiscal Discipline to maintain fiscal sustainability national

2 Allocation Efficiency Discipline to assure public choices inter ministerial

3 Operational Management Discipline to assure that we deliver for what we are expected to and for what has been paid for intra ministerial (within agency)

4

THE ESSENCE OF ACCOUNTING IN THE ESSENCE OF ACCOUNTING IN PUBLIC SECTORSPUBLIC SECTORS

P U B L I C B U D G E T


P

U

B

L

I

C

B

U

D

G

E

T

P

U

B

L

I

C

B

U

D

G

E

T

ACCOUNTABILITY amp

TRANSAPARENCY

ACCOUNTABILITY amp

TRANSAPARENCY

MANAGAMENT DECISION MAKING

amp CONTROL


amp CONTROL

Budget Operation

Budget Operation

Resources amp Claims


Government

Accounting

Government

Accounting

Optimum allocation

Optimum allocation

Operation efficiency


5

PRINCIPAL-AGENT CONTRACTUAL PRINCIPAL-AGENT CONTRACTUAL RELATIONSHIP IN GOVERNMENT SETTINGRELATIONSHIP IN GOVERNMENT SETTING

PRINCIPAL

PEOPLE

AGENT

GOVERNMENT

Transfer of Resources amp Legal Rights

Monitoring

Bonding

Legal amp Managerial Accountability Process

6


PARLIAMENT

Accounting Reporting

Auditing

PRINCIPAL

PEOPLE

AGENT

GOVERNMNET

Laws amp Legal Provisions

Planning amp Budgeting

TRANSPARENCY amp ACCOUNTABILITY

7

International Public Sector International Public Sector Accounting StandardAccounting Standard

IPSAS are financial reporting standards for application by governments (other than for Government Business Enterprises) and other international public sector entities

International Public Sector Accounting Standards (IPSASs) are issued by the IPSASB a board under IFAC

Almost 70 countries have adopted IPSASs or are in the process of adopting IPSASs

Many countries have chosen not to adopt IPSASs lock stock and barrel but have developed standards that are similar to IPSASs

The main reason is that many countries want to adapt the public accounting standards to their own environment

8

Adaptation of IPSAS

9

National Public Sector Accounting Standards Similar to IPSASs

Governments that already apply full accrual accounting standards and apply accounting standards that are broadly consistent with IPSAS requirementsAustraliaCanadaNew ZealandUnited KingdomUnited States of America

10

IPSASIPSAS

11

bull IPSAS are high-quality international standards

bull IPSAS and IFRS are similar

bull IPSAS contains cash flow Statement

bull IPSAS and GFS (Government Finance Statistics) are similar

WHY IPSASWHY IPSAS

transparency and credibility

understandable for people who know company accounts

understandable for people who know cash accounting

avoids duplication of efforts for governments

12

BENEFIT OF IPSASBENEFIT OF IPSAS

Improved internal control and transparency in respect of assets and liabilities generally

The alignment with best accounting practices through the application of credible independent accounting standards on a full accrual basis

More comprehensive information about costs that will better support results-based management

The integration of non-expendable equipment into the accounting system with resulting improvements in the accuracy and completeness of non-expendable equipment records

Improved consistency and comparability of financial statements as a result of the detailed requirements and guidance provided in each standard

Sources The United Nations General Assembly which adopted IPSAS in 2006

13

BENEFIT ndash Improve Allocation of BENEFIT ndash Improve Allocation of capitalcapital

Many public sector organisations see the improved management and allocation of infrastructure assets as one of the major benefits of IPSASs and accrual accounting

A government wants to build a bridge and the bridge will take two years to complete The government pays the contractor 50 per cent of the costs upfront and the remaining 50 per cent of costs on delivery The bridge is expected to last 100 years and will cost 20 million Under cash accounting 10 million hits the statement of financial performance in both years 1 and 2 while under accrual accounting only 200000 hits the statement of financial performance for 100 years Cash accounting reflects the cash flows of the transactions while accrual accounting reflects the usage of the asset

In a governmental (and therefore political) setting the different results under cash and accrual accounting matter

A politician may be more likely to invest in building a bridge in an election year if the governmentrsquos financial statements reflect the accruals based usage of the bridge rather than cash flows of the purchase one method has a far greater impact on the bottom line which may prove significant in an election year

One of the reasons why Canada adopted accrual accounting was that it thought that it would positively influence infrastructure investment decisions

Sources IPSAS Improving accountability in the World Ian Sanderson CA(SA) works in the field of international development for Deloitte in Geneva Switzerland and Professor Frans van Schaik CA(SA) is a member of the IPSAS

14

IPSAS ndash Developing WorldIPSAS ndash Developing World

Many developing countries are also in the process of adopting IPSASs Many of these countries are currently implementing the cash-based IPSASs which

are seen as a stepping stone towards the future adoption of accrual accounting Many countries have projects that are being funded by international donor

organizations such as the World Bank and the International Monetary Fund the Swedish Development Agency (SIDA)

The adoption of IPSASs is viewed as a means towards improving accountability in those countries and it is a move that should be supported The adoption by developing countries should not be underestimated because the move towards an effective and transparent accounting system will hopefully lead to better resource allocation and less wastage (ie corruption) in public sector finances

The development will hopefully also lead to improved investor confidence and an improved economic outlook


15

IPSAS ndash Must go with Audit Strong IPSAS ndash Must go with Audit Strong FrameworkFramework

The risk of corruption in developing countries will diminish further as the cash based IPSASs are gradually superseded by the accruals based IPSAS

The risk of corruption can only be mitigated by sufficient checks and balances in the system to reduce the temptation to steal (ie the risk of being caught) such as a strong audit framework

In many developing countries there are moves towards strengthening the audit function in government and many donors are supporting their efforts to improve accountability through IPSASs by working to strengthen the technical capacity

We note a significant rise in the number of qualified chartered accountants working for the South African Auditor-General The Auditor-General and his staff will play a critical role in working with the public sector in the move towards accrual accounting


16

CASH ndash ACCRUAL ACCOUNTINGCASH ndash ACCRUAL ACCOUNTING

Cash1048633 Traditionally used in public sector1048633 Expenses and revenues recorded when they are paid or received

Accrual1048633 Traditionally used in private sector1048633 Expenses and revenues recorded when they are incurred or earned

17


18


19

WHY ldquoACCRUAL BASISrdquo IS GOOD WHY ldquoACCRUAL BASISrdquo IS GOOD PUBLIC ACCOUNTINGPUBLIC ACCOUNTING

1 Providing good economic measures for resources consumed earned or transferred

2 Yielding more acceptable measures of performance in line with the performance-based budget approach

3 Improving information on the costs of government services Total costs not just immediate cash outlays

4 Capable to produce comprehensive balance sheet (assets and liabilities) Illuminate long-term fiscal sustainability

5 Embracing the capital maintenance concept6 Gaining universal acceptance

20

WHY ldquoACCRUAL BASISrdquo - 1WHY ldquoACCRUAL BASISrdquo - 1

1 The promotion of accrual accounting and reporting in public sectors has received varied responses and caused considerable debate or controversy

2 In a comparative study of public financial management reforms in ten OECD countries Olson et al (1997) found the shift to accrual in only one case

3 The result in inefficient resource allocation and ineffectiveness of public financial management as in contrast to the efficiency and market effectiveness by commercial sectors supported by accrual accounting information The adoption of business accrual accounting systems was advocated as it was the readily implemented accounting model for public sectors ldquowithout reinventing the wheelrdquo (Anthony 1978 Christensen 2003)

21


Information generated from accrual-based reporting systems allows users to assess the accountability for all resources and the deployment of those

resources assess the performance financial position and cash flows of the reporting entity making decisions as to providing resources to or doing business with the entity

Study 14 of IFAC Public Sector Committee (2002) argues that reporting on accrual basis is useful in evaluating a governmentrsquos performance in terms of its service costs efficiency and accomplishments

This basis enables users of reports to identify the financial position and changes of the financial position of a government and how a government financed its activities and met its cash requirements and therefore it facilitates the assessment of a government capacity

Accrual-based government accounting will also allow the government to identify opportunities of future use of resources and to demonstrate successful management of the resources

22


Compared to cash-based accounting accrual-based accounting has been widely accepted in commercial sector for its ability to provide a multi-dimensional view of the governmentrsquos cash flow financial performance and financial position and to show the full cost of activities not just the short term cash impact

The broad benefits of accrual based accounting include the facts that it provides measures of the economic goods and services

consumed transformed and earned it yields a more acceptable measure of performance and it embraces well the concept of capital maintenance

(Jones amp Pendlebury 1988)

23


The Public Sector Committee of IFAC has commented extensively on the benefits of accrual accounting for governments and individual public sector entities (IFAC 2002)

Therefore accrual accounting is currently gaining importance in several countries particularly in OECD countries (Schiavo-Campo amp Tommasi 1999)

Carlin (2005) explores the body of literature expressing support for accrual adoption by the public sector He identifies two appealing justifications for the ldquoinevitabilityrdquo of the adoption ie improvement of organizational performance allowed by the full

cost information which yields to operational efficiency and optimum resource allocation and

enhancement of transparency both internally and externally

24


The lack of evidence to improved government performance as a result of improved cost control systems has been also provided by Olson et al (2001) In general Olson et al conclude that public services may be caught in ldquoevaluator traprdquo where continual promotion of reforms results in decreasing public service with increasing cost per unit

Barton (1999 2004 2009) strongly argues that the business model of accrual accounting should not be forced on to the public sector

The two sectors are not identical twins with respect to their accounting requirements The reasons for governments to exist are totally different from those for business institutions

Barton (2004) emphasizes that the nature of governments and their roles in a modern democratic nation are fundamentally different and much more complex and diverse than those of the private sector ldquoAs a minimum citizens want their governments to provide various goods and services which cannot be readily provided by private firms and they require that they be accountable to them for all of their activitiesrdquo (p 283)

25


According to McGregor (1999) accounting selection in government setting requires a more conceptual approach One common argument in support of a separate and different approach for public sector entities relates to the broader notion of accountability that exists in public sector

The need for accountability is written into the US constitution and it is the first objective of financial reporting by the US Government (Granoff 2001)

Accountability is fundamental to public sector accounting and reporting In a democratic nation the government plays the role as agents of the citizens The parliament and the public need the detailed information on government activities and their financial resources It is for this reason that all taxation and expenditure proposals must be approved by the parliament before they can be implemented and it is for this reason why budget compliance is necessary (Barton 2004)

26

ldquo ldquoACCRUAL BASISrdquo in Public Sector ACCRUAL BASISrdquo in Public Sector Accounting SOME CAVEATSAccounting SOME CAVEATS

1 Accrual accounting is not in harmony with the typical governmental context except for units that have business like activities

2 Incorporates defects in that economic inputs (costs) are matched with limited economic outputs when they should actually be compared to the social services

3 Most governments adopt non-accrual budgeting approach4 Relevance for political decision-makers more room for

interpretation5 Research evidence Switching does not automatically

produces benefits (Christians amp Rommel 2008)

27

ldquoldquoACCRUAL BASISrdquo - CAVEATSACCRUAL BASISrdquo - CAVEATS

The arguments for accrual adoption has been ripe for criticism including among others the potential moral hazards of creative accountability reporting produced therein (Carlin 2000) the contingency to a range of factors eg asset valuation especially those of public infrastructure and collections of cultural scientific and heritage assets (Mautz 1981 1988 McGregor 1999 Blondal 2007 Carlin 2005)

The different concept of net equity of government ndash it is a passive residual between the total assets and the total liabilities rather than ownersrsquo residual claims (Barton 2004)

Costlier accounting design and implementation issues (Carlin 2005 Blondal 2007)

28

ldquo ldquoACCRUAL ACCOUNTINGrdquo in Public ACCRUAL ACCOUNTINGrdquo in Public Sector IMPLEMENTATION ISSUESSector IMPLEMENTATION ISSUES

1 Recognition criteria heritage assets military systems infrastructure assets social insurance

2 Valuation issues historical or current market3 Setting accounting standards a separate committee single

standard setter for both private and public sectors or IPSAS

4 Asset registers many countries did not have up-to-date asset registers

5 Upgrading accounting skills accruals requires higher level of accounting skills

6 Conversion problems lack of understanding time consuming costly and riskier

29

WHY IS ldquoCASH BASISrdquo PREFERABLEWHY IS ldquoCASH BASISrdquo PREFERABLE

1 Simple avoiding difficulties and complexities in its implementation and comprehension

2 Annual government budgets are constructed based on real cash flows hence the accountability report should be designed consistently

3 The lack of demand for financial stock information4 Has been a long tradition in most countries

30

WHY IS ldquoCASH BASISrdquo PREFERABLEWHY IS ldquoCASH BASISrdquo PREFERABLE There are at least two reasons for many governments to

maintain the cash basis approach rather than implementing the accrual-based model (Manao 2006 2008) Annual government budgets of many governments are constructed

based on real cash flows hence the accountability report should be designed consistently

The use of cash basis approach has been a long tradition avoiding difficulties in its comprehension especially among the parliament members

While warranting the importance of information of stock position of government assets and debts Blondal (2007) admits that for public sector management cash information is paramount

31

WHY IS ldquoCASH BASISrdquo PREFERABLEWHY IS ldquoCASH BASISrdquo PREFERABLE According to Barton (2009) the activities of governments in satisfying the

community and national interests can be summarized into sixfold as follows provision of public goods and services to the community provision of social welfare goods and services to citizens macroeconomic management of the economy conservation of the nationrsquos natural and cultural environment pursuit of intergenerational equity and management of government resources which are used to provide the above

goods and services The first five activities involve conditions that apply only in the public

sector of the economy Those activities involve the expenditure of cash by government and its

collection from taxation and other government sources in order to fund their provision

32

WHY IS ldquoCASH BASISrdquo PREFERABLEWHY IS ldquoCASH BASISrdquo PREFERABLE A cash budgeting and accounting system is more relevant to

manage the government roles Only in the last role of efficient resource management that requires accrual information

Barton (2009) argues further that for fiscal policy purposes cash accounting information is also required The flows of government cash receipts and expenditures encompassed in the governmentrsquos fiscal policies have major effects on the state of economy (economic growth inflation and exchange rates and unemployment rate) on financial markets and on social welfare

33

WHY IS ldquoCASH BASISrdquo PREFERABLEWHY IS ldquoCASH BASISrdquo PREFERABLE In such cases the business model of accrual accounting does

not easily fit the environment and does not properly satisfy the information requirements

Accrual information is not quite relevant when a government agency is primarily designed as a spending unit or as a cost center relying on budget appropriation not from revenue generation

The outputs of such government agencies cannot be measured in terms of traditional financial performance and their non-financial assets do not provide economic benefits to the entities

34

WHY IS ldquoCASH BASISrdquo PREFERABLEWHY IS ldquoCASH BASISrdquo PREFERABLE the accrual adoption by the governments of New Zealand

Australia the United Kingdom and Sweden must be viewed in particular as a strategic tool for the public sector reform agenda in those countries

The accrual accounting choice in New Zealand and the United Kingdom was a precursor implementation of the reform concept of New Public Management The reforms were openly based on public choice theory (PCT) which advocates that governments should be managed based on the business methods to achieve highest efficiency and to curtail the size of the governments (Newberry amp Pallot 2005)

35

WHY IS ldquoCASH BASISrdquo PREFERABLEWHY IS ldquoCASH BASISrdquo PREFERABLE The reforms had been oriented to identifying government

entities operating in pseudo-business where accrual accounting model should fit better in the environment

Likewise the so-called marketization reform approach as practiced in Sweden attempted to embed the performance measurement of government agencies where accrual accounting was expected more appropriate (Modell amp Wiesel 2008)

Carlin (2005) has also underscored the limited relevance of accrual accounting to government setting particularly in those entities with quasi-business operations as he illustrated it in the case of Victoria State Australia

36

The ldquoCASH TOWARDS ACCRUAL The ldquoCASH TOWARDS ACCRUAL BASISrdquo A MID WAYBASISrdquo A MID WAY

1 Maintaining daily transaction recording based on cash transaction events

2 Creating corollary entries on transactions affecting the position of capitalized assets or liabilities

3 Requiring year-end adjusting entries to reflect new balances of receivables inventories investments and payables (periodical approach)

4 Minimizing the issue of complex reconciliation5 Generating budget accountability reports in line with

the cash-based budget model6 Producing accrual information wherefrom balance

sheet is constructed

37

THE ODD ldquoCASH TOWARDS THE ODD ldquoCASH TOWARDS ACCRUAL BASISrdquoACCRUAL BASISrdquo

GAINING ACCEPTANCE BECAUSE Embracing both the simple cash basis and the pervasive

accrual basis Fitting the migrating transition from cash to accrual basis

avoiding high resistanceBUT

The rationality of the new approach is still questioned Some accounting complexities remain intact

NEVERTHELESS with this new accounting approach the central Government of

Indonesia has been successfully produce its first Comprehensive FS of 2004 and FS of 2005 2006 amp 2007

THE ldquoCASH TOWARDS ACCRUALrdquo ACCOUNTING SCHEME

All external cash

transactions

Recording and posting in Revenue

or Expenditure

Accounts and Cash Account Affectin

g LT AssetLiability

Accounts

Corollary entries on related LT

AssetLiability AccountsPeriodical adjusting entries

affecting - Stock

Accounts- Flow

Accounts

Non ndash cash internalext

ernal transaction

s

Balance Sheet or

Statements of Ending Position

Reversing entries on Adjusted

Flow Accounts

Budget Realization

Report

Cash - flow ReportSto

pN

Y

39

Lesson from Indonesia

Causing factors of economic crisis

Weak institutions Poor quality of information due to

deficiencies in accounting system weak legal system

Poor policy analysis Poor policy implementation

Weak economic fundamentals public finance banking system and corporate governance

40

Poor quality of information

The quality of information has been poor in Indonesia mainly because of deficiencies in the accounting system poor auditing process and the flawed legal system

Financial reporting of the public sector applied the single entry and cash basis accounting system based on the outdated Indische Comptabiliteitswet (ICW) inherited from the Dutch colonial era

As the government budget under this system does not represent allocation of resources it cannot be used as a tool for public resource management

There was no treasury single account for public funds

41


On the surface the governmentrsquos fiscal position had appeared to be relatively strong prior to the crisis as government budgets were either in balance or shown as having small surpluses The real story was however different fromthe official figures as Government budget did not provide the true picture of financial transactions

of the public sector due to the presence of the large extra-budget funds not all government revenues and expenditures were reported in the formal

budget a large amount of state funds was deposited under the names of individual

government officials including those who has long been passed away the losses of state-owned enterprises and state-owned banks and their

clients particularly those owned by politically well-connected groups became contingent liabilities of the government

these future budget commitments were not recognized until cash payments had been made

42

43

PRE REFORM ACCOUNTINGThe Absence of modern accounting until 20031 Single Entry recording system2 Cash based reporting3 No accounting standards4 Limited IT supports5 The lack of integrated recording systems6 More judgmental number than reconciled data

source7 Significant time lag of recording and reporting8 Deficiency of competent accounting personal

Fiscal ReformFiscal reforms address the weaknesses of the previous fiscal

system by among other things

end separation between routine and development expenditures in order to avoid duplication of spending and misuse of public funds for unintended purposes

move from a single entry to a double entry accounting system and from cash basis to accrual basis to allow medium- and long-term planning and performance basis and multi-year budget

44

Fiscal Reform

The reform of the fiscal system to align it with the international best practices started with the issuance of a Presidential Decree on Government Financial Accountability in 1999 Major reforms were introduced with the promulgation of the following three laws on state finance in 2003 and 2004

Law No 17 of 2003 on State Finance Law No 1 of 2004 on State Treasury Law No 15 of 2004 on Auditing the Management and

Accountability of State Finance

45

Fiscal Reform adopt a Treasury Single Account to improve financial

control modernize and integrate computerized accounting

system decentralize the accounting implementation in a

hierarchical manner by each accounting unit both at the central and regional levels

Improve the audit of public funds applying a tight time frame for the accountability report strengthen follow up on audit findings and prosecute cases of corruption

46

47

THE NEW GOVERNMENT ACCOUNTING RULES (1)

1 Every public spending agency (both central and local government around 37000) must administer accounting and present periodic financial statement

2 Accounting standards to be established by an independent committee

3 Ministry of Finance develops accounting system for the central government agencies

4 Local government develops accounting system for their own purposes with assistance from Ministry of Home Affair

5 The new accounting systems must at least generates (1) budget realization report (2) balance sheet (3) cash flow statement and (4) notes to the financial statement

48


5 Information on actual output to be submitted along with the financial statements (FS)

6 Spending ministergovernormajor must present a Statement of Responsibility (SOR)

7 The Supreme Audit Board performs financial audit and render its opinion on the fairness of the FS

8 The audited financial statement are to be submitted to the parliament in 6 month period after the budget-year end

9 Once submitted to parliament the audit report are opened for public access

49

CRUTIAL ISSUES IN GOVERNMENT ACCOUNTING STANDARDS DEVELPOMENT

The Government Accounting Standards Committee established in 2004 has 9 members from government officer academia and accounting professionals

Several crucial issues arising1 Whether a separate set of accounting standards is needed2 Whether International public accounting standards are to

be adopted3 Which accounting basis to be adopted4 Which government units set forth as accounting and

reporting entities5 Whether or not to adopt the fund accounting concept

50

INDONESIA GOVERNMENT ACCOUNTING STANDARS

1 The Conceptual Framework of Government Accounting2 Presentation of Financial Statement3 Budget Realization Statement4 Cash Flow Statement5 Notes of the Financial Statement6 Accounting for the Inventories7 Accounting for Investment8 Accounting for Fixed Asset9 Accounting for Construction in progress10 Accounting for Liabilities11 Accounting for Error Adjustments Accounting Changes and

Extra-ordinary Events12 Consolidation of Financial Statement

51

IN PROGRESS ACCRUAL ACCOUNTING DEVELOPMENT Law 172003 on State Finance and Law 12004 on State

Treasury Government Accounting Standards Committee has

developed Government Accounting Standards based on accrual basis

Referring to the best international practices Adapting to the International Public Sector Accounting

Standards Hearing has been conducted from 2007 to 2008 In December 2008 final draft has been delivered to The

Supreme Audit Board (BPK) for the consideration 2009 process to become President Decree

Modern accounting serves the need for public accountability and transparency as well as the process of decision making and control but all confined in the public budget constraints

Some countries such as NZ UK Australia and Sweden have been adopting accrual-based accounting and some of countries adapted IPSAS as an accounting Standard

Empirical academic evidence remains strain as to the benefits claimed for accrual accounting in governments

Accrual information may be indispensable but cash information is more relevant in the public financial management as constrained by the budget instead of the normal marginal cost-benefit theory

A midway solution to serve the information need for cash and accrual in government is important Indonesia promotes the ldquocash towards accrualrdquo based accounting approach






IN CONCLUSIONIN CONCLUSION

53

IN CONCLUSION

1 The comprehensive Government Financial Management Reform in areas of Legal and Institutional Planning and Budgeting Treasury Accounting and Auditing has opened a policy window for the implementation of modern accounting in Indonesia

2 The introduction of modern accounting from 2004 requires the double-entry recording approach but accommodates the recording of both cash and accrual transactions in the ldquoCash toward Accrualrdquo basis

3 The new accounting has successfully produced the first comprehensive financial statements of 2004 ndash 2005

4 In December 2008 final draft of accrual basis Government Accounting Standards has been delivered to get approval

Reference FDJ Van Schaik IPSAS Summary ndash Deloitte

httpwwwiaspluscomifac2007ipsassummarypdf Andrew Newman CA Financial AccountabilityFinancial Accountability Looking Looking

Forward Forward

IPSAS ADOPTION BY GOVERNMENTS wwwunopsorgSiteCollectionDocumentsAccountability wwwunopsorgSiteCollectionDocumentsAccountability documents20090831-IPSAS-implementation-UNOPSpdfdocuments20090831-IPSAS-implementation-UNOPSpdf

54

55

THANK YOUTERIMA KASIH

2

ROLE OF GOVERNMENTROLE OF GOVERNMENT

bull Government gives a lot of contribution in economic by creating policy amp regulation spending government expenditure to create multiplier effect and deliver public services

bull Improvement the quality of financial management in government become the center point of public interest to establish new public governance

bull Credible financial information will increase transparency and accountability and the information will be used in decision making and controlling the operation

3





4




P

U

B

L

I

C

B

U

D

G

E

T

P

U

B

L

I

C

B

U

D

G

E

T

ACCOUNTABILITY amp

TRANSAPARENCY

ACCOUNTABILITY amp

TRANSAPARENCY


amp CONTROL


amp CONTROL

Budget Operation

Budget Operation



Government

Accounting

Government

Accounting

Optimum allocation

Optimum allocation



5


PRINCIPAL

PEOPLE

AGENT

GOVERNMENT


Monitoring

Bonding


6


PARLIAMENT


Auditing

PRINCIPAL

PEOPLE

AGENT

GOVERNMNET




7







8

Adaptation of IPSAS

9



10

IPSASIPSAS

11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


3





4




P

U

B

L

I

C

B

U

D

G

E

T

P

U

B

L

I

C

B

U

D

G

E

T

ACCOUNTABILITY amp

TRANSAPARENCY

ACCOUNTABILITY amp

TRANSAPARENCY


amp CONTROL


amp CONTROL

Budget Operation

Budget Operation



Government

Accounting

Government

Accounting

Optimum allocation

Optimum allocation



5


PRINCIPAL

PEOPLE

AGENT

GOVERNMENT


Monitoring

Bonding


6


PARLIAMENT


Auditing

PRINCIPAL

PEOPLE

AGENT

GOVERNMNET




7







8

Adaptation of IPSAS

9



10

IPSASIPSAS

11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


4




P

U

B

L

I

C

B

U

D

G

E

T

P

U

B

L

I

C

B

U

D

G

E

T

ACCOUNTABILITY amp

TRANSAPARENCY

ACCOUNTABILITY amp

TRANSAPARENCY


amp CONTROL


amp CONTROL

Budget Operation

Budget Operation



Government

Accounting

Government

Accounting

Optimum allocation

Optimum allocation



5


PRINCIPAL

PEOPLE

AGENT

GOVERNMENT


Monitoring

Bonding


6


PARLIAMENT


Auditing

PRINCIPAL

PEOPLE

AGENT

GOVERNMNET




7







8

Adaptation of IPSAS

9



10

IPSASIPSAS

11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


5


PRINCIPAL

PEOPLE

AGENT

GOVERNMENT


Monitoring

Bonding


6


PARLIAMENT


Auditing

PRINCIPAL

PEOPLE

AGENT

GOVERNMNET




7







8

Adaptation of IPSAS

9



10

IPSASIPSAS

11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


6


PARLIAMENT


Auditing

PRINCIPAL

PEOPLE

AGENT

GOVERNMNET




7







8

Adaptation of IPSAS

9



10

IPSASIPSAS

11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


7







8

Adaptation of IPSAS

9



10

IPSASIPSAS

11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


8

Adaptation of IPSAS

9



10

IPSASIPSAS

11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


9



10

IPSASIPSAS

11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


10

IPSASIPSAS

11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


11





WHY IPSASWHY IPSAS





12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


12








13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


13








14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


14








15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


15







16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


16




17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


17


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


18


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


19







20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


20





21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


21







22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


22






23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


23







24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


24






25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


25





26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


26







27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


27





28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


28








29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


29





30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


30






31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


31






32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


32




33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


33





34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


34




35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


35





36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


36








37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


37









All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55



All external cash

transactions


or Expenditure


g LT AssetLiability

Accounts



affecting - Stock

Accounts- Flow

Accounts


ernal transaction

s

Balance Sheet or



Flow Accounts

Budget Realization

Report


pN

Y

39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


39







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55







40






41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55







41








42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55









42

43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


43







44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55






44

Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


Fiscal Reform




45






46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55







46

47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


47







48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


48







49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


49






50




51


















53

IN CONCLUSION







Forward Forward


54

55


50




51


















53

IN CONCLUSION







Forward Forward


54

55


51


















53

IN CONCLUSION







Forward Forward


54

55













53

IN CONCLUSION







Forward Forward


54

55


53

IN CONCLUSION







Forward Forward


54

55




Forward Forward


54

55


55
