PS October 2007 Page 1

Transcription

1 Nvember, 2007 Beijing, Peple s Republic f China ED 32 Additinal Field Test Reprts Overview f Field Test Results Intrductin An additinal field test reprt has been received frm the Ministry f finance f Estnia. That reprt is attached. Field testing is als underway in Tadjikistan and Indnesia. Staff will include field test reprts frm these cuntries in the next distributin f materials t the IPSASB. Summary: Field Test Reprt Ministry f Finance, Estnia As nted in the attached field test reprt, Estnia has adpted the accrual basis fr financial reprting. Hwever, state and lcal gvernments currently prepare cash basis budgets. Estnia plans t mve t accrual budgets fr these entities fr the 2010 fiscal year. The Ministry f Finance carried ut a field test f ED 32 n bth the cash budget fulfillment reprt and the accrual basis financial statements fr The field test reprt reflects that: In respect f the cash fulfillment reprt infrmatin abut ttal external assistance received in cash, whether in the frm f grants r lans, is presented. Hwever, infrmatin t supprt ther disaggregated disclsures is nt available - including disclsure f the uses f assistance by majr class, and disclsure f the amunts received by majr class f prvider; and In respect f the accrual financial statements while ED 32 is nt a prpsed accrual basis IPSAS, data is currently cllected (r will be available within the shrt term) which wuld supprt all required disclsures n an accrual (rather than cash) basis. Significantly, given that this was a matter f cncern t a number f respndents t ED 32, the reprt ntes that balances f undrawn lans and grants are currently disclsed external assistance cmmitted under a written agreement but nt yet drawn. The field test reprt ntes that data cding is nt currently sufficiently sensitive t identify as separate classes: multilateral and bilateral aid agencies and ther agencies which are prviders f external assistance. ED 32 des nt actually require that bilateral r multi lateral agencies be identified as a separate class fr disclsure purpses rather it uses these grupings as examples f a class and illustrates their disclsure. Hwever, this interpretatin f the intent f the ED by field testers wh are very familiar with the ED, prmpts staff t cnsider whether cmmentary in paragraph f agenda item 13.4 shuld clarify that the identity f the classes are nt specified in the IPSAS. Distinguishing between multilateral and bilateral agencies and NGOs is f curse mre imprtant the disclsures in the prpsed IPSAS Part 1 are required t be made in respect f external assistance received frm freign gvernments and their agencies, and multilateral and bilateral aid agencies - but they are nly encuraged in respect f assistance prvided by NGO s. In respect f encuraged disclsures, the field test reprt ntes that disclsures f the: amunt prvided by each prvider may be nerus in respect f the gvernment s cnslidated financial given that many dnrs prvide resurces t individual agencies as well as t the gvernment itself; terms and cnditins that determine access t, r limit the use f, external assistance resurces may be nerus in respect f the gvernment s cnslidated financial statements given the range f agreements that may be in place; and details f the change in undrawn balances f lan and grant assistance during the reprting perid are nt currently disclsed, but wuld be useful. PS Octber 2007 Page 1

2 Nvember, 2007 Beijing, Peple s Republic f China Frm: Juta Maar [juta.maar@fin.ee] Sent: Mnday, 16 Octber :56 PM T: Paul Sutcliffe Subject: RE: Ptential t Field Test "Financial Reprting Under the Cash Basis f Accunting - Disclsure Requirements fr Recipients f External Assistance" Attachments: ED_32_Field_Test_Estnia.dc Dear Mr Sutcliffe Please find a brief reprt frm the Ministry f Finance f Estnia abut Expsure Draft ED 32 (attached in a separate file). Thank yu fr ffering the field testing t us. We really cnsider that was useful fr us t get a picture f t what extent we have been cmplied with the mdern requirements f financial reprting and what will be useful t add in ur data cllecting and disclsing systems in the future. Best regards Juta Maar PS Octber 2007 Page 2

3 Nvember, 2007 Beijing, Peple s Republic f China ED 32 Financial Reprting Under the Cash Basis f Accunting Disclsure Requirements fr Recipients f External Assistance Field Test Reprt - Ministry f Finance f Estnia Abut the current basis f financial reprting in Estnian public sectr entities Starting frm year 2004 The Ministry f Finance f Estnia enfrced General Accunting Principles fr Public Sectr. Since that year the accrual bases f accunting has been applied. Befre 2004 accunting was held partly n the cash bases (fr example revenues) and partly n the accrual bases (sme types f expenses since 1996). Hwever the state and mst f ur lcal gvernments still prepare their budget n the cash bases and accuntants keep infrmatin abut the budget fulfillment als n the cash bases. Just nw we are wrking ut the new principles and technical systems fr the accrual-based budgeting and ur aim is t intrduce the accrual based budget starting frm the year Currently the Ministry f Finance cllects bth the accrual accunting infrmatin (frm all public sectr entities) and the cash based budget fulfillment infrmatin (frm the central gvernment entities). Based n gathered infrmatin the annual reprt f the gvernment is prepared and submitted t the Parliament. It s als imprtant t clarify that the accrual accunting infrmatin cllected and presented in the annual financial statements is much mre cmprehensive than the cash based budget and budget fulfillment infrmatin. 1. The mst recent financial statements t apply ED 32 fr testing purpses We have finalized the annual reprt 2006 f the gvernment and the test f ED 32 based n that reprt. We have presented the fllwing infrmatin abut external assistance in ur annual reprt 2006: a) cash based budget and budget fulfillment reprt ttal external assistance received in cash, separately lans and grants; due t ur data cllecting systems we are nt able t divide cash based infrmatin by attributes such as wh it was received frm (frm bilateral r frm multilateral assistance agencies r frm ther) r t what activity it was spent n, etc; b) accrual-based financial statements and ntes t the financial statements include large scale f infrmatin separately abut transfers, lans and guarantees; fr example, abut transfers (accrding t the accunting principles as set ut in IPSAS 23) the fllwing infrmatin is available: b.1) revenue, receivables and liabilities by significant classes f transferrs: freign transferrs, including separately different funds f Eurpean Unin; dmestic transferrs, including separately ther public sectr entities (nt cnslidated); PS Octber 2007 Page 3

4 Nvember, 2007 Beijing, Peple s Republic f China b.2) revenue frm transfers by the purpses fr which external assistance was received (we use COFOG activity cdes fr divisin): t be used fr specific current expenses: educatin; scial prtectin; etc; t be used specifically fr purchasing f fixed assets: educatin; scial prtectin; etc; transfers, where specific usage was nt required and checked: educatin; scial prtectin; etc; b.3) transfers by payment type: received in cash; direct payments frm external assistance agencies t the recipient entities fr gds and services prvided; gds and services in-kind (nly thse reliable measured); b.4) nn cmpliance with significant terms and cnditins, amunts and reasns f cancelled assistance; b.5) external assistance cmmitted under a written agreement but nt yet drawn. Basically, we can claim, that we have gathered als all the infrmatin needed t be disclsed abut lans and guarantees accrding t the ED 32. Cmpared with grants, it is mre simple t us, because we dn t take/give any significant lans and guarantees at the present (except capital lease). 2. Whether there are parts f the required cmpnent f the ED (part 1) that Estnian gvernment culd nt cmply with in the field test year As it was explained abve, we are nt able t prvide all cash-based infrmatin cmpulsry accrding t the ED 23 part 1. At the same time we can prvide the required infrmatin n accrual bases t a great extent. S far we dn t have crrect data abut grants by such grantr types as multilateral and bilateral agencies and nn-gvernment rganizatins. At the mment we are cntinuing with ur system t cllect accrual data abut fllwing grantr types: dmestic grantrs: central gvernment entities (separately every entity fr cnslidatin purpses); lcal gvernment entities (separately every entity fr cnslidatin purpses); NGO-s; business enterprises (separately gvernment business enterprises and lcal business enterprises fr cnslidatin purpses) individuals; freign and multilateral grantrs: freign central gvernments and entities under their cntrl; freign lcal gvernments and entities under their cntrl; PS Octber 2007 Page 4

5 Nvember, 2007 Beijing, Peple s Republic f China Eurpean Unin funds and agencies; ther multilateral agencies; business enterprises and NGO-s; individuals. T be hnest, it s a bit cnfusing t me, hw t examine, wh f the freign grantrs was a multilateral r a bilateral assistance agency r wh was a nn-gvernmental rganizatin. Althugh we use special cdes fr different cntractr types, I m nt sure the data is always crrect. Prbably it s ur prblem and we shuld add mre explanatins t ur instructins t get mre true data. 3. Whether Estnian gvernment culd structure its data cllectin system t generate data t cmply with all requirements within a shrt perid f time? We can prvide all required significant data n the accrual bases. After ne year we can be mre exact with the different grantr types as well. 4. Whether Part 1 f the ED requires the disclsure f infrmatin which is nt currently available, and which is unlikely will be able t be generated hwever lng transitinal perid is allwed? We didn t find such requirements. 5. Whether the Estnian gvernment culd have cmplied with all r sme f the encuraged disclsures in Part 2 f the ED in the field test year? Whether it is useful t make such disclsures? We cnsider all the given disclsures useful, therefre I add nly the few cmments belw: Part 2: I ttally agree, that each significant prvider f external assistance shuld be encuraged t disclse in the financial statements f separate reprting entities, if the entity has sme prviders. But I dubt it s reasnable cllecting s exact data, when fr example cnslidated financial statements f the Estnian gvernment are cncerned. As I explained earlier, we cllect data separately by grantrs, wh are the entities cnslidated in ur financial statements. But we dn t cllect data by every separate grantr if they are nt cnslidated entities. Then we use the cntractr type cdes. Part 2: Again, such infrmatin is much mre exact in the financial statements f a single entity, but it s quite cmplicated t cllect frm different accunting entities, preparing cnslidated financial statements. We cllect separately the amunts f grants specifically fr current expenses r fr cnstructin f fixed assets r thse that receiving entity can decide hw t use it. But we usually dn t cllect any ther terms r cnditins, cncerning grants, fr example timing limits r quality requirements etc. Lans and guarantees f the central gvernment f Estnia are allwed nly with the permissin f the Ministry f Finance (treasury) and then, f curse, the infrmatin f terms and cnditins is available. PS Octber 2007 Page 5

6 Nvember, 2007 Beijing, Peple s Republic f China 6. Encuraged disclsures which culd nt be cmplied with in the field test year, but which the Estnian gvernment believes wuld be useful t disclse in the future. Part 2: S far we have disclsed nly balances f undrawn lans and grants as it was required in Part 1. We agree, that it wuld be mre infrmative t link the pening balances, the mvements in the reprting perid and the clsing balances as the requirements in this paragraph suggest. The brief reprt was prvided by Juta Maar Head f state accunting department Ministry f Finance f Estnia juta.maar@fin.ee tel +372 (0) PS Octber 2007 Page 6