IPSAS / EPSAS

The changeover to new accounting standards is a challenge for every organisation. The changeover often affects not only the accounting area, but also has consequences for the entire organisation.

IPSAS: Significance and triggers for conversion projects

The International Public Sector Accounting Standards (IPSAS) are becoming increasingly important and ensure a global improvement and comparability of public financial reporting. Uniform accounting standards are intended to facilitate the preparation of consolidated financial statements and the procurement of capital. Due to its proximity to the International Financial Reporting Standards (IFRS), it is a set of rules that can be understood worldwide.

For supranational organisations and non-profit organisations (NPOs) in particular, IPSAS therefore offer a valuable framework for globally transparent financial reporting, as they are in competition for public and private funds. Voluntary financial reporting can pave the way for new sources of funding and create trust and transparency.

The ownership structure can also be the trigger for a changeover if the application of IPSAS is mandatory. This arises primarily when umbrella organisations impose binding requirements on their members.

Conversion projects are currently taking place in many countries. Until now, the IPSAS rules were not available in German. To improve understanding, KPMG has published a German translation of IPSAS authorised by IFAC.

EPSAS: Significance and triggers for the introduction

The discussion about harmonising international accounting standards has gained new momentum in the wake of the sovereign debt crisis. In March 2013, the EU Commission officially declared itself in favour of introducing the European Public Sector Accounting Standards (EPSAS).

According to the EU Commission, EPSAS should be developed on the basis of the existing International Public Sector Accounting Standards (IPSAS) and significantly improve the database for budgetary monitoring at EU level.

A flash survey conducted by the KPMG Institute for the Public Sector among participants at a specialist event on international accounting in the public sector shows that experts expect EPSAS to be introduced. 48 per cent consider EPSAS to be important for their own professional practice in the future.

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Our range of services

The changeover to external financial reporting based on the presentation of actual circumstances requires a project-based approach, taking into account the effects on neighbouring areas. This applies both to conversions from cameralistics to IPSAS/EPSAS and from double-entry accounting or HGB to IPSAS/EPSAS.

KPMG provides you with expert support during the changeover. Our interdisciplinary project team will provide you with detailed advice on accounting and reporting issues and support you in reorganising your processes and IT landscape. Thanks to an integrated project approach, the effects on neighbouring areas such as planning and controlling instruments are taken into account.

Our integrated approach can be customised to the client's individual needs and is based on tried and tested methods and procedures. This helps to achieve faster and better results. On this basis, those responsible for the changeover can make better decisions during the changeover phase.

All variants and combinations are conceivable, from a pure coaching function to taking over the entire project management. Partial involvement in particularly complex areas of changeover, such as asset accounting and consolidation, is also conceivable.

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Your advantages at a glance:

Use of proven tools ensures efficient procedures and adherence to deadlines.
Interdisciplinary teams guarantee a high quality of advice.
The integration of our consultants into your project team contributes to the rapid transfer of knowledge and a high level of acceptance within the administration.
A coordinated division of tasks makes it possible to limit project costs.
High customer satisfaction through appropriate project organisation and continuous feedback

Group accounting in the public sector

The IPSAS have detailed specifications for group accounting and can influence the development of public financial statements as part of reform projects in Germany.

The reform projects of the German public accounting system have so far focussed on individual financial statements. Public consolidated financial statements have only played a subordinate role to date. This will change in the coming years, as the preparation of consolidated public financial statements is mandatory depending on the respective federal state.

The aim of consolidated public financial statements is to provide a true and fair view of the Group's net assets, financial position and results of operations, irrespective of where public services are provided (core administration, spin-off).

The challenges in the reform projects relate to determining the scope of consolidation, ensuring uniform accounting and valuation methods throughout the Group and the actual consolidation (capital, debt, expense and income consolidation and elimination of intercompany profits and losses). The implementation of the consolidation steps requires a system-side adjustment of the IT landscape.

KPMG provides you with expert advice on the design of public consolidated financial statements. We also advise you on the design of sub-group financial statements for spin-offs that have to prepare consolidated financial statements in accordance with the German Commercial Code (HGB). The German Accounting Law Modernisation Act (BilMoG) also results in new requirements for group accounting.

Our involvement in your project team can be customised: from a pure coaching function to taking over the entire project management, all variants and combinations are conceivable.