About this learning event

Good financial information is essential for decision-making about public finances. This is true for national and local governments as well as for international organizations, such as the European Union (EU) and the International Monetary Fund (IMF), that carry out supervisory and advisory roles in support of national governments.

In the last decade important new developments have taken place in the area of financial reporting. These new developments are reflected in revisions of the standards that international organizations, including the EU and the IMF, have established. The new developments mainly concern (a) the comprehensiveness of reporting and (b) the introduction of accrual concepts.

To ensure that a financial report provides an accurate picture of the financial position of the government, it is essential that it covers all financial operations for which the government bears responsibility. For this purpose international standards, such as the European System of Accounts (ESA) 2010, and the Government Finance Statistics (GFS) of the IMF have established precise definitions of the “General Government” and its sub-sectors: Central Government, State Government, Local Government and Social Security. Typically each sub-sector includes not only a core government institution (for example the ‘State”, the municipality) but also a number of public institutions with legal personality that are controlled and mostly financed by the core government institution (for example: hospitals, schools). Moreover, many governments bear responsibility for a number of institutions in the corporate (business) sector of the economy, namely for the corporations they own - the State Owned Enterprises (SOE’s) and the public enterprises owned by other sub-sectors of the general government, such as municipal enterprises. In many countries reporting on institutions with legal personality outside the State, but inside the general government or one of its sub-sectors, is not yet up to the standards set by the international organizations. The same is true for reporting on the public enterprise sector (the “Public Sector” in a broad sense, including both general government and the publicly owned enterprises).

This course will focus on the comprehensiveness of financial reporting, and pay particular attention to publicly owned institutions with legal personality outside the State. The course will also focus on the introduction of accrual concepts in financial reporting.

It is well known that politicians and civil servants are not always enthusiastic about this new development, in particular if attempts are made to apply it to budgeting in addition to financial reporting. Basically, accrual concepts aim to capture the change in value (“net worth”) of government assets, rather than the change in cash resources. It is sometimes alleged that the application of accrual concepts may obscure as well as clarify the picture of a government’s public finances, for instance when it comes to public investment. On the other hand, it is also clear that governments sometimes make use of “deficit devices” that artificially improve the budget balance (deferred spending, hidden borrowing, disinvestment, concessions and public private partnerships) and that escape recording if financial reports are on cash basis. For this reason both ESA 2010 and GFS now require reporting of major expenditure and revenue items on accrual basis (including taxes, interest, social benefits, and transfers). The course will focus on the practices that are in use in countries to convert cash data into accrual data, as required by international accounting standards.

The course will pay attention to the practices concerning the organization of financial reporting. These practices are widely different between countries. As far as the General Government is concerned, the pattern in countries is basically that the State, the publicly owned institutions as well as the State and Local Governments send their accounts to the Statistical Office and the latter consolidates the data of separate institutions and compiles the reports on the General Government and its subsectors in accordance with the requirements of ESA 2010 and GFS. Similarly, the publicly owned enterprises send their accounts to the statistical office and the latter consolidates and compiles the Public Sector reports. However, there are many variations of this procedure. There will be opportunity in the course to discuss these variations and their merits.

The course will be given by practitioners. The emphasis will be on discussions and real examples (case studies). Theory will be kept to a minimum. The focus will be on lessons learned and ways to go forward and challenges that need to be taken into account.

What you will learn

The objective of this course is two-fold: first, it aims to familiarize participants with new developments in financial reporting and with the practices that have evolved in advanced countries to implement the necessary reforms; second, it aims to offer an opportunity for experienced officials to exchange ideas on alternative approaches to the implementation of reforms and to discuss their relative merits.

The topics of the course include:
• Review of the latest versions of ESA 2010 and GFS
• Coverage of General Government and its sub-sectors
• The Public Sector (public enterprises)
• Consolidation within the general government and within the sub-sectors
• From cash to accrual concepts
• From source data to ESA 2010 and GFS
• Balance sheet and public debt

How you will benefit

By the end of this course you will have refreshed your knowledge of ESA 2010 and GFS and you will be able to reiterate the rules concerning the demarcation of the general government and it sub-sectors as well as of the public sector. In addition, you will be able to reiterate the requirements of ESA 2010 and GFS concerning the use of accrual concepts in financial reporting.

You will be aware of the challenges facing the Ministry of Finance and the Statistical Office in consolidation and in the production of ESA 2010 and GFS tables based on source data that are available in your country.

You will benefit from the discussions with other course participants and faculty on the organization of financial reporting and the division of tasks between producers of source data, the Ministry of Finance and the Statistical Office.

Who should attend

A strict condition for participation in the course is a basic knowledge of the system of national accounts (ESA or the UN System of National Accounts). The course will start with a short refreshment session, but this session will assume basic knowledge (it is not possible to provide training in national accounting in the context of this three-day course).

The target audience of the course consists of practitioners who are currently working in the area of financial reporting. They may either be young officials who are looking for training in new developments in financial reporting as a prerequisite for their current or future job performance, or they may be senior officials who bear responsibility for current reporting and for the reform of reporting procedures in a country.

Faculty

Andrej Flajs, Statistical Office of the Republic of Slovenia

Mr. Flajs is an expert in national accounts at the Statistical Office of the Republic of Slovenia. His expertise includes developing macroeconomic statistics and compilation of System of National Accounts, being responsible for co-operation with international institutions in the field of macroeconomics statistics, presenting National Accounts of Slovenia in Task Forces organized by EUROSTAT and being responsible for further methodology improvements and development of National Accounts of Slovenia in line with ESA 95. He has numerous working experience in the region.

Vincent Marie, Expert

Mr. Marie was a Senior Economist of the International Monetary Fund until 2010. The greater part of his 30 year career at the Fund was spent in the Statistics Department, where he specialized in government finance and monetary and financial statistics, as well as in the development and implementation of macroeconomic statistical standards. In the mid-1990s he was on secondment to Eurostat, working on the deficit and debt statistics of European Monetary Union member states and EU candidate countries. During 2007-2009 he was a GFS regional advisor for South-East Europe at the CEF. Mr. Marie is now on the panel of experts for the IMF Statistics and Fiscal Affairs departments regularly conducting technical assistance and teaching assignments and advising on GFS legislation.

Marjana Klinar, Statistical Office of the Republic of Slovenia

Ms. Klinar is an expert in Clasification of the Functions of Government (COFOG), General Government statistics, and clasification of institutional sectors. She is a Senior Advisor at the Statistical Office of the Republic of Slovenia (Office), responsible for developing and compiling regular data in line with COFOG and involved in Commission for classification of institutional sectors. She contibutes to the Office's publication, publishing the article on Public Sector and General Government Sector.

Noel Hepworth, Independent Public Policy Professional

Mr. Hepworth was Chief Executive of Chartered Institute of Public Finance and Accountancy (CIPFA) from 1980-1996. He was Chairman of the Féderation des Experts Comptables Européens Public Sector Committee from its establishment in 1985 to 2003. As part of this he was responsible for providing a European perspective on the IFAC public sector standards proposals. In addition on behalf of the Féderation des Experts Comptables Européens he was responsible for the development of their agenda of activity and managed the work of the European profession on the introduction of the single currency across the EU, 1996 to 2001. He was also a technical adviser to the IFAC public sector committee for a period of years.

From 1996 he was also Chairman of the Institute of Public Finance (a wholly owned subsidiary of CIPFA). In this capacity he was responsible for the development and management of the Institute’s international strategy with particular regard to the establishment of certified training programmes in public sector accounting and internal and external audit, in developing and transition economy countries, including Slovenia, Croatia, Albania, Macedonia and Kosovo.

More recently, he has worked extensively with OECD/SIGMA and completed peer reviews and annual assessments of public financial management in many Balkans and Eastern European countries. He is also the external adviser to the Palestine Ministry of Finance Audit Committee.

Noel Hepworth is a qualified accountant and has been a member of the CIPFA since 1958. He holds a post graduate diploma in public administration from the University of London. He has been awarded honorary doctorates by the University of Hull, by the University of Brighton and by London City University. He is a member of the Royal Society of Arts and was awarded an OBE by Her Majesty the Queen in 1980.

Stane Vencelj, Ministry of Finance of the Republic of Slovenia

Mr. Vencelj, a Head of Department for general government accounts and methodology within the Ministry of Finance, is an expert in government finance statistics. He is responsible for development of institutional, economic and functional classifications of general government, consolidation of general government accounts and preparation and publishing of general government accounts for the Republic of Slovenia. As a result of all these activities he has got a lot of experience in the field of the introduction and preparation of general governments accounts, based on GFS and ESA 95 general government principles. In the last five years he was engaged by the International Monetary Fund in several short term missions in Bosnia and Herzegovina as a regional expert in the area of general government accounts. The main objective of these missions was to assist the Bosnian authorities in their efforts to develop a consolidated reporting system in the area of general government, based on GFS methodology and incorporating all units of general government in Bosnia and Herzegovina. He is also engaged by the EU in a project for capacity development in Bosnia and Herzegovina for the compilation and presentation of general government accounts, based on GFS and ESA methodology.

Financial Reporting on General Government and its Sub-sectors

About this learning event

What you will learn

How you will benefit

Who should attend

Faculty

Application procedure