ACCA Members: Africa Conference · Phone +263-4-571988 Mobile +263-775837757 He is a Fellow of ACCA...
Transcript of ACCA Members: Africa Conference · Phone +263-4-571988 Mobile +263-775837757 He is a Fellow of ACCA...
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ACCA Members: Africa Conference
PUBLICSECTORFINANCEInternationallyrecognisedPublicSectorAccounting
Standardsaretakingthemarketbystormwithmilitaryprecision-Zimbabwemilitaryinterventiontype,
by2020
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ThefutureofPublicSectorFinanceinAfrica-2020Perspective
IPSASimplementationislifeordeathforAfrica
Don’tbeleftoutGo&implementnow
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PRESENTER CREDENTIALS
Dr R Muza 143 Chiremba RdQueensdale. Harare
Director CCG Systems & Senior Partner Ralph Bomment Greenacre & ReynoldsRegistered Public Auditors (Zimbabwe)
Phone +263-4-571988 Mobile +263-775837757
He is a Fellow of ACCA (FCCA)Chartered Public Finance Accountant (CPFA); member of CIPFA (UK)– CA(L); AZiCA; Chartered Public Accountant CPA (Canada)– FCCA; CPA; RPA(Z) Registered Public Auditor (Zimbabwe)Ø Founding Partner Grant Thornton (Zimbabwe)Ø Trained at Price Waterhouse –PwC in Zimbabwev Versatile in South Africa Local Authorities GRAP and IPSAS Standardsv Implemented IPSAS and Accrual Accounting at City of Harare 2012 to 2014v Implemented IPSAS and Accrual accounting at Chirundu Local Board 2016 to 2017.v Presenter in Public Finance Management Act and in practical Migration to full
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2020PERSPECTIVES• Thesourcesofpublicsectorfinanceswillremainthesame• Whatmightchangearethevolumesinthemix• Taxes,fines,andformunicipalities,propertyrates,waterbills,servicecharges
Whatwillchange?• Skillsrequiredofyoutoremainrelevantandinfluential• TheWorldismovingtoIPSAS,posingsignificantthreattoACCAmemberswhodonotchangeskillssets
• Brettonwoods InstitutionsexpectIPSASreportingframeworkforpublicsector• SomeUNorgansareonIPSAS• ACCAintroducedacertificateinIPSAS,toequipmembers,makeuseofthat.
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TECHNOLOGYCHANGES-2020• TheoldsmallphonehasmemorymuchmorethanthatofApollo11.(EdwinAldrin,Neil
Armstrongandcolleague• ThosewhothoughttheApollo11softwarehadreachedthebest,pleaseprayforthemto
resurrectandseewhattechnologyisdoingtoday• ModernsoftwareasdisplayedherebySAGEandCASEWAREdoeswonders• CCGSystemsisdemonstratinghowtheprofessionalaccountantsskillsbeyond2020• Robotswillpreparemostofyourreports• ROBOTScanpreparepresentationstoBoardorcanpresentatyourBoard
Areyoumaintainingrelevancebeyond2020?• No,taketheinitiativetoleadinrobotics• Robotscangiveyouinformationaboutyourdebtors,creditors,bankbalancesetc• Sogobackanddrivechangeinordertostayrelevant
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LEVERAGINGONTECHNOLOGY
•AfricaGovernmentscancutdownonfavouritismlinkedwithcorruptioninpaymentcycle•NewERPselectsuppliersforyou•ERPSqueu paymentsinthepriorityfashionauthorisedbyauthorities•Reducehumaninvolvementindecisionexecution•Lettechnologyincreasetransparencyinfinancialmanagement
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WHATISCOMING?
• Uniformreportsforpublicsector- IPSAS• Abusinessapproachtofinancialreportinginpublicsector• Automatedpreparationofreportsintheformatuserswantthem• Automaticdispatchofreportstomanagementwithouthumaninvolvement• Automatedpreparationoffinancialstatementseg CasewareFinancials• CorruptioninpaymentofcreditorscanbereducedthroughuseofERP• Rapidfinancialreporting,financialinformationuptodateatalltimes• Focusonanalysisofreportsasopposedtopreparationoffinancialstatements
• Exampleofsoftwaredoingthis,SAGEEVOLUTION,justacrossfromourboothdownstairs
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OBJECTIVEOFIPSASWHOINAFRICAISNOTTALKINGTRANSPARENCYTODAY?
• Toprescribethemannerinwhichgeneralpurposefinancialstatementsshouldbepresentedtoensurecomparabilitybothwiththeentity’sfinancialstatementsofpreviousperiodsandwiththefinancialstatementsofotherentities.• Setsoutoverallconsiderationsforthepresentationoffinancialstatements,guidancefortheirstructure,andminimumrequirementsforthecontentoffinancialstatementspreparedundertheaccrualbasisofaccounting.
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SCOPE•AppliedtoallgeneralpurposefinancialstatementspreparedandpresentedundertheaccrualbasisofaccountinginaccordancewithIPSASs.•Doesnotapplytocondensedinterimfinancialinformation•AppliestoallpublicsectorentitiesotherthanGovernmentBusinessEnterprises(GBEs)/SOES.
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THEPASTPITFALLSWhatisthishell,thatIhearIMFsaysouraccountsaremisleadingorarenottransparent?
Sir,youknowwedonotrecordtransactionsonceourbudgetlineitemisexhaustedandwecannotvirement,perouraccountingmanual.
Correct,so,whatistheproblemwiththat?IMFmuststopthisdiscriminationagainstAfricancountries?
WhatdoesACCAsay?
TheACCAqualifiedauditpartnersaidallobligationsmustberecordedandincludedinourfinancialstatementssothatwearenothidinganything?
HesaidthatiswhatIPSASsay. MINISTER
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MODIFIEDCASHBASISORFULLACCRUAL?MODIFIEDCASHBASIS
ImpliesthatestimatesofobligationsarebroughttobookatyearendIfyourPublicsectorisunabletosettleitsobligationsastheyfallduedon’twastetimeand
moneytryingmodifiedcashbasis
FULLACCRUALPublicsectorinAfricadoesnot havemoneytocleartheirobligationsastheyfalldue.
Accordingly,goforfullaccrualaccounting.UnderFullaccrualitislikehowyouaremaintainingthebooksofaccountsforprivatesector.Introduce: creditors,provisions,debtors,fixedassetsintoyourfinancialreporting.Underthecurrentpracticefixedassetswereexpensedinpublic
sectortherebyproducingmisleadingfinancialstatements.Inshort,youshouldbegintoproduceabalancesheet/statementoffinancialpositionforyourpublicsectorentity.Yourbudgetwillalsohavetotakeintoaccountaccrualissuesintoaccount.
Brettonwoods institutionshavebeenscepticalaboutmisleadingfinancialstatementsfrommanycountries-lackoftransparency.Whatislackoftransparency?
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WHATAFRICAUNIONCLAIMSWERETHEIMPACTSOFIPSAS
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Nature Currentyear
Prior year Assertionsaddressed
Migration toIPSASProcedures
Revenue from exchange transactions Refer to note # Refer to note #
Service charges xx xxInterest received from customers latepayments
xx xx
Rental income xx xxOther income xx xxInterest received xx xxTotal revenue from exchange transactions xx xx
Revenue from non-exchange transactionsProperty rates xx xxAny other taxes and fines xx xxTransfer revenuesGovernment grants and subsidies xx xxTOTAL REVENUES xx xx
STRUCTUREOFSTATEMENTOFFINANCIALPOSITIONUNDERANIPSASFRAMEWORKRevenue(LocalAuthority)
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Nature Current year Prior year Assertions addressed Migration to IPSASProcedures
Expenses Refer to note # Refer to note #Administration xx xxAudit fees xx xxBulk purchases xx xxContracted services xx xxDebt impairment xx xxDepreciation and amortisation xx xxGeneral expenses xx xxFinance costs xx xxImpairment loss xx xxPersonnel costs xx xxRemuneration of councillors xx xxRepairs and maintenance xx xxTotal costs xx xx
Operating surplusLoss on disposal of assets xx xxFair value adjustments xx xx
Surplus for the year xx xx
STRUCTUREOFSTATEMENTOFFINANCIALPOSITIONUNDERANIPSASFRAMEWORKExpenditure(LocalAuthority)
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SAMPLE STATEMENT OF FINANCIAL POSITION DEC 20X2
(Assets side for purposes of slide size)
20X2 20X1ASSETS
Current assetsCash and cash equivalents X XReceivables X XInventories X XPrepayments X XOther current assets X X
X XNon current assetsReceivables-long term portion X XInvestments in associates X XOther financial assets X XInfrastructure, plant and equipment X XLand and buildings X XIntangible assets X XOther non-financial assets X X
X X
Total assets X X
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STATEMENT OF FINANCIAL POSITION (Cont) 20X2 20X1
LIABILITIES
Current liabilities
Payables X X
Short term borrowings X X
Current portion of long term borrowings X X
Short term provisions X X
Employee benefits X X
X X
Non current liabilities
Payables X X
Long term borrowings X X
Long term provisions X X
Employee benefits X X
X X
Total liabilities X X
Net assets X X
NET ASSETS /EQUITY
Capital contributed by
Other government entities X X
Reserves X X
Accumulated surplus/(deficit) X X
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STATEMENT OF FINANCIAL PERFORMANCE –CENTRAL GOVERNMENT
20X2 20X1
Revenue
Taxes X X
Fees, penalties and licences X X
Transfers from other Government entities X X
Other revenue X X
Total revenue X X
ExpensesGeneral public services X X
Defence X X
Public order and safety X X
Education X X
Health X X
Social protection X X
Housing and community amenities X X
Recreational, cultural. And religion X X
Other expenses X X
Finance costs X X
Total expenses X X
Share of surplus of associates (if any) X X
Surplus /(deficit) for the period X X
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SAMPLE CENTRAL GOVERNMENT- STATEMENT OF CHANGES IN NET ASSETS/EQUITY FOR YEAR ENDED 31 DEC 20X1
Contributed capital
Other reserves
Translation reserve
Accumulated surplus reserve/(reserve)
Total Non controlling interest
Total net assets/equity
Balance at December 31 20x0 X X (X) X X X X
Changes in accounting policy X X X X X
Restated balance X X (X) X X X X
Changes in net assets/equity for 20x1
Gain on property revaluation X X X X
Loss on revaluation of investments (X) (X) (X) (X)
Exchange differences on translating foreign currencies
(X) (X) (X) (X)
Net revenues recognised directly in net assets/equity
X X X X
X X X
Surplus for the period X X X X
Total recognised revenue and expense for the period
X (X) X X X
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COMPARISON OF BUDGET TO ACTUAL PERFORMANCE STATEMENT: IPSAS 24
BUDGETED
AMOUNTS
ACTUAL AMOUNTS Difference
Original final On comparable basis Final budget vsactual
Explain
RECEIPTSTaxation X X X X YAid agreements X X X X YInternational agencies X X X X YOther grants and aid X X X X YProceeds from borrowing X X X X YProceeds-disposal of plant and equipment
X X X X YY
Trading activities X X X X YOther receipts X X X X YTotal receipts XXX XXX XXXX XXX YY
PAYMENTSHealth X X X X YEducation X X X X YPublic order /safety X X X X YSocial protection X X X X YDefence X X X X YHousing and community amenities X X X X YRecreational, cultural and religion X X X X YEconomic affairs X X X X YOther X X X X YTotal payments XXX X XX XX YYNET RECEIPTS/PAYMENTS XX XXX XXXXX XXX YY
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STATEMENTOFFINANCIALPERFOMANCE
CLASSIFICATIONOFEXPENSES(NATURE/FUNCTION)
IFYOUCLASSIFYBYFUNCTION,THEREMAYBEADDITIONALINFORMATIONTHATMAYBE
DISCLOSEDABOUTTHENATUREOFEXPENSESINCLUDING
DEPRECIATION,ARMOTISATION,EMPLOYEEBENEFITSANDFINANCE
COSTS.
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PUBLICSECTORFINANCEMANAGEMENT/IPSASIMPLEMENTATIONOURREF.SITES:SOUTHAFRICA
SOUTHAFRICASITES
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• Greater transparency
• Encourages separation of revenue and capitaltransactions
• Consistency in various sectors increasing comparabilityof financial statements
• Amounts arising from provisions and contingentliabilities are also disclosed in the financials
Why accrual based reporting framework migration process by 2020?
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• Collaboration with CCG Systems or those members who haveimplemented IPSAS before
• Use project management processes skills and fit for purposeERPs
• Approval of policies in the appropriate governance structures
• Alignment of business processes and information systems tocater for the accrual basis of accounting
• Identification of fit for purpose ERP Software
ERP IPSAS Implementation: ACCA members can drive it driverive the process
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WHATISAFFECTED&WHATROLEACCACANPLAY
IndustryVerticalMarkets
• StateandLocalAuthorities/Government• GeneralGovernment• Defence andIntelligence• FinancialServices• Healthcare• PublicSafety• Energy,EnvironmentandTransportation• InternationalDonor&FinanceAgencies
AdvisoryServicesLines
• Audit• GovernmentInfrastructure&ProjectFinance• FinancialManagement• OrganizationalImprovement• InformationTechnology
OtherSolutionsACCAmemberscanprovide• PerformanceManagement• InformationManagement• FinancialManagement
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DISCUSSION
Amasegnalehu !!Thankyouverymuchall!!Tatendazvikuru mose !!
Siabonga khakhulu mahlabezulu !!Asantesana !!Goededankie !!
Zikomo kwambiri nonseinu !!Obregado