In 2025, governments in 50% of jurisdictions will report on an accrual basis, according to a report released today by the International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA). The report was drawn from the International Public Sector Financial Accountability Index, which captures current and future use of public financial reporting bases and frameworks by governments around the world.

The 2021 Index Status Report, which captures information from 165 jurisdictions, finds that while 30% of their governments reported on an accrual basis in 2020 (an increase of 6% since 2018), 50% will report on accrual by the end of 2025. Africa, Asia, and Latin America and the Caribbean will lead the projected increase in accrual adoption over the coming five years.

By providing a comprehensive view of government finances, accrual reporting helps ensure that expenditure of public funds is transparent, public officials are held accountable, and future liabilities are recognized officially and planned for properly. With governments under more financial strain than ever following the huge levels of pandemic-related expenditure, understanding the overall picture and making the best use of the remaining resources is crucial to long-term recovery. In addition to the support of regional and international organizations, effective implementation of accrual accounting relies on the skills of public sector accountants to interpret the richer, more comprehensive data; as more governments move to accrual, the need for need for public sector accountants will increase correspondingly.

“Accrual-based accounting is essential in helping governments mitigate corruption, improve trust and transparency, and deliver desired outcomes that their communities deserve and need in the post-pandemic world,” said Rob Whiteman, Chief Executive of CIPFA.

Public financial reporting frameworks are developed in various ways, with many using International Public Sector Accounting Standards (IPSAS). IPSAS provide high quality financial reporting guidance for governments and other public bodies around the world, in order to improve their consistency and transparency. 57% of governments that reported on an accrual basis in 2020 used IPSAS directly, indirectly, or as a reference point. By the end of 2025, nearly three-quarters (73%) of governments that report on accrual will use IPSAS in one of these three ways.

“This continuing shift from cash to accrual reporting in the public sector, and increased usage of IPSAS in particular, will be crucial to governments globally in making the tough choices they face following the pandemic. Professional accountants have a critical role to play in delivering the full potential benefits for citizens worldwide in terms of decision making, transparency, and accountability,” said Kevin Dancey, IFAC CEO.

IFAC and CIPFA plan to expand the Index progressively in terms of both coverage and information depth and provide periodic status reports throughout this crucial uptake period for accrual financial reporting globally.

Access the 2021 Status Report.

About IFAC

IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of more than 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.

About CIPFA

CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. CIPFA shows the way in public finance globally, standing up for sound public financial management and good governance around the world as the leading commentator on managing and accounting for public money. 

The IAASB in collaboration with IFAC invite you to join our quality management webinar series on June 24, July 29, and August 5 and 18 on Zoom with livestreaming on the IAASB’s YouTube channel. The webinars will take a deep dive into aspects of the IAASB’s International Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements.

ISQM 1 is part of the IAASB’s suite of quality management standards, issued in late 2020. The standards strengthen and modernize how firms approach quality management. They also mark an evolution from a traditional, more linear approach for quality control to an integrated quality management approach.

The webinars will be held in English and will be available on the IAASB’s YouTube Channel following the session. Participants joining live via Zoom will be able to submit questions.

• Webinar One: All You Need to Know about the Firm’s Risk Assessment Process
  • June 24, 11 am–12 pm GMT
  • Featuring IAASB members Julie Corden and Chun Wee Chiew and IAASB Deputy Director Natalie Klonaridis
  • Register Now
• Webinar Two: Resources: Expectations for Firms and Engagement Partners
  • July 29, 11 am–12 pm GMT
  • Featuring IAASB members Josephine Jackson and Sue Almond and IAASB Deputy Director Natalie Klonaridis
  • Discussion will include the linkage between ISQM 1 and  International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements
  • Register Now
• Webinar Three: What’s New for Firms’ Monitoring and Remediation Processes
  • August 5, 11 am–12 pm GMT
  • Featuring IAASB member Chun Wee Chiew,  IAASB technical advisor Denise Weber, and IAASB Deputy Director Natalie Klonaridis
  • Register Now
• Webinar Four: Bringing it All Together: Exploring all the Components of a Quality Management System
  • August 18, 11 am–12 pm GMT
  • Featuring IAASB members Julie Corden and Sachiko Kai and IAASB Deputy Director Natalie Klonaridis
  • Register Now

This webinar series is part of the IAASB’s implementation support efforts. Looking for additional resources on the suite of quality management standards? Check out the IAASB’s dedicated web page: iaasb.org/quality-management

IFAC is committed to supporting our member organizations and the development, adoption, and implementation of high-quality international standards.

On Tuesday, June 1 at 9 AM EDT, as part of the United Nations Special Session of the General Assembly Against Corruption (#UNGASS), the International Federation of Accountants (IFAC) and the International Bar Association (IBA) will be co-hosting the event Independent Professions Fighting Corruption, a live virtual roundtable discussion about how the legal and accountancy professions fight corruption and promote the rule of law.

The global legal and accountancy professions are vital allies in the fight against corruption, in every country around the world.  In this live event, distinguished leaders from both professions will discuss how their professions contribute to the fight, with a focus on ethics and independence.  While the “professional enablers” narrative has attracted significant attention recently, this event looks to highlight the important role the professions play as allies, as well as to strengthen the dialogue with key stakeholders and enhancing the professions’ contributions as committed partners. 

Panelists include:

• Srinivas Gurazada, Head of Public Expenditure and Financial Accountability (PEFA) Initiative Secretariat
• Leopoldo Pagotto, Co-Chair, IBA Anti-Corruption Committee
• Stephen Revell, Freshfields Bruckhaus Derringer and co-vice chair of the IBA Law Firm Management Committee
• Dr. Stavros Thomadakis, Chair, International Ethics Standards Board for Accountants (IESBA)
• Co-Moderator, Sara Carnegie, Director of Legal Projects, IBA
• Co-Moderator, Scott Hanson, Director of Public Policy & Regulation, IFAC

Join the webinar on Tuesday, June 1, at 9:00 AM EDT here.

The SMPAG supports the IAASB Exposure Draft to make necessary conforming and consequential amendments to address inconsistencies between the IAASB’s Other Standards and Framework with the new and revised QM standards.

The IFAC SMP Advisory Group believes that the approach for a global PIE definition should be narrow, rather than broad. Otherwise the situation arises where PIEs at an international level are not PIEs under local legislation in several parts of the world and it leads to inconsistent practices. Whilst going beyond this may be necessary in a few jurisdictions and for certain cases (i.e., this would be determined in legislation), exclusions of entities or additions by individual firms would be far less appropriate from a stakeholder’s and public interest perspective.

IFAC’s Professional Accountants in Business (PAIB) Advisory Group has compiled insights on key global trends impacting the future readiness of the accountancy profession in a new report Enabling Purpose Driven Organizations: PAIBs Leading Sustainability and Digital Transformation.

This report includes highlights from the PAIB March 2021 meeting, focusing on:

• Enabling value creation and sustainability 
• Delivering on climate change 
• How procurement and supply chain operating models are changing the role of finance functions 
• The changing nature of work and remote finance Gen Z and the future of accountancy 
• Public sector priorities to support COVID-19 recovery

IFAC PAIB Advisory Group Chair Sanjay Rughani says: “It is important we continue to drive forward the key areas of the PAIB agenda and share our learnings across the global accountancy profession. Together, we can enable a PAIB-relevant profession that is attractive to the new generation entering the workforce.”

Access the report and additional insights.

About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.

For more information about CPA Canada, visit www.cpacanada.ca.