Nearly three-quarters of OECD countries have adopted accrual accounting for their year-end financial reports and more than a quarter now prepare their annual budgets on an accrual basis, according to the landmark study Accrual Practices and Reform Experiences in OECD Countries by the International Federation of Accountants (IFAC) and the Organisation for Economic Co-operation and Development (OECD).

The study, which examined accounting and budgeting practices at the national government level in OECD countries, discusses the challenges and benefits of accruals reforms and considers what steps countries are taking to make better use of accrual information in the future.

“High-quality financial reporting is essential to ensure that governments make fiscal decisions based on up-to-date information and an accurate understanding of their financial position,” said Fayez Choudhury, IFAC CEO. “They provide a mechanism through which legislatures, auditors, and the public at large can hold governments accountable for their financial performance.”

The study showed that most OECD countries have reformed and modernized their financial reporting practices over the last few decades:

• approximately three-quarters of OECD countries have adopted accrual accounting for their year-end financial reports as a key priority;
• more than a quarter of OECD countries prepare their annual budgets on an accrual basis; and
• audit techniques and accounting standard-setting mechanisms have also evolved significantly in the wake of accounting reforms.

The study also points out that while the direct adoption of international accounting standards, such as International Public Sector Accounting Standards (IPSAS) or International Financial Reporting Standards (IFRS), by national governments remains very low, many standard setters use IPSAS or IFRS as primary or explicit references for developing their national standards.

“While governments still seek to improve the usefulness and comprehensibility of their financial reports, a majority of OECD countries expressed satisfaction that accounting reforms have already resulted in greater transparency and accountability of their financial operations,” said Jón R. Blöndal, Head of the OECD Budgeting and Public Expenditures Division.

A digital version of the report can be found at on the IFAC and OECD websites.

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 OECD
Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.

Highlights from the IESBA's March 13-15, 2017, meeting in New York, New York.

0:10 Introduction

0:40 Overview from IESBA Chairman Dr. Stavros Thomadakis

5:29 Professional Skepticism

8:00 Part C of the IESBA Code

10:00 Fees Working Group Update

11:41 Proposed Staff-Prepared Q&As on Long Association

12:25 Closing Remarks

The 2016 IFAC Global SMP Survey asked practitioners operating in small- and medium-sized practices (SMPs) a number of questions about the challenges they face, the market factors most likely to affect them in the future, the consulting services they provide, and their performance, both in 2016 and projected for the year ahead. In addition, respondents were asked about their small- and medium-sized entity (SME) clients, including questions around the challenges they face and the extent of their engagement in international activities.

Accountants working in small- and medium-sized practices (SMPs) around the world are facing heightened staffing challenges, according to the latest IFAC Global SMP Survey results. Attracting new clients, keeping up with new regulations/standards, and pressure to lower fees remained key challenges faced by SMPs.

Additionally, the anticipated impact of technology developments over the next five years increased substantially in 2016 over 2015. Investing in and staying current with software and achieving a digital, paperless environment topped this list of technology challenges.   

Despite these challenges, SMPs’ future performance expectations increased slightly from a year ago in three of the four service areas, with the exception of tax. Growth is expected to be driven by advisory/consulting services, along with accounting, compilation, and other non-assurance/related services, with 45% and 44%, respectively, predicting fee revenue increases in these areas in 2017.

“The ever-increasing pace of technological change represents both a challenge and opportunity for SMPs,” said IFAC CEO Fayez Choudhury. “As trusted business advisors to small- and medium-sized entities or SMEs, a sector critical to global economic stability and growth, SMPs need to consider how they can best leverage technological advances to reduce costs and offer value-added services to meet clients’ changing demands and expectations. In addition, SMPs that keep pace with developments in technology are likely to do better in attracting, retaining, and nurturing talent.” 

Additional key findings from the survey include:

SMPs recognize the value of offering business advisory and consultancy services.

• A significant majority of respondents provide some form of advisory services, with corporate advisory (48%), management accounting (46%), and human resource/employment regulations (30%) being the most common.

SMEs continued to be challenged by economic uncertainty and rising costs.

• Consistent with 2015, the top challenges facing SME clients were economic uncertainty and rising costs (with 61% and 59%, respectively, rating these as a high or very high challenge).

SMP performance in 2016 improved slightly over 2015.

• In 2016, 30% or more of SMPs reported moderate or substantial increases in fee revenue across services areas, compared to 27% or more in 2015.

Some regions, countries, and larger SMPs were not well represented in the survey results; caution should be exercised when attempting to generalize survey results to specific countries or regions, or SMPs of all sizes. See the full results, including breakdowns by region and size of practice, and subscribe to receive SMP updates, on the IFAC website: www.ifac.org/SMP.

About the Survey
The 2016 IFAC Global SMP Survey received 5,060 respondents, representing 164 countries. It was conducted October–November 2016 in 23 languages. The survey design and reporting were undertaken in collaboration with Sarah Webber and Donna L. Street, lead researchers from the University of Dayton (US). The survey’s translation and distribution were only possible with the support of IFAC member organizations and partners. The next IFAC Global SMP Survey is expected to open in 2018.

Designed to be completed by senior SMP professionals, whose clients are predominately SMEs, the survey takes a snapshot of key issues, and tracks important trends and developments, facing this critical sector. The survey results help IFAC and its members gain an understanding of the specific challenges and opportunities faced by SMPs and SMEs globally, and as a result, better serve them. To this end, IFAC develops and facilitates the sharing of tools and resources to help build SMPs’ capacity, including publications to support practice management and international standards implementation. These and over 400 original articles and 10,000 links to related resources can be accessed in the IFAC Global Knowledge Gateway.

About the SMP Committee
The SMP Committee of the International Federation of Accountants^® (IFAC^®) represents the interests of professional accountants operating in small- and medium-sized practices (SMPs). The committee develops guidance and tools and works to ensure the needs of the SMPs are considered by standard setters, regulators, and policy makers. The committee also speaks out on behalf of SMPs to raise awareness of their role and value, especially in supporting SMEs, and the importance of the small business sector overall.

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. It 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.

Organized by the Institute of Chartered Accountants of the Caribbean (ICAC), IFAC, and the World Bank, a 2016 conference brought together representatives of Caribbean governments and the accountancy profession to discuss enhancements to public financial accounting and reporting, and to consider how to enhance collaboration between governments and the accountancy profession to improve public financial accounting and reporting in the region.

Conference participants completed a survey on the status of IPSAS adoption in their country, the findings of which are reported here. 

Highlights from the IPSASB's March 7-10, 2017, meeting in Washington, DC.

00:10 Introduction

1:00 Overview of March 6 Seminar, Harnessing the Power of Accrual in Managing Public Finances, from IPSASB Chair Ian Carruthers 

3:00 Overview of IPSASB Meeting from Chair Ian Carruthers 

5:10 Heritage

6:40 Revenue and Non-exchange Expenses

8:00 Social Benefits

9:20 Strategy and Work Plan

12:10 Closing Remarks