EPSAS: The idea
EPSAS: The idea
On the idea of introducing "EPSAS"
The idea of reforming public sector budgeting and accounting is based on the notion that tradtional cash-based government accounting systems are not
capable of showing resource consumption, providing comprehensive information on the public entity's financial situation, and facilitating cross-border
comparisons based on performance as well as financial indicators. An improved public sector financial management is vital in order to prevent future public financial crises.
Especially in times when EU Member States guarantee for other Member States' public debt, intransparent and highly heterogeneous (cash-based) budgeting and accounting
systems are no longer acceptable.
Several EU Member States already engage in reforming their budgeting and accounting systems towards accrual-based regimes. The reform processes, however,
have not been coordinated, resulting in a multitude of completely different and hardly comparable systems. The heterogeneity of european budgeting
and accounting systems leads to a situation where meaningful comparisons across borders are nigh on impossible. Yet, such comparibility
is essential in order to enhance fiscal transparency and in order to foster a "cross-border learning from the best" (best practice approach) promoting
significant improvements in governments' effectiveness and efficiency.
One solution to solve the issues mentioned above lies in introducing harmonised European Public Sector Accounting Standards (EPSAS)
(based on the principles of accrual budgeting and accounting). One possible starting point for such a system can be found in the
International Public Sector Accounting Standards (IPSAS).
By using an endorsement process similar to the endorsement process applied for IAS/IFRS standards, IPSAS can be converted into EU regulations.
Together with additionally developed budgeting standards the endorsed IPSAS would form the basis of the EU's new budgeting and accounting regime.
In this case, the conversion to EPSAS would be compulsory for all EU Member States (including Member States' respective federal government, state
level governments, and local governments). Hereby, a uniform accrual-based budgeting and accounting system, that is used by all public entities in the EU, could be created.
Such a system would form the foundation for significant progress in public entities' financial management, potentially realising substantial improvements,
e.g. regarding transparency, intergenerational equity, management capabilities, comparability, efficiency, and effectiveness.
The EU's initiative towards EPSAS
On 8 November 2011, the Council of the European Union adopted the
legislative package aiming at reinforcing economic governance in the EU. One of the elements of the Six-Pack is the
"Council Directive on requirements for budgetary frameworks of the Member States"
which calls for the European Commission to carry out an assessment of the suitability of International Public Sector Accounting Standards (IPSAS)
for EU Member States. On behalf of the European Commission, Eurostat (the EU's statistical office) carries out the assessment process.
In February 2012, Eurostat launched a
to review the suitability of IPSAS for EU Member States.
All citizens, organisations, national governments, and authorities were called to participate in the consultation.
Comments were due by 11 May 2012.
A summary of responses to the public consultation was published on 18 December 2012.
On 6 March 2013, the European Commission additionally published a
report to the European Council and the European Parliament on implementing harmonised public sector accounting standards in EU Member States.
The report is accompanied by a
Commission staff working document.
In the report the European Commission comes to the conclusion that, in general, the IPSAS represent a suitable reference framework
for the development of EPSAS. However, the European Commission also concludes that IPSAS cannot easily be implemented in EU Member States.
Several concerns with regard to the suitability of IPSAS need to be addressed (see also
page 8 of the report).
A major problem of the goals formulated in the report is that the project so far solely focuses on reforming public sector accounting. Truely modernising
public financial management, however, also requires the development of harmonised accrual-based budgeting standards. Budgeting is vital since
a public entity's annual budget is still one of the most (if not the most) important financial governance instrument(s).
It is for the Council of the European Union and the European Parliament to finally decide of whether and how to actually implement
EPSAS. The report published in March 2013 represents an important step towards such a decision. As a next step, a
conference on implementing EPSAS
was held on 29/30 May 2013 in Brussels. All available material regarding this conference (slides, speeches etc.) can be downloaded
here: News on EPSAS.
Following the EPSAS conference, the EU initiated a
public consultation on future EPSAS governance principles and structures.
A draft report of the results of this public consultation was published in March 2014.