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Today, the International Federation of Accountant (IFAC) and the Zurich University of Applied Sciences (ZHAW), in partnership with the International Public Sector Accounting Standards Board (IPSASB), have published a practical accounting tool for governments and other interested stakeholders to help analyze COVID-19 intervention programs.

With more than $9 trillion spent by governments globally on fiscal interventions in the past three months, the effect of the pandemic on public finances will be both immediate and long-lasting. Understanding the design of these interventions, how they are delivered and funded, as well as their impact on the financial position of governments, is critical to manage current challenges and secure sustainable public finances in the future.

“Government accounting is not the first priority that comes to mind when people think about the current pandemic. Yet, there’s evidence that having a comprehensive and well-managed balance sheet supports strong public programs, including for healthcare and economic wellbeing,” said Alta Prinsloo, IFAC Executive Director. “It’s never too late for countries to adopt accounting best practices, including accrual-based International Public Sector Accounting Standards (IPSAS), and we hope this guidance will help governments make the case for doing so.”

The COVID-19 Intervention Assessment Tool includes:

• A step-by-step process and assessment tool to help assess, evaluate, and inform various types of government interventions related to the pandemic;
• An overview of the pathway to accrual IPSAS for governments.

“By utilizing accrual accounting, governments can gain a more complete understanding of their financial standing and ability to recover from the impacts of the pandemic,” said Andreas Bergmann, Professor of Public Finance at the Zurich University of Applied Sciences (ZHAW). “This will not be the last time governments will need to act to mitigate an economic crisis and accrual accounting also helps designing economic interventions in a sustainable way.”

IFAC and ZHAW remain committed to advocating for, and supporting, strong public financial management in economies globally. This tool is the latest effort to support the adoption and implementation of IPSAS and accrual accounting in the public sector.

About IFAC
The International Federation of Accountants (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 more than 3 million accountants in public practice, education, government service, industry, and commerce.

About the Zurich University of Applied Sciences (ZHAW)
Zurich University of Applied Sciences (ZHAW) was founded in 1874 in Winterthur/Switzerland and nowadays includes eight disciplinary schools. The ZHAW School of Management & Law is the largest business school in Switzerland and only one of four which are internationally accredited by AACSB. Public Financial Management has been part of its curriculum for more than 50 years and became a key area of research in 1996.

Today, IFAC and the Zurich University of Applied Science (ZHAW), in partnership with IPSASB, have published a tool for governments and other interested stakeholders to apply best practices in public sector accounting when analyzing COVID-19-related intervention programs.

The COVID-19 pandemic led governments to deploy significant interventions to support individuals, businesses, the monetary system, and specific sectors, including healthcare. In view of the unprecedented scale of these interventions there is an urgent need to understand their full current and ongoing impacts on public finances.

The COVID-19 Intervention Assessment Tool includes:

• A step-by-step process and assessment tool to help assess, evaluate and inform various types of government interventions related to the pandemic; and
• An overview of the way it can support the pathway to accrual IPSAS for governments.

“We are seeing another example of where public sector finances are under great stress a result of a major economic shock – but the current pandemic stands out because of its magnitude and global impact. This increases the pressure on countries to improve their accounting infrastructure to support the tough decisions that will undoubtedly be needed,” said Ian Carruthers, IPSASB Chair. “High-quality financial information enhances government decision-making and supports better outcomes for citizens over the medium and longer-term.”

“Governments with accrual accounting information are better positioned to understand the true picture of their public finances,” said Ross Smith, IPSASB Program and Technical Director. “Understanding the pandemic’s impact on government finances is especially important when considering the need and ability to provide for additional interventions moving forward.”

The supplementary report “Impact Assessment and the Pathway to Accrual” provides high-level insights on the IPSAS adoption and implementation process, and the ways in which the Assessment Tool can support this, while emphasizing the importance that IPSAS adoption occurs within the context of broader public financial management reforms.  

About the IPSASB
The International Public Sector Accounting Standards Board (IPSASB) works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards® (IPSAS®) and other high-quality financial reporting guidance for use by governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption. The Board receives support from the Asian Development Bank, the Chartered Professional Accountants of Canada, the New Zealand External Reporting Board, and the governments of Canada and New Zealand. The structures and processes that support the operations of the IPSASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.

About the Public Interest Committee
The governance and standard-setting activities of the IPSASB are overseen by the Public Interest Committee (PIC), to ensure that they follow due process and reflect the public interest. The PIC is comprised of individuals with expertise in public sector or financial reporting, and professional engagement in organizations that have an interest in promoting high-quality and internationally comparable financial information.

COVID-19 has raised challenges that are unprecedented in the modern era. The G20 governments have responded with significant short-term actions to support people and economies. Today, the International Federation of Accountants (IFAC), which represents more than three million professional accountants worldwide, is calling on G20 countries to remain focused on long-term progress alongside their immediate priorities for response and recovery.

“We are at a critical inflection point around the world for many reasons. While the immediate response to COVID-19 is paramount, we must not take action that puts other urgent global priorities and progress at risk,” said Kevin Dancey, IFAC CEO. “The decisions we make now and the actions we take are crucial as we work to build strong, sustainable economies and realize the opportunities of the 21st century for all.”

G20 countries play a crucial role in fostering institutions and governance models that can anticipate and mitigate future crises. To strengthen our global economy as we manage the myriad new challenges presented by COVID-19, IFAC calls on G20 leaders to:

1. Accelerate Sustainability and Inclusion

The COVID-19 crisis is a wake-up call to accelerate the transition to a more sustainable and inclusive global economy. Both the business community and governments have an important role to play in this transformation, from focusing on long-term value creation to supporting an economy aligned with the United Nations’ Sustainable Development Goals.

2. Focus on Public Sector Transparency and Integrity

Responding to COVID-19 has driven an enormous increase in public sector spending. Integrity and transparency in the public sector are essential to the social contract between governments and their citizens. IFAC calls on the G20 to step up its efforts to deliver on the G20 Anti-Corruption and Anti-Money Laundering Action Plans, and to adopt International Public Sector Accounting Standards and accrual accounting at all levels of government.

3. Resist Regulatory Fragmentation

Regulatory fragmentation costs the global economy more than $780 billion a year, and the cost is borne disproportionately by small- and medium-sized enterprises. IFAC calls for policymakers to prioritize regulatory cooperation and harmonization so that all enterprises can thrive. We also urge all stakeholders to agree on a global framework for non-financial reporting that incorporates integrated reporting principles.

4. Recommit to Global Collaboration

Global institutions for cooperation and crisis-management—both public and private sector—are more important than ever. Multilateralism in support of building back better for those most in need is the foundation for resilience and a fairer and more prosperous world for all. G20 leadership must commit to working together through global institutions to anticipate and mitigate the global problems of the 21st century.

IFAC’s full call to action for the G20 is available online.

About IFAC
The International Federation of Accountants (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 more than 3 million accountants in public practice, education, government service, industry, and commerce.