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. 

This non-authoritative First-time Implementation Guide will help practitioners understand and implement the requirements of the International Standard on Quality Management (ISQM) 2, Engagement Quality Reviews. It will help practitioners and firms successfully plan and implement the standards by the effective date, December 15, 2022.

It does not amend or override the International Standard on Quality Management (ISQMs), the texts of which alone are authoritative. Reading the publication is not a substitute for reading the ISQMs.

This non-authoritative First-time Implementation Guide may help stakeholders understand the requirements of the International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements, and implement the standard in the manner intended.

Firms are required to have systems of quality management designed and implemented in accordance with ISQM 1 by December 15, 2022.

The International Auditing and Assurance Standards Board (IAASB) today released two guides to help stakeholders implement its suite of quality management standards. The guides will help stakeholders understand the standards and properly implement the requirements in the manner intended:

• First-time Implementation Guide for International Standard on Quality Management (ISQM) 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements
• First-time Implementation Guide for ISQM 2, Engagement Quality Reviews

The IAASB will also issue an implementation guide for International Standard on Auditing 220 (Revised), Quality Management for an Audit of Financial Statements, in Q3. The suite of quality management standards come into effect on December 15, 2022.     

These publications do not amend or override the International Standards on Quality Management (ISQMs), the texts of which alone are authoritative. Reading the publications are not a substitute for reading the ISQMs.

The IAASB encourages all practitioners to plan early for appropriate implementation, given the potential impact of the changes to firms’ systems of quality management.

In 2015, the International Auditing and Assurance Standards Board (IAASB) released new auditor reporting standards to enhance the communicative value, transparency and relevance of the auditor’s report in the public interest. Today, the IAASB published a feedback statement after a public consultation. Stakeholders expressed broad support for the standards, and the resulting auditor’s report, and indicated that the standards have met the IAASB’s objectives.

The stakeholder feedback statement summarizes key themes and views shared with the IAASB through the 2020 Auditor Reporting Post-Implementation Survey as well as a roundtable discussion held in September 2020. The survey, roundtable, and related outreach solicited perspectives on implementation and specific aspects of the revised auditor reporting standards. Three of the key areas of focus for stakeholders were key audit matters, going concern and other information in the auditor’s report. The IAASB’s Auditor Reporting Implementation Working Group is considering the feedback in developing its post-implementation review recommendations for the IAASB’s consideration in September 2021.

In 2015, the IAASB released new auditor reporting standards to enhance the communicative value, transparency and relevance of the auditor’s report in the public interest. Reflecting stakeholder input, the feedback statement makes it clear the standards, and the resulting auditor’s report, have broad support from stakeholders—and meet the IAASB’s objectives. It summarizes key themes and views shared with the IAASB through the 2020 Auditor Reporting Post-Implementation Survey as well as a roundtable discussion held in September 2020.

The IAASB in collaboration with IFAC held the final webinar in our quality management webinar series on August 18 from 11 am–12 pm GMT on Zoom with livestreaming on YouTube. The webinar addressed how firms can bring all the components of a quality management system together to align with the requirements in 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.

The IAASB in collaboration with IFAC held the third webinar in our quality management webinar series on August 5 from 11 am–12 pm GMT on Zoom with livestreaming on YouTube. The webinar addressed how your firm can establish or modify your monitoring and remediation processes to align with the requirements in 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.

The IAASB in collaboration with IFAC held the second webinar in our quality management webinar series on July 29 from 11 am–12 pm GMT on Zoom with livestreaming on YouTube. The webinar addressed how to resource to align with the requirements in 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.