Governmental Financial Reporting

Public Sector Accounting Reform in Slovakia

Katarína Kaszasová FCCAMinistry of Finance of the Slovak Republic

World Congress of AccountantsIstanbul, November 2006

Agenda

Why Slovakia introduced public sector accounting reform

What are main components of reform and their status of realization

What we have learned and what we need to solve in forthcoming years

Public Finance Management Reform

To strengthen the institutional capacity for budgeting, expenditure management and the financial management of government operationsProgram budgetingMulti-annual budgetingState TreasuryAgency for Debt and Liquidity Management

Public Finance Management Reform

The present system of public sector accounting provides neither the full extent of needed financial information, nor financial information with following qualities: relevant, reliable, comparable, timely, understandable.

Public Sector Accounting ReformObjective

Public Sector Accounting is the information system that records, analyses, classifies, summarizes and communicates public sector entity financial and economic events, and their impacts, in terms of both:

The provision of information required by management and senior executives for planning, organizing and control, and

The preparation and provision of financial statements and fiscal reports under specific accounting and reporting standards for external users

Public Sector Accounting ReformComponents

New accounting and reporting standards“MoF must produce, in line with new definition of public finance accounting, specific formats and content for several public finance accounting and reporting methodologies, consistent with the standards and trend in other countries.”Implementation of IPSAS into national accounting standardsIntroduction of consolidation proceduresIntroduction of conversion procedures

Public Sector Accounting ReformComponents

System support to implementation“MoF must re-specify the basic operability criteria of, and its access to, public finance accounting systems to promote functionality of public finance accounting and reporting and to be consistent with the standards and trend in other countries.”System of the State Treasury New module for consolidation Financial and administration centers for local government

Public Sector Accounting ReformComponents

Training of accountants“MoF should develop a clear and comprehensive vision and strategy how public finance accountants will be able to obtain appropriate levels of training and experience to meet the needs of users of public finance accounting information.”Series of trainings for 6,500 public accountantsCooperation with universities and professional associationsCommunication

Public Sector Accounting ReformTimetable

Key activities

Project management 2005 - 2009

New standards preparation 2005 - 2006

Trainings 2005 - 2007

System support pilot projects 2006 - 2007

Adoption of new standards and new systems 1.1.2008

First consolidated financial statements April 2010

Lessons learnedPreconditions for success

Recognition that accrual accounting is part of reform process

Broad consultation and acceptance Adoption/development of accounting standards Participation of accountancy profession Existence of robust audit process

Information and contacts

Ministry of Finance of the Slovak Republic

Štefanovičova 5P.O.Box 82

817 82 Bratislava 15Slovak Republic

www.finance.gov.sk