close

Newsroom

European public finance accounting reform urged

30th June 2014

MGI World European public finance accounting reform urged

Accounting and financial reporting within Europe’s public sector require a major overhaul, a new joint study claims. The report from the Institute of Chartered Accountants in England and Wales (ICAEW) and PwC warns that shortcomings in accounting, reporting and financial reporting represent a “major risk” for the sustainability of public finances in many European countries.

The two organisations set out ten points for achieving improved public finances based on the twin tenets of democratic accountability and fiscal sustainability.

ICAEW’s regional director for Europe, Martin Manuzi, says tackling the current shortcomings is a matter of “critical public interest”. He notes that while the debate currently taking place in the European Union over which path to take to harmonise public sector accounting standards is important, improving decision-making has to be the central focus.

“It is essential that the debate on the way forward in Europe focuses on the degree of financial transparency and comparability achieved,” argues Mr Manuzi.

The report highlights a number of interlinked factors are critical, while it also identifies a key issue around improving the financial literacy of citizens, policymakers, and intermediaries.

“Debates on fiscal sustainability can often be very complex. We need to further promote a basic understanding of EU countries’ financial situation and the impact of future fiscal sustainability challenges,” adds Mr Manuzi.

The report also stresses that the introduction of accruals accounting throughout the public sector in Europe is not “an end in itself”, but part of wider process of improving accounting and financial reporting.

Patrice Schumesch, PwC global partner for Public Finance and Accounting, commented: “Accruals accounting is just one piece in the jigsaw – albeit a critical one: to reap the full benefits of reform, a comprehensive change management process, involving the broader financial management and governance systems of the public sector, is required.”

The report also calls on Europe to take a lead in the world on the areas covered. While the EU has done this in private accounting by championing global standards through IFRS, it could once again play a strong leadership role in public finance.

Read more on Industry news and Europe, UK & Ireland

MGI World Vat Forum 518X362

MGI UK & Ireland Region is very excited to announce that it has held the very first, post-pandemic, in-person meeting!

16th September 2021

An Actual Meeting! Yes its true! MGI UK & Ireland held an in-person Tax Forum at The Marriott,...

MGI World Montage with elements from the flags of China and Korea

MGI Worldwide CPAAI firms continue to have a voice in international publications! In the latest edition of the IAB, our members in China and Korea contribute to key articles

7th September 2021

As a top-ranking global network, it is great to see MGI Worldwide CPAAI members continuing to...

MGI World Reduced image of the front cover of Doing Business Guide Romania

Did you know that Romania has one of the lowest tax rates in the EU? Teaha Management Consulting releases a new guide showcasing the advantages of doing business in Romania

2nd September 2021

Bucharest-based Teaha Management Consulting, is happy to share with fellow MGI Worldwide CPAAI...