eBusiness Weekly
Tawanda Musarurwa
Zimbabwe’s public sector has in a number of cases shown low compliance with the Public Finance Management (PFM) law and related regulations, but in others, the problem has been one of weak or antiquated systems.
One key area is that of public accounting.
The Parliamentary Portfolio Committee on Public Accounts has over the years highlighted discrepancies in Ministries and public entities’ books due to failure to adhere to proper financial reporting procedures, which has weakened public trust in these bodies.
All things being equal, a Government requires the trust of its citizens as well as other key stakeholders (in the region and globally) to deliver their goals efficiently and effectively.
To this extent consistent publication of high-quality financial reports helps strengthen public financial management.
It’s key in maintaining that trust.
This is where the adoption of accrual accounting based on the International Public Sector Accounting Standards (IPSAS) is critical for the Government.
IPSAS-based information provides a comprehensive and comparable picture of a public sector entity’s financial performance and position.
The IPSAS programme started in 1997 and by the end of 2018, 37 governments had implemented the public sector reporting standard.
Its adoption and implementation therefore represent fundamental steps for the Government to take, not only to increase transparency and accountability to their citizens and stakeholders, but also to inform effective decision making, so contributing to fiscal stability and sustainability.
PFM reforms such as this require political will and the Government has shown resolve in this respect.
Zimbabwe first hinted at the shift to accrual accounting in the 2018 National Budget.
And last year the Government said it had set aside ZW$700 000 for the initial phases of the IPSAS implementation from the 2018 National Budget, while the World Bank had allocated US$300 000.
The Government has officially adopted the national IPSAS implementation strategy, which is the roadmap that will be used in the transition to the accrual IPSASB-based reporting framework
According to secretary for Finance and Economic Development George Guvamatanga:
“As a Government our decisions will be better informed; transparency and accountability will be enhanced leading to increased trust in us as Government. “We are fully committed in supporting the migration process in every way possible, so that the implantation strategy plan is implemented fully,” he said.
“The public sector is key in the economic reform agenda and therefore I cannot understate the need to ensure that the migration is a success.”
The Zimbabwean Government’s political will in respect of these reforms have been acknowledged by head of the Public Expenditure and Financial Accountability secretariat, Jens Kromann Kristensen.
“It was very important that the reforms were done in Zimbabwe, by Zimbabwe, for Zimbabwe. It was not done by David Watkins, who was telling them what they should be doing, based on what the UK had done,” he told Public Finance International of his work on training public sector accountants in the country.
Accountant General Daniel Muchemwa said Government is aiming to complete implementation of the IPSAS by 2025.
“In terms of the Implementation Strategy Plan, the target is to implement IPSAS for the whole of Government by 2025. And when I say the whole of Government I mean Central Government, State entities that are fully funded by Government and local authorities.”
According to the Accountant General, three Ministries (namely Finance and Economic Development; Local Government, Public Works and National Housing, and Information, Publicity and Broadcasting Services) have been identified for pilot projects.
Additionally, two commissions, two parastatals and eight local authorities have also been identified for pilot projects.
IPSAS Board executive chairman Ian Carruthers said his organization is supportive of Zimbabwe’s reform process.
“As IPSASB we are fully behind the reforms that you are doing here. Compared with cash accounting, accrual accounting provides complete financial overview of an entity, reliable basis for decision-making and improved public expenditure.”
A concern, however, is that although the Government made a specific budgetary commitment for the adoption of accrual accounting programme in the 2018 National Budget, following budgets – including the 2020 National Budget – have not been so accommodating for the programme.
There is no specific mention of the programme in the 2020 National Budget; will this ‘oversight’ derail the success of the programme?
