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Serbia – Report on the Enhancement of Public Sector Financial Reporting. 2017 REPF Results. Task Team Leaders: Iwona Warzecha, Sector Leader Financial Management Aleksandar Crnomarkovic, Senior Financial Management Specialist. REPF Report – messages.
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Serbia – Report on the Enhancement of Public Sector Financial Reporting 2017 REPF Results • Task Team Leaders: • Iwona Warzecha, Sector Leader Financial Management Aleksandar Crnomarkovic, Senior Financial Management Specialist
REPF Report – messages The Financial Reporting and Methodology Unit of the Treasury Administration has operational responsibility for accounting policy by drafting relevant laws, decrees, and rulebooks. Consultation process and cooperation with all reform stakeholders is required A formal commission for the Implementation of IPSAS is envisaged toact as a standard-setting body Need to review and redesign of the accounting processes and optimizing the number of accounting units to fit into the institutional set up and governance structure of public sector, adequate to size of Serbia. Links to Budget System - There is a need for comprehensive register listof units and institutions that are part of the general government and which are budget beneficiaries The legal framework is complex, fragmented, and not clear. Streamlining and harmonizing to reduce the number of regulations
REPF Report - messages There is a need for a well-designed and targeted professional capacity building approach, to introduce the concept of accrual accounting and particularly IPSAS. Staff levels at the regulatory level to be strengthened Difficulties in recruiting associate and junior staff levels from universities Lack of distinct and harmonized statutory requirements relating to the professional education of accountants, chief accountants, or directors of public sector accounting units. As a result, users of budgetary funds tend to set their own professional qualification requirements.
REPF Report– messages Quality of Financial Reporting- Process of reporting is fragmented: Cash based transactions derived from Treasury Main Ledger (TML), non-financial assets from Property Directorate, liabilities collected using excel Accurate, timely and complete information on arrears and accounts payable is not assured Auditing - Modified opinions are in majority Limited capacity of SAI to audit financial statements of all local government – thus it can be delegated to private auditors SAI to be strengthened to perform IPSAS audits, and to be involved in the reform process
REPF Report – messages ICT Various ICT softwares for separate functions – payments, budget execution, Accounting, financial reporting, planning, payroll. Duplication of entry, manual consolidation, reconciliation, issues with accuracy and completeness of data ICT master plan is needed - Integration and centralization at the central level is an option for consideration Significant reduction of Accounting softwares at the entity level or at least defining standard requirements Selected ICT solutions will have direct impact on IT staffing requirements
IPSAS Implementation Strategy • Partial Adoption of IPSAS in which national legislation is modified to be consistent with selected parts of IPSAS, approach requires considerable resources to maintain a national standards-setting mechanism. • Selection of IPSAS for adoption: • are largely consistent with current Serbian PS GAAP; • address fundamental accounting issues relating to recognition, measurement, and presentation which are: currently poorly covered by Serbian PS GAAP; are not controversial as regards EPSAS; and are not expected to be changed by the IPSASB in the near future. • address disclosure requirements that would not require undue additional effort and cost to achieve compliance.
IPSAS Implementation Strategy • Normative block: • Strategic planning – overall design of organization of accounting in public sector, size, reporting and accounting units, hierarchy, ICT model • Legal framework • Operational implementation block: to follow and suport vision of the reform: • Leadership including strong political support for the reform • Project operational plan including technical content • Timetable • Budget • Performance management • Staff • Communication including internal and external stakeholders together with education and raising awareness
IPSAS Implementation Strategy • Normative block: • Address institutional framework: • Streamline and harmonize Accounting legal framework • Define overall design of organization of accounting in public sector, size, reporting and accounting units, hierarchy, ICT model, • Assign responsibilities for financial reporting and Accounting • Capacity building of Accounting Staff • Establish standard setting body and standard setting process • Legal framework
IPSAS Implementation Strategy Operational implementation block: to follow and support vision of the reform: • Leadership including strong political support for the reform – the Budget Accounting and Financial Reporting Sector – resources included Staff required • ICT review • Analysis of various organizational forms of entities and their role in consolidation of financial reporting • Develop methodology and application guidelines based on the new law • Update chart of accounts also to align with ESA 2010 and GFSM 2014 • Develop and issue transitional arrangements – opening balances