Public Sector Accounting Reform in Slovakia

1. Public Sector Accounting Reformin Slovakia Lucia Kašiarová Ministry of Finance of the Slovak Republic Vienna 26 November 2018

2. Public sector accounting reform • Why Slovakia introduced Public Sector Accounting Reform • Main reforms components • What we have learned

3. Public finance reform in Slovakia To strengthen the institutional capacity forbudgeting, expenditure management and the financial management of government operations • Program budgeting • Multi-annual budgeting • State Treasury • Agency for Debt and Liquidity Management • Uniform accrual accounting and reporting

4. Public sector accounting reform • Different accounting methodologies for public sector accounting units • No or limited data about revenues, expenses, provisions, contingent liabilities • System for collecting of accounting and financial information without access to individual data • Poor understandability of financial statements for the public • No systematic educations of public sector accountants

5. Public sector accounting reform 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 Hlavný názov prezentácie

6. The public sector accounting reformTimetable Key activities • Project management2005 - 2012 • New accounting and reporting standards preparation2005 - 2006 • Trainings2006– 2010 • IT system for collection of data and consolidation2006 - 2011 • Implementation on Individual Level 1.1.2008 • Implementation on Consolidated Level 2010-2011 • External Audit and Annual Report 2012

7. The public sector accounting reform - Components • New accounting and reporting standards, • Improvement of information systems for recording, processing and analyzing accounting data, • Communication and improvement of public sector accountants skills. Hlavný názov prezentácie

8. New accounting and reporting standards • New accounting standards contains accrual principle and consolidation principle. • All public sector accounting entities are using the same accounting standards. • Uniform structure of financial statements is given to ensure consistency for collection and aggregation of accounting data. Hlavný názov prezentácie

9. Development of regulatory framework • Slovak public sector accounting framework is based on IPSAS • Developed in cooperation with external experts (auditors and experts from universities) • Differences between national accounting legislation and IPSAS documented and regularly discussed

10. Regulatory framework Public sector accounting legislation consist of: • Law on accounting (one law for all accounting entities in Slovakia) • One law on Accounting for all accounting entities (private and public sector) • Transposes the legally binding acts of the European Union Hlavný názov prezentácie

11. Regulatory framework Secondary legislation: • Measures/Decrees (for budgetary organizations, semi-budgetary organizations, state funds, municipalities and higher territorial units): • determining details of accounting procedures and a framework chart of accounts • laying down details of the structure, description and content of items of individual financial statements, time and place for submission FS Hlavný názov prezentácie

12. Regulatory framework • defining the arrangement, structure and content specification of items of an consolidated financial statement, and terms and location for submission of consolidated FS • determining details of content, method, terms and place for submition of accounting information and others data necessary for budget fulfillment valuation • Methodological regulation All these legislative documents are issued by the Ministry of Finance Hlavný názov prezentácie

13. Informationsystems • Accounting information system, it is responsibility of every single entityto keep accounting evidence in line with legal requirements • State Treasury System, IS developed by MoF (2004) • Central consolidation system, IS developed by MoF (2009) • Budgetary IS, developed by MoF (1996)

14. Education “MoFshould 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 approximately 10 000 public accountants • Cooperation with universities and professionalassociations • Communication Hlavný názov prezentácie

15. Education MoF organizes ongoing trainings for public sector accountants on: • Accrual accounting • Consolidation • Information systems Help Desk for all public sector accountants. It is a tool for centralizing all questions and requests for advice on accounting standards, reporting system and consolidation process. Hlavný názov prezentácie

16. Roadblocks encountered • Development of one central accounting system versus development of information systems for data collection, processing and consolidation • Direct adoption of IPSAS versus national accounting standards • Consolidation process • External audit of consolidated financial statements

17. Major benefits • Available accrual accounting data for fiscal reporting • Better control about the quality of accounting data • Financial statements in public sector are comparable and understandable for wider public • Higher level of knowledge and skills of public accountants • Improved understanding of costs, but still an emphasis on “near cash”appropriations

18. Lessons Learnt • Integral Part of Public Finance Management Reform • Strong but Silent Political Support • Use of Private Sector Experience • Dedicated Internal (MoF) Capacities • Trainings for Public Sector Accountants • Communication • On-Going Process

19. Current Status and Way Forward • External Audit of Consolidated Financial Statements • Fine-tuning of Consolidation Process • Learn to use the information that the accrual accounting system offers in an effective way • Centralization and unification of economicsystems

20. Information and Contact Ministry of Finance of the Slovak Republic Štefanovičova 5 P.O.Box 82 817 82 Bratislava 15 Slovak Republic www.finance.gov.sk Lucia Kašiarová FCCA State Reporting Section lucia.kasiarova@mfsr.sk

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