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| Thursday, 14 August 2014, 11:30 HKT/SGT | |
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Source: IFAC | |
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| IFAC Also Applauds US SEC for Compelling Municipalities to Provide Complete Financial Disclosure |
NEW YORK, N.Y., Aug 14, 2014 - (ACN Newswire) - Argentina's most recent default adds to the long list of government defaults, bailouts, and restructurings over the years. It also serves to highlight that sovereign debt problems evident during the recent global financial crisis continue to exist.
Like many countries, Argentina does not prepare accrual-based financial statements, which are essential for effective financial management. Accrual-based financial statements show a government's total assets, liabilities, and cash flows, and provide other important disclosures about future commitments and contingencies -- all essential information for making proper decisions and ensuring that there is sound financial management for today, tomorrow, and for a long-term sustainable future. Many countries around the world -- including many in Europe, that received multi-billion dollar bailouts over the last few years -- are also in need of better government financial reporting.
According to Standard & Poor's (S&P), Argentina has about $200 billion in foreign-currency debt, including $30 billion of restructured bonds. That's important to know. But what are the Argentinian government's total liabilities? That is, its liabilities other than debt, including social security and pension obligations, which are long-term commitments that burden future generations.
"Countries continue to default on their debt, yet aren't pushed by governments, credit rating agencies, or financial commentators to significantly improve public sector financial reporting," said Fayezul Choudhury, Chief Executive Officer of IFAC. "These same countries require private sector companies in their jurisdictions to publish audited, accrual-based, financial statements when raising funds in capital markets. What justifies the double standard whereby a government compels private companies to be transparent and accountable, when it avoids using accrual accounting itself -- despite having bonds traded on the capital markets?"
Last year, the G-20 Finance Ministers and Central Banks Governors declared a "goal of strengthening the public sector balance sheet" and of "looking at transparency and comparability of public sector reporting, and monitoring the impact of financial sector vulnerabilities on public debt." IFAC strongly recommends that the G-20 makes enhanced public sector financial management a key priority this year and in the future.
"It is critical that the G-20 focuses on initiatives to improve governments' financial management and reporting practices. This means making accrual-based financial reporting in accordance with high-quality, globally accepted standards, such as the International Public Sector Accounting Standards(TM) (IPSASs(TM)), a key objective," said Mr. Choudhury. "In fact, IFAC urges the G-20 to promote greater adoption of IPSASs, by adding these standards to the Financial Stability Board's list of standards that are designated as deserving of priority implementation."
In a related matter, the U.S. Securities and Exchange Commission (SEC) this week charged Kansas with failing to disclose a multibillion-dollar pension liability to bond investors. Choudhury commented, "We applaud the SEC for compelling states and localities to properly disclose liabilities and risks and provide a complete picture of financial condition to investors and other stakeholders. This is imperative so that the $3.7 trillion municipal bond market can operate efficiently and effectively."
About IFAC
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 179 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce. www.ifac.org
CONTACT INFORMATION
Contact:
Laura Wilker
Head of Communications
+1-212-471-8707
laurawilker@ifac.org
Topic: Research / Industry Report
Source: IFAC
https://www.acnnewswire.com
From the Asia Corporate News Network
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