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May 14, 2012

ICAEW warns of weaknesses in EU public accounting

The UK Institute of Chartered Accountants for England and Wales (ICAEW) said many EU member states have not got the capacity or capability to implement international public sector accounting standards and must therefore make a substantial investment in developing the skills required.

The ICAEW said in its submission to the Eurostat’s consultation on International Public Sector Accounting Standards (IPSAS) that the first critical step for members is to urgently move from cash-based to accruals-based accounting.

ICAEW Europe regional director Martin Manuzi said there is a need for financial reform in the public sector in order to rebuild trust and confidence and ensure public sector finances are sustainable in the future.

“However, many countries in the EU haven’t yet got the capability to implement IPSAS and must therefore focus on getting the basics right. Moving from cash to accruals accounting is a critical first step,” he added.

Manuzi also called for education and further development of finance skills to be a priority across the EU.

 “Many EU governments still employ relatively few qualified finance professionals. Attempting a move to any set of international standards could therefore be hugely difficult, and thus undermine the political will required to complete the process,” he said.

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