THE SOVEREIGN DEBT CRISIS,              A MATTER OF URGENCY-FROM                 LESSONS TO REFORM               VIENNA, 1...
FROM CASH TO ACCRUAL ACCOUNTING     IN GOVERNMENT: WHEN?                     BEFORE 1981       PUBLIC ACCOUNTING = BUDGETA...
FROM CASH TO ACCRUAL ACCOUNTING      IN GOVERNMENT: WHEN?                       FROM 2011                NEW PUBLIC ACCOUN...
FROM CASH TO ACCRUAL ACCOUNTING      IN GOVERNMENT: WHY?                    1981                    WHY?     TO HARMONIZE ...
FROM CASH TO ACCRUAL ACCOUNTING      IN GOVERNMENT: WHY?                         FROM 2011                          WHY?  ...
FROM CASH TO ACCRUAL ACCOUNTING      IN GOVERNMENT: HOW?  1981           2006                        2011   WINNING INTERE...
FROM CASH TO ACCRUAL ACCOUNTING      IN GOVERNMENT: HOW?       1981 - 1986            2006 - 2011                     HOW?...
GOVERNMENT BUDGETBUDGETARY EXERCISE:  1ST JANUARY-31ST DECEMBERBUDGET STRUCTURE:  EXPENDITURE BUDGET: LIMITATIVE  REVENU...
GOVERNMENT ACCOUNTINGPUBLIC ACCOUNTING REGULATION PROVIDES TWORECORDING SYSTEMS COMPLETELY INTEGRATED:   FINANCIAL ACCOUN...
FINANCIAL ACCOUNTANCY(DOUBLE-ENTRY BOOK-KEEPING)             ACCRUAL BASED SYSTEM (I)  ACCRUAL STANDARD:  “Transactions an...
FINANCIAL ACCOUNTANCY(DOUBLE-ENTRY BOOK-KEEPING)              ACCRUAL BASED SYSTEM (II)   Economic revenues and expenses d...
FINANCIAL ACCOUNTANCY   CHART OF ACOUNTS             GROUP 1         BASIC FINANCING    GROUP 2 NON CURRENT ASSETS        ...
BUDGETARY ACCOUNTANCY(SINGLE-ENTRY BOOK-KEEPING)                              EXPENDITURE BUDGET                     BUDGE...
BUDGETARY ACCOUNTANCY(SINGLE-ENTRY BOOK-KEEPING)                                INCOME BUDGET                      BUDGET ...
FINANCIAL STATEMENTS            STATEMENT OF         FINANCIAL POSITION                                  STATEMENT OF     ...
I. STATEMENT OF FINANCIAL POSITION (I)                          ASSETS                  A) NON-CURRENT ASSETS             ...
I. STATEMENT OF FINANCIAL POSITION (II)          EQUITY AND LIABIILITIES                              A) EQUITY           ...
II. STATEMENT OF FINANCIAL              PERFORMANCE (I)                                                                   ...
II. STATEMENT OF FINANCIAL      PERFORMANCE (II)                                                                    NOTES ...
III. STATEMENT OF CHANGES IN EQUITY:             STRUCTURE     TOTAL STATEMENT OF CHANGES IN EQUITY     STATEMENT OF REVEN...
III.TOTAL STATEMENT OF CHANGES IN             EQUITY (I)                                                          II.     ...
III. STATEMENT OF REVENUES AND           EXPENSES (II)                                                             NOTES  ...
III. STATEMENT OF TRANSACTIONS WITH OWNERS    ACTING IN THEIR CAPACITY AS OWNERS (III)       EQUITY TRANSACTIONS WITH OWNE...
III. STATEMENT OF TRANSACTIONS WITH OWNERS    ACTING IN THEIR CAPACITY AS OWNERS (IV)        ANOTHER TRANSACTIONS WITH    ...
IV. CASH FLOW STATEMENT                                                           NOTES   N    N-1I. CASH FLOWS FROM OPERA...
V. COMPARISON OF EXPENDITUREBUDGET AND ACTUAL AMOUNTS (I)                      BUDGET                BUDGET               ...
V. COMPARISON OF INCOME BUDGET AND        ACTUAL AMOUNTS (II)                        BUDGET                BUDGET         ...
V. COMPARISON OF BUDGET AND ACTUAL   AMOUNTS: BUDGETARY RESULT (III)                                                     B...
MORE INFORMATION ABOUTSPANISH ACCOUNTING REGULATION        www.igae.pap.minhap.gob.es           Normativa e informes     ...
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Belén Hernández, Public Accounting Directorate Spain - IFAC Sovereign Debt Seminar Presentation

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Belén Hernández, Public Accounting Directorate Spain - IFAC Sovereign Debt Seminar

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Belén Hernández, Public Accounting Directorate Spain - IFAC Sovereign Debt Seminar Presentation

  1. 1. THE SOVEREIGN DEBT CRISIS, A MATTER OF URGENCY-FROM LESSONS TO REFORM VIENNA, 19th-MARCH-2012FROM CASH TO ACCRUAL ACCOUNTING AND BUDGETING IN GOVERNMENT. WHY, WHEN AND HOW? Belén Hernández 1 BHernandez@igae.minhap.es
  2. 2. FROM CASH TO ACCRUAL ACCOUNTING IN GOVERNMENT: WHEN? BEFORE 1981 PUBLIC ACCOUNTING = BUDGETARY ACCOUNTING ALMOST CASH BASED SYSTEM 1981-1986 NEW PUBLIC ACCOUNTING REGULATION + NEW IT SYSTEM: SIC PUBLIC ACCOUNTING:  BUDGETARY ACCOUNTING: ALMOST CASH BASED SYSTEM  FINANCIAL ACCOUNTING: ACCRUAL BASED SYSTEM 2
  3. 3. FROM CASH TO ACCRUAL ACCOUNTING IN GOVERNMENT: WHEN? FROM 2011 NEW PUBLIC ACCOUNTING REGULATION ADAPTED TO IPSAS + NEW IT SYSTEM: SIC’3 PUBLIC ACCOUNTING :  BUDGETARY ACCOUNTING: ALMOST CASH BASED SYSTEM  FINANCIAL ACCOUNTING: ACCRUAL BASED SYSTEM ADAPTED TO IPSAS  COST ACCOUNTING 3
  4. 4. FROM CASH TO ACCRUAL ACCOUNTING IN GOVERNMENT: WHY? 1981 WHY? TO HARMONIZE TO SHOW THE WITH THE NEW FAITHFUL SPANISH IMAGE OF BUSINESS FINANCIAL ACCOUNTING STATEMENTS REGULATION (1973) 4
  5. 5. FROM CASH TO ACCRUAL ACCOUNTING IN GOVERNMENT: WHY? FROM 2011 WHY? TO HARMONIZE WITH TO SHOW THE THE SPANISH FAITHFUL IMAGE BUSINESS OF FINANCIAL ACCOUNTING STATEMENTS REGULATION (2007) ADAPTED TO IAS-IFRS TO ADAPT TO PROVIDE INFORMATION ACCOUNTING ABOUT NEW REGULATION TRANSACTIONS WHICH TO IPSAS WEREN´T ANALYZED IN THE PREVIOUS REGULATION 5
  6. 6. FROM CASH TO ACCRUAL ACCOUNTING IN GOVERNMENT: HOW? 1981 2006 2011 WINNING INTEREST AND SUPPORT FROM POLITICAL LEVEL MINISTRY OF FINANCE AS REFORM DRIVER AND STANDARD SETTER FINANCIAL REFORM DESIGN AND IMPLEMENTATION STATE THROUGH OWN STAFF MENTS STUDY OF SPANISH BUSINESS ACCOUNTING ADAPTED REGULATION TO IPSAS INTENSIVE STUDY OF IPSAS, IAS-IFRS 6
  7. 7. FROM CASH TO ACCRUAL ACCOUNTING IN GOVERNMENT: HOW? 1981 - 1986 2006 - 2011 HOW? NEW PERSONAL REGULATION TRAINING NEW IT SYSTEM 7
  8. 8. GOVERNMENT BUDGETBUDGETARY EXERCISE: 1ST JANUARY-31ST DECEMBERBUDGET STRUCTURE:  EXPENDITURE BUDGET: LIMITATIVE  REVENUE BUDGET: ESTIMATIVEBUDGETARY ACCOUNTANCY: RIGHTS AND OBLIGATIONS RECOGNITION (ALMOST CASH BASED SYSTEM)FINANCIAL STATEMENTS: INFORMATION ABOUT BUDGET EXECUTION 8
  9. 9. GOVERNMENT ACCOUNTINGPUBLIC ACCOUNTING REGULATION PROVIDES TWORECORDING SYSTEMS COMPLETELY INTEGRATED: FINANCIAL ACCOUNTANCY BUDGETARY ACCOUNTANCYFINANCIAL ACCOUNTANCY (double-entry book-keeping) applies a FULL ACCRUAL BASED SYSTEM.BUDGETARY ACCOUNTANCY (single-entry book-keeping) almost applies a CASH BASED SYSTEM. 9
  10. 10. FINANCIAL ACCOUNTANCY(DOUBLE-ENTRY BOOK-KEEPING) ACCRUAL BASED SYSTEM (I) ACCRUAL STANDARD: “Transactions and other events should be recognised when they occur (and not as cash or its equivalent is received or paid) and they are recorded in the accounting records and reported in the Financial Statements of the periods to which they relate.” Financial statements prepared on the accrual basis inform users not only of past transactions involving the payment and receipt of cash but also of obligations to pay cash in the future and of resources that represent cash to be received in the future. 10
  11. 11. FINANCIAL ACCOUNTANCY(DOUBLE-ENTRY BOOK-KEEPING) ACCRUAL BASED SYSTEM (II) Economic revenues and expenses deriving from budget execution can be recorded at the same time as the correlative budgetary rights and obligations. TWO KIND OF ADJUSTMENTS should be made at the end of the year:  All revenues and expenses already recorded and assigned to budget but not totally accrued must be corrected through accrual adjustments.  All revenues and expenses accrued in the financial sphere but not assigned to budget yet must be recorded. 11
  12. 12. FINANCIAL ACCOUNTANCY CHART OF ACOUNTS GROUP 1 BASIC FINANCING GROUP 2 NON CURRENT ASSETS STATEMENT OF GROUP 3INVENTORY AND OTHER CURRENT ASSETS FINANCIAL POSITION GROUP 4 CREDITORS AND DEBTORS CASH FLOW GROUP 5 STATEMENT FINANCIAL ACCOUNTS GROUP 6 BUYS & EXPENDITURES STATEMENT OF FINANCIAL GROUP 7 SALES & INCOMES PERFORMANCE GROUP 8: EXPENDITURES RECOGNIZED DIRECTLY IN EQUITY STATEMENT OF CHANGES IN GROUP 9: INCOMES RECOGNIZED DIRECTLY IN EQUITY EQUITY GROUP 0 BUDGETARY CONTROL ACCOUNTS 12
  13. 13. BUDGETARY ACCOUNTANCY(SINGLE-ENTRY BOOK-KEEPING) EXPENDITURE BUDGET BUDGET BUDGET UNPAID BUDGET EXECUTION= PAYMENTS RECOGNIZED UNEXECUTED ITEM ORIGINAL CHANGES FINAL RECOGNISED (5) OBLIGATIONS BUDGET (1) (2) (3=1+2) OBLIGATIONS (7=4-5) (8=3-5) (4) TOTAL COMPARISON OF BUDGET AND ACTUAL AMOUNTS 13
  14. 14. BUDGETARY ACCOUNTANCY(SINGLE-ENTRY BOOK-KEEPING) INCOME BUDGET BUDGET BUDGET EXECUTION= CASH IN UNPAID UNEXECUTED BUDGET RECOGNIZED FLOW RECOGNIZED BUDGET ITEM ORIGINAL CHANGES FINAL RIGHTS RIGHTS (5) (6=4-5) (7=3-4) (1) (2) (3=1+2) (4) TOTAL COMPARISON OF BUDGET AND ACTUAL AMOUNTS 14
  15. 15. FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION STATEMENT OF FINANCIAL NOTES PERFORMANCE FINANCIAL STATEMENTS STATEMENT OF CHANGES IN EQUITY COMPARISON OF BUDGET CASH FLOW AND ACTUAL STATEMENT AMOUNTS
  16. 16. I. STATEMENT OF FINANCIAL POSITION (I) ASSETS A) NON-CURRENT ASSETS NOTES N N-1 I. Intangible assets II. Property, plant, and equipment III. Investment property IV. Financial assets in controlled entities, joint ventures and associated. V. Financial assets (in the rest of entities) B) CURRENT ASSETS I. Available-for-sale-non-financial assets II. Inventories III. Recoverables IV. Financial assets in controlled entities, joint ventures and associated V. Financial assets (in the rest of entities) VI. Accrual adjustements VII. Cash and cash equivalents 16
  17. 17. I. STATEMENT OF FINANCIAL POSITION (II) EQUITY AND LIABIILITIES A) EQUITY NOTES N N-1 I. Contributed capital II. Accumulated surpluses or deficits and reserves III. Changes in fair value recognized in equity IV. Another equity increases B) NON CURRENT LIABILITIES I. Provisions II. Financial liabilities (in the rest of entities) III. Financial liabilities in controlled entities, joint ventures and associated C) CURRENT LIABILITIES I. Provisions II. Financial liabilities III. Financial liabilities in controlled entities, joint ventures and associated IV. Payables V. Accrual adjustements 17
  18. 18. II. STATEMENT OF FINANCIAL PERFORMANCE (I) NOTES N N-11. Taxes contributions to National insurance2. Transfers3. Sales and rendering of services4. Inventory turnover &disposals5. Other revenues from ordinary activities6. Increase in provisions A) TOTAL REVENUE FROM OPERATING ACTIVITIES (1+2+3+4+5+6)7. Wages, salaries, and employee benefits8. Grants and other transfer payments9. Acquisitions10. Other expenses from ordinary activities11. Depreciation and amortization expense B) TOTAL EXPENSE FROM OPERATING ACTIVITIES (8+9+10+11) I. SURPLUS/DEFICIT FROM OPERATING ACTIVITIES (A-B)12. Impairment and disposals of items of property, plant, and equipment13. Non ordinary items II. NON FINANCIAL SURPLUS/DEFICIT (I+12+13) 18
  19. 19. II. STATEMENT OF FINANCIAL PERFORMANCE (II) NOTES N N-1 14. Finance revenues 15. Finance expenses 16. Changes in fair value recognized in surplus or deficit 17. Changes in foreign exchange rates 18. Impairment and disposals of financial assets and liabilities III. FINANCIAL SURPLUS/DEFICIT RESULT (14+15+16+17+18) IV. SURPLUS OR DEFICIT FOR THE PERIOD (II + III) 19
  20. 20. III. STATEMENT OF CHANGES IN EQUITY: STRUCTURE TOTAL STATEMENT OF CHANGES IN EQUITY STATEMENT OF REVENUES AND EXPENSES STATEMENT OF TRANSACTIONS WITH OWNERS ACTING IN THEIR CAPACITY AS OWNERS EQUITY TRANSACTIONS WITH OWNERS ACTING IN THEIR CAPACITY AS OWNERS ANOTHER TRANSACTIONS WITH OWNERS ACTING IN THEIR CAPACITY AS OWNERS
  21. 21. III.TOTAL STATEMENT OF CHANGES IN EQUITY (I) II. III. I. IV. Accumulated Changes in Contri Another NOTES surpluses or fair value TOTAL buted equity deficits and recognized capital increases reserves in equity A. EQUITY AT THE END OF THE PERIOD N-1 B. CHANGES IN ACCOUNTING POLICIES AND CORRECTIONS OF ERRORS C. EQUITY AT THE BEGINNING OF THE PERIOD N (A+B) D. CHANGES IN EQUITY FOR THE PERIOD 1. Total revenue and expense for the period 2. Transactions with owners acting in their capacity as owners 3. Another equity increases E. EQUITY AT THE END OF THE PERIOD N (C+D) 21
  22. 22. III. STATEMENT OF REVENUES AND EXPENSES (II) NOTES N N-1 I. SURPLUS OR DEFICIT FOR THE PERIOD II. REVENUE AND EXPENSE FOR THE PERIOD THAT IS RECOGNIZED DIRECTLY IN EQUITY 1. Property, plant, and equipment & Investment property 2. Financial assets and liabilities 3. Hedge accounting 4. Another equity increases III. TRANSFERS TO THE STATEMENT OF FINANCIAL PERFORMANCE 1. Property, plant, and equipment & Investment property 2. Financial assets and liabilities 3. Hedge accounting 4. Another equity increases IV. TOTAL REVENUE AND EXPENSE FOR THE PERIOD (I+II+III) 22
  23. 23. III. STATEMENT OF TRANSACTIONS WITH OWNERS ACTING IN THEIR CAPACITY AS OWNERS (III) EQUITY TRANSACTIONS WITH OWNERS ACTING IN THEIR CAPACITY AS NOTES N N-1 OWNERS 1. CASH-CONTRIBUTED-CAPITAL 2. IN-KIND-CONTRIBUTED-CAPITAL 3. DEBT RELIEF OR ASSUMPTION OF FINANCIAL LIABILITIES 4. ANOTHER CONTRIBUTED CAPITAL 5. (-) IN-KIND-DEVOLUTIONS TO OWNERS 6. (-) ANOTHER DEVOLUTIONS TO OWNERS TOTAL 23
  24. 24. III. STATEMENT OF TRANSACTIONS WITH OWNERS ACTING IN THEIR CAPACITY AS OWNERS (IV) ANOTHER TRANSACTIONS WITH OWNERS ACTING IN THEIR NOTES N N-1 CAPACITY AS OWNERS REVENUES AND EXPENSES RECOGNISED IN THE ECONOMIC AND ASSET RESULT STATEMENT REVENUES AND EXPENSES RECOGNISED IN THE STATEMENT OF CHANGES IN EQUITY TOTAL 24
  25. 25. IV. CASH FLOW STATEMENT NOTES N N-1I. CASH FLOWS FROM OPERATING ACTIVITIESII. CASH FLOWS FROM INVESTING ACTIVITIESIII. CASH FLOWS FROM FINANCING ACTIVITIESIV. OTHER CASH FLOWSV. EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES VI. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (I+II+III+IV+V)Cash and cash equivalents at the beginning of the periodCash and cash equivalents at the end of the period 25
  26. 26. V. COMPARISON OF EXPENDITUREBUDGET AND ACTUAL AMOUNTS (I) BUDGET BUDGET UNPAID BUDGET EXECUTION= PAYMENTS RECOGNIZED UNEXECUTED ITEM ORIGINAL CHANGES FINAL RECOGNISED (5) OBLIGATIONS BUDGET (1) (2) (3=1+2) OBLIGATIONS (7=4-5) (8=3-5) (4) TOTAL 26
  27. 27. V. COMPARISON OF INCOME BUDGET AND ACTUAL AMOUNTS (II) BUDGET BUDGET EXECUTION= CASH IN UNPAID UNEXECUTED BUDGET RECOGNIZED FLOW RECOGNIZED BUDGET ITEM ORIGINAL CHANGES FINAL RIGHTS RIGHTS (5) (6=4-5) (7=3-4) (1) (2) (3=1+2) (4) TOTAL 27
  28. 28. V. COMPARISON OF BUDGET AND ACTUAL AMOUNTS: BUDGETARY RESULT (III) BUDGET BUDGET EXECUTION= EXECUTION= BUDGETARY RECOGNIZED RECOGNISED RESULT RIGHTS OBLIGATIONS a. Current operations b. Non current operations c. Comercial operations 1. Non financial operations (a+b+c) d. Financial assets e. Financial liabilities 2. Financial operations (d+e) I. BUDGETARY RESULT FROM THE PERIOD (1+2) 28
  29. 29. MORE INFORMATION ABOUTSPANISH ACCOUNTING REGULATION www.igae.pap.minhap.gob.es Normativa e informes (Legislation and reports) Contabilidad Pública (Public accounting) bhernandez@igae.minhap.es 29

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