This presentation was made by Jean-Paul Milot and Isabelle Collignon-Joffre, France, at the 15th Annual OECD Public Sector Accruals Symposium held in Paris on 26-27 February 2015.

1. French Conceptual Framework for Public Accounts
OECD – 26 February 2015
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2. 2
Why publish a Conceptual Framework
for Public Accounts in France ?
• Accrual accounting was progressively introduced into the public sector by way of
numerous laws and regulations
• Following the requirements of the Constitutional Bylaw (issued in 2001) for the
Central Government Accounts, a main order (relating to public budgetary and
accounting management), published in 2012, requires that the accounting rules of
all public entities only diverge from those applicable to private entities
wherever made necessary by the specific features of their activities.
• The Conceptual Framework for Public Accounts sets out the concepts that
underlie the standards:
– Either generally accepted accounting concepts, or
– Concepts specific to the public sector
• Formalising those accounting concepts enhances convergence towards and
consistency of the standards.

3. 3
Process for elaborating
the Conceptual Framework
• The CNOCP published a draft Conceptual Framework for Public Accounts for
comments.
• Comments to be submitted by 30 April 2015.
• A finalised version is to be published by the end of 2015.

4. Role and Authority
of the Conceptual Framework
• Role:
– What? a coherent set of concepts underlying the accounting standards.
– To whom?
• The standard setter for the public sector (the CNOCP)
• The authorities in charge of defining accounting rules
• The preparers of accounts
• The auditors
• The users of public accounts.
• Authority: the Conceptual Framework is not a standard.
Nothing in this CF overrides any specific standard.
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5. Entities within the scope
of the Conceptual Framework
• A specificity of this Conceptual Framework: characterise the entities that
fall under its scope
• Why such a characterisation?
To identify public sector entities’ key characteristics that form a
conceptual basis for specific accounting standards modifying,
adapting or supplementing private sector accounting standards
• Entities within the scope combine 3 characteristics:
– Being established, directly or not, by a political process
– Their main function is the implementation of public policy that consists of:
• Providing goods and services, without charges or for a price that is not economically significant
• Providing cash benefits.
– Being financed directly or indirectly by public funds.
• This scope matches approximatively the General Government’s scope. 5

6. Key Characteristics
of the action of Government Units (1/2)
The accounting standards for government units may diverge from those of the
private sector to accommodate specific characteristics of public action.
•Key characteristics related to the nature of government units:
– Mandatory and unilateral character of certain public decisions
– Longevity of the General Government sector
– Importance of the budget
•Key characteristics related to the functions of government units:
– Exercise authorisation and control functions
– Provide goods and services, directly or indirectly (through cash transfers), in a non-
market environment,
Some of these actions are designed to put the solidarity principle into
effect, most often through the sharing out mechanism.
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7. Key Characteristics
of the action of Government Units (2/2)
• Key characteristics related to the funding of government units:
– Compulsory nature of the levies which represent the majority of these resources
– Use of public property
– Where applicable, regulation through restricted budgets.
• The Conceptual Framework considers that the main root of the specificities
of government unit’s action is the sovereign power.
The sovereign power may create, cancel or change the content
of public policies as well as the public entity responsible for their
implementation
It may therefore modify the rights and obligations attributed to
governments units
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8. The root of Key Characteristics
leads to distinguish two tiers
The identification of sovereignty as a source of particular prerogatives and
specific characteristics of the action of government units leads us to distinguish
two tiers:
• That of the sovereign power:
– It has powers and commitments
– It attributes some of them to government units which, at the end of the process and in
some conditions, will have the nature of rights and obligations for government units
• That of government units:
– responsible, in varying degrees, for the implementation of public policies that translate
the will of the sovereign power into acts, certain of which are of a specific nature
– Therefore managers of the competence and resources attributed to them by the
sovereign power
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9. Consequence of the reference
to the private sector entities standards
With respect to the rights and obligations of the managing entities (namely the
government units), the reference to private sector accounting standards leads to
consider:
• rights, obligations or transactions similar or equivalent to those of
private sector entities
apply standards derived or adapted from the private sector
• rights, obligations and transactions considered specific to public action,
arising from the action and commitments of the sovereign power
their features require specific accounting treatments
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10. Main accounting consequences
of the sovereign power
• Nature of reporting entities:
– The sovereign power is not a reporting entity
• Definition of a going concern principle suitable for government units
– The future of the entity is not tied to that of its rights and obligations
• Definition of the level of maturity required for rights and obligations
specific to public action to be recognized in the accounts
– The timing of their recognition in the financial statements of the relevant entity needs to
be determined
• Identification of new types of elements and need for disclosures in the
notes specific to government units
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11. Users and objectives
of financial statements
• Primary users: citizens and their representatives
• Information on public accounts is potentially interesting for everybody
• General needs of users encompass:
– Information about the financial position and performance of a government unit;
– A report on the financial performance for the current period compared to budget if it
exists;
– Sustainability reports, financial projections, macro-economic data or information on the
appropriate use of public funds.
• The financial statements should provide relevant information about some
of those needs:
– Presentation of the financial position of the government unit;
– Where applicable, reconciliation with budget, forecasts or other accounting reports;
Limitation: to be well-informed, users need to be aware of the limitations relating to the
scope of information covered by and/or excluded from the financial statements.
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12. Qualitative Characteristics
of Financial Statements
• General Principles: Faithful representation, Compliance, True and fair view
• Qualitative Characteristics (QC) of the financial statements:
– Neutrality, relevance, reliability, completeness, understandability, prudence,
comparability, substance over form…
– Sometimes, QC may overlap exercise judgment
• Constraints:
– Cost-benefit
– Materiality
– Confidentiality of certain operations or transactions
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13. Elements and Recognition
• Elements:
– Asset
• Embodying service potential and
• Control
– Liability
• Similar to an obligation of a private sector entity or
• Specific to public action
– Other resources and other obligations
– Net assets or equity
– Revenue, expense, surplus and deficit
• Recognition criteria:
– The recognising event of the element has occurred ;
– It can be reliably measured.
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14. Measurement
• Different measurement bases are listed
• The preferred method for measuring assets at the reporting date:
– Entry value, after deducting, as appropriate, accumulated depreciation and
impairment.
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15. Presentation
of the Financial Statements
• Definition of a Reporting Entity
• Components of Financial Statements:
– Mandatory:
• A statement of financial position or balance sheet;
• A surplus/deficit statement;
• Notes.
– And possibly:
• A cash flow statement ;
• A statement of changes in net assets/equity.
• Notes: may include specific disclosures related to the sovereign power.
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16. Consolidation and combination
of Reporting entities
Under the legislation applicable to government units, accounts combining
several reporting entities may be prepared, namely:
•Consolidated accounts or
•Combined accounts.
In some cases, aggregated accounts (which are not those of a reporting entity).
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17. Comparison with the IPSAS Board
Conceptual Framework
• Main topics arising at this stage:
– The definition of the Public Sector and of its key characteristics: in the
‘Preface’ vs. inside the Framework
– The root of these key characteristics and its consequences: sovereign
power and reporting entity
– The nature of commitment deriving from the sovereign power
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