Govt expedites new accounting system

BUSINESS REPORTER

Government is accelerating the implementation of the new accounting system as part of efforts to improve efficiency, transparency and accountability in the public sector.

Central government, local authorities and State entities are expected to migrate to the accrual based International Public Sector Accounting Standards (IPSAS) from the traditional cash-based accounting system.

This week, Finance minister, Mthuli Ncube (pictured), launched the new IPSAS Financial Reporting Manual (IPSAS ZFRM) for use by all government ministries, commissions, local authorities and public entities.

“It signifies the level of importance the government places on fiscal management,” Ncube said this week.

He added: “Global investors and fund providers have increased the call for more transparency in the way businesses report and communicate their value creation stories, therefore, modernisation of the public sphere is no longer an option for the governments as they have to meet these stakeholders’ demands”.

Ncube also launched the Public Sector Professional Accountancy of Zimbabwe Training Office.

Government has since directed that the central government, urban and rural authorities and State entities should implement IPSAS by 2025.

The cash-basis accounting system recognises transactions between government, local authorities and their clients only when the money is paid.

But, the accrual-based IPSAS, which recognise those transactions within the time period that they occur, is part of a wider public finance management (PFM) reform in the public sector.

The new accounting system is expected to contribute to better use of public funds. It will also allow better public service performance.

Government has roped in the Institute of Chartered Accountants (ICAZ) and the Public Accountants and Auditors Board (PAAB) to help in the migration from cash-basis accounting system to the more transparent accruals system.

Ncube said the new reporting framework would go a long way in making sure that “we can account for government resources better, this will go a long way in us mobilising domestic resources, what is called domestic resource mobilisation, will go a long way in assuring transparency and accountability at all government levels”.

Zimbabwe announced its commitment to migrate to the principle based IPSAS reporting framework from the rule-based accounting as from January 1, 2018.

Ncube said the accrual based IPSAS reporting framework would be supportive of Government efforts to achieve the desired results-based performance through efficient utilisation of resources and, timely and transparent reporting.

The reform is part of ongoing efforts to enhance and strengthen the Public Finance Management system, he said.

“A strong accountancy profession is indispensable to our country’s economic development. The usefulness of a sound financial accounting and reporting system in socio-economic development cannot be over emphasised with transparency and accountability being at the heart of our economic recovery strategy as we endeavour to establish economic confidence,” Ncube said.