HARARE – Government has finalised a strategy on the implementation of a new accounting system for the public sector.
Central government, local authorities and State entities, have been using the traditional cash-basis accounting system since 1923 when the country was declared the Republic of Southern Rhodesia under Premier Charles Coghlan. But, they are now migrating to a new accounting system, the accrual-based International Public Sector Accounting Standard (IPSAS) as part of efforts to improve efficiency, transparency and accountability.
Admire Ndurunduru, the secretary for PAAB, this week confirmed that IPSAS implementation strategy and plan for Zimbabwe that has been under development since March this year has been finalised.
“Significant progress has been made,” Ndurunduru said.
“We have been developing the implementation strategy and plan since the round table conference held in Harare in March 2018. The first draft has been finalised now. We have sent it out to various stakeholders for comments to make it more robust and increase the chance of successful implementation. Cut off date for comments is the end of this week (June 8) and we hope to complete the whole process by July 8 2018,” he added.
Ndurunduru said PAAB and government were in the process of setting up a Steering committee to monitor the implementation of the new accounting system.
“The process of setting up a Steering Committee is ongoing and we hope to complete it (the process) soon,” Ndurunduru said.
The latest development comes after Finance Minister, Patrick Chinamasa, in January this year directed that central government, urban and rural local authorities and government entities to migrate to an accruals accounting framework.
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 will 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 been working closely with the PAAB, which had been roped in to help migrate its accounting system to the more transparent accruals system.
PAAB, which regulates the accountancy profession in the country, reports to the Ministry of Finance and Economic Planning.
Section 44 (2) (a) of the revised Public Accountants and Auditors Act Chapter 27:12 gives PAAB a statutory mandate to prescribe accounting and auditing standards for use in Zimbabwe and coming up with regulations prescribing the application of reporting standards in the public sector.
Zimbabwe is rolling out accrual-based IPSAS in public institutions to ensure effective and efficient management of government assets and liabilities.
The momentum for IPSAS is a global trend, with more countries around the world adopting accruals accounting practices, which is a critical platform for accountability and transparency in the utilisation of government resources.
Adopting a high-quality accrual-based accounting system is also expected to result in development of better management information systems, which should in turn contribute to better decision making and better use of public money.
Under the accruals accounting systems, a comprehensive view of government’s assets and liabilities and of its financial performance and cash flows for a given period is achieved.
It also reflects the long-term economic impact of political decisions in the financial statements. Cash accounting systems do not allow for this.
Continued use of the cash basis accounting system made it difficult for government to accurately assess performance and to detect deviation from agreed strategic plans.
This resulted in government failing to take early corrective action.
Adopting IPSAS will enable government to provide information that delivers real insight into public financial management and will enhance decision making.
The public sector plays a major role in society.
In most jurisdictions, including Zimbabwe, public expenditure is critical in spurring demand for goods and services in an economy, and public sector entities are substantial employers and major capital market participants.