The International Federation of Accountants (IFAC), the global organisation for the accountancy profession with members and associates in more than 120 countries, calls for broad and swift action by the G-20 leaders at their June 26-27 meeting in Toronto, Canada, to greatly improve government transparency and accountability as a means toward global fiscal sustainability.
“Governments require that private sector companies report high-quality financial information to their investors and stakeholders. It’s time for the public sector to practice what it preaches,” says Ian Ball, CEO of IFAC. “The problems associated with public finance and government debt require a coordinated, international approach that global leaders have been slow to address. Sovereign debt concerns in European countries illustrate the stark implications and urgency of this issue – confidence in sovereign debt has been seriously damaged by accounting and auditing failures. These failures have occurred not only on the national level but also on the regional, state and local levels.”
Taxpayers, investors and citizens in all nations are entitled to accurate and complete financial information about their governments, according to IFAC. They should demand that their governments provide a comprehensive picture of fiscal performance and position. This includes an accrual-based measure of surplus or deficit as well as full details of debt, other liabilities, contingent liabilities and guarantees, and future expenditures and the resources needed to support them.
IFAC’s letter to the G20 contains several specific, actionable recommendations, including: adoption of accrual-based accounting; improving transparency and accountability of stimulus programs and bailouts; and adoption of international standards to improve the quality of financial information.