## AFRITAC South mission report (cr17326) — Accrual accounting, IPSAS adoption, and asset register (Mauritius)

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### Executive summary and high-level findings
- Mission: AFRITAC South (AFS) technical assistance mission to Port Louis, Mauritius during the period October 4–24, 2016.
- Mission team: Peter Murphy (PFM Advisor, AFRITAC South) and Abdul Khan (FAD expert).
- Principal objective: Advise on implementation of an accrual accounting framework consistent with internationally accepted standards (IPSAS), with emphasis on how to implement rather than the rationale for reform.
- Key high-level findings:
  - Existing accounting and financial reporting framework provides a sound foundation for a move to accrual accounting and international standards.
  - Advantages in Mauritius include: double entry accounting already followed; a modern financial management application (Oracle E-Business Suite) used as the Treasury Accounting System (TAS) with demonstrated capability to produce both cash and accrual reports; existing reporting of selected assets and liabilities; and presence of qualified accountants and ICT professionals.
  - Accrual framework objective: produce financial statements that provide a true and fair view of the public finances and enable the Director of Audit to give an opinion on that view.
  - IPSAS application: apply IPSAS to all public sector entities except where the primary objective is seeking a return on investors’ equity; entities using different standards must make adjustments when preparing consolidated financial statements (CFS).
  - Reconciliation with budget: accrual financial statements should be compared and reconciled with budget and budgetary reports, showing comparisons between actual and budgeted amounts on the same basis as the budget and reconciling accrual-based surplus/deficit with cash-based budget result.

### Recommended phased implementation timeline and road map
- Phased timing overview (targets and scope):
  - Commence immediately.
  - 2017/18: Produce first accrual-based financial statements for Budgetary Central Government (BCG) with nonfinancial assets still reported on a cash basis.
  - 2018/19: Recognize nonfinancial assets on an accrual basis; expand coverage to Central Government (CG).
  - 2019/20: Expand coverage to General Government (GG).
  - 2020/21: Expand coverage to the public sector; aim for audited IPSAS financial statements for the public sector.
- Integrated road map: six phases from preparatory work to audited IPSAS public sector financial statements for 2020/21, with detailed tasks for finalizing framework, form/content of financial statements, legal changes, chart of accounts for TAS, progressive recognition/reporting of assets/liabilities/revenues/expenses, and expanding coverage from BCG to CG to GG to public sector.
- Phase-specific targets and milestones (selected):
  - Development of an opening statement of financial assets and liabilities as at July 1, 2017 (Target: February 2018).
  - Reconfiguration of TAS on dual accrual and cash basis (Target: commencing July 2017).
  - IPSAS partial financial statements of Budgetary Central Government including financial assets and liabilities for 2017/18 (Target: February 2019).
  - IPSAS partial financial statements of Central Government including nonfinancial assets for 2018/19 (Target: February 2020).
  - IPSAS consolidated financial statements of General Government including nonfinancial assets for 2019/20 (Target: February 2021).
  - Audited IPSAS financial statements of public sector including all assets and liabilities for 2020/21 (Target: February 2022).
- Phase I–VI summary of activities (selected):
  - Phase I (2016/17): preparatory work, produce opening statement of financial assets and liabilities, specify conceptual design, develop financial statement templates, specify accounting policies, develop accrual chart of accounts, begin inventories.
  - Phase II (effective date July 1, 2017): TAS configured with two ledgers—primary ledger (cash basis) and secondary ledger (accrual basis)—using one common chart of accounts; extensive testing and training; commence transaction recording on dual basis on July 1, 2017.
  - Phase III (2017/18): IPSAS partial consolidated financial statements of BCG (financial assets/liabilities on accrual; nonfinancial assets on cash).
  - Phase IV (2018/19): IPSAS partial consolidated financial statements of CG with nonfinancial assets recognized; opening balances as at July 1, 2018 entered into TAS and asset register.
  - Phase V (2019/20): IPSAS consolidated financial statements of GG with all assets/liabilities reported; LG entities consolidated with segment information disclosed.
  - Phase VI (2020/21): Audited IPSAS consolidated financial statements of public sector; all controlled entities consolidated; aim for unmodified audit opinion.

### Governance, stakeholder engagement, and change management
- Recommended governance arrangements:
  - Establish a Technical Working Group (TWG) chaired by the Accountant General, with MoFED representation as alternate chair; TWG to advise the Financial Secretary.
  - Establish task teams (accounting policies and procedures; TAS task team with service provider SIL; capacity building and training team).
  - TWG to meet monthly to review progress, resolve challenges, authorize changes, and mobilize resources.
  - Roadmap to be used as strategic action plan and implementation progress review instrument; TWG to prepare communications strategy and consider a digital methodology (website) for updates.
  - Annual evaluation by task teams consolidated by the Accountant General; present revised implementation plan to TWG.
- Communication and monitoring:
  - Develop a communication strategy and progress monitoring and evaluation arrangements.
  - Brief senior management, Parliament, and other stakeholders on reform vision, timeframe, roles and responsibilities, required actions, resources, and training participation.

### Capacity development, staffing, and training
- Current Treasury and related staff structure:
  - Central Treasury: 183 staff, including 18 professional accountants and 2 systems analysts, managed by the Accountant General.
  - Directorate of Financial Operations (DFO): posts approximately 100 finance and accounting staff to executing units.
  - Accounting Officers in some 90 executing units.
  - Local ICT service provider: SIL (Oracle Financials platform).
- Implementation resource and staffing needs:
  - Additional resources (in-house or external) required for recognition and valuation of financial assets/liabilities (e.g., pension funds, debt, investments) and non-financial assets (land, infrastructure).
  - In the first two years of implementation up to 10 additional dedicated professional, technical, and training staff may be required to support policy development, TAS accrual design, TAS set-up with service provider, user testing, data collection and migration, report design, production testing, and user training including user manuals.
  - Proposal to second three staff from the Directorate of Financial Operations (DFO) to the Treasury for the initial implementation phase.
  - Staffing requirement may reduce over time but an expanded requirement will remain for ongoing management of upgraded TAS, application and ICT help desks, and expansion to other Central Government entities.
- Training strategy:
  - A training of trainer’s approach commencing with the Treasury.
  - The training task team and SIL to undertake a training needs analysis and develop a training of trainers proposal; once central Treasury team is trained, members to train other users in Treasury, DFO, and MoFED.
  - SIL involved in initial training and development of course materials and manuals; progressively transfer training responsibilities to trained staff.
- Future technical assistance (AFS support areas):
  - Support for development of accrual policies and procedures (remote IMF STX support and review).
  - Determination and monitoring of detailed task group action plans (periodic resident AFS LTX advisor support).
  - Progress monitoring and quality assurance for TAS system development (periodic AFS LTX and STX missions).
  - Training of Trainers based on training needs assessment.

### Coverage, accounting policies, and presentation (IPSAS compliance)
- Recommendation: The government financial statements should be prepared in compliance with IPSAS.
  - IPSASs meet information needs of GPFR users: resource providers and service recipients including citizens, parliament, donors, and lenders/investors.
  - Financial statements may be described as complying with IPSAS only when they comply with all the requirements of IPSASs.
  - Transition recognition: during transition financial statements must disclose:
    - the IPSASs that are complied with and those not yet complied with fully or partially;
    - the reasons for such non-compliance; and
    - where practicable, quantify the impact of such non-compliance.
  - Form and content must follow IPSAS guidance (particularly IPSAS 1) and international good practice.
- Coverage of IPSAS — which entities should apply IPSAS:
  - Apply IPSAS to public sector entities that:
    - Are responsible for delivery of services to benefit the public and/or to redistribute income and wealth;
    - Mainly finance activities by taxes and/or transfers, social contributions, debt, or fees; and
    - Do not have a primary objective to make profits.
  - Most Mauritius public sector entities satisfy the criteria and should apply IPSAS (line ministries, departments, statutory bodies, subnational governments, government owned companies and enterprises).
  - Entities with primary objective to seek return on equity should apply IFRS; such entities’ financial statements included in government CFS require appropriate adjustments to conform to IPSAS-based accounting policies and must provide information to the Treasury in a timely manner.
- Recognition and measurement (content of financial statements):
  - Financial statements shall recognize and report all assets, liabilities, revenues, and expenses of the government when they:
    - Satisfy the definitions of assets, liabilities, revenues, or expenses; and
    - Can be measured reliably.
  - Reference: IPSAB’s Conceptual Framework — recognize when an item “can be measured in a way that achieves the qualitative characteristics and takes account of constraints on information in GPFRs.”
  - Qualitative characteristics: relevance, faithful representation, understandability, timeliness, comparability, verifiability.
  - Constraints: materiality and cost-benefit.
  - Professional judgment required where characteristics conflict; if sufficiently reliable estimates cannot be made (e.g., tax receivables) do not recognize and disclose relevant facts in notes.
- Elements of financial statements (Box 2 definitions preserved):
  - Asset: A resource (i.e., an item with service potential or the ability to generate economic benefits) presently controlled by the entity as a result of a past event.
  - Liability: A present obligation of the entity for an outflow of resources that results from a past event.
  - Revenue: Increases in the net financial position of the entity, other than increases arising from ownership contributions.
  - Expenses: Decreases in the net financial position of the entity, other than decreases arising from ownership distributions.
  - Ownership contributions: Inflows of resources to an entity, contributed by external parties in their capacity as owners, which establish or increase an interest in the net financial position of the entity.
  - Ownership distributions: Outflows of resources from the entity, distributed to external parties in their capacity as owners, which return or reduce an interest in the net financial position of the entity.

### Financial statements, budget reconciliation, and example figures
- Budget comparability and reconciliations:
  - Financial statements should include a comparison of actual and budget amounts, presented on the same basis on which the budget is prepared.
  - Accrual-based financial statements shall include a statement showing actual revenues, expenditures, and any other amounts compared to corresponding budget amounts presented on the same accounting basis—mainly cash with interest expense being budgeted on an accrual basis—and the same classification, entities, and period as the approved budget.
  - Actual amounts presented on a comparable basis to the budget shall be reconciled to net cash flows from operating, investing, and financing activities as per the cash flow statement in accordance with IPSAS 2.
  - The financial statements shall include a reconciliation of the accrual-based surplus/deficit and the cash-based surplus/deficit reported as part of budget outcome reports.
- Key figures from the U.S. example (Table 1: Net Operating Cost vs. Budget Deficit, Dollars in Billions) — preserved exactly:
  - Net Operating Cost 2015: $    (519.7)
  - Net Operating Cost 2014: $    (791.3)
  - Change in Federal Employee and Veterans Benefits Payable 2015: $        46.7; 2014: $      134.3
  - Environmental and Disposal Liabilities 2015: $        42.5; 2014: $        20.0
  - Property, Plant, and Equipment, Net 2015: $      (15.6); 2014: $        18.4
  - Yearend Upward/(Downward) Credit Reform Subsidy Reestimates, Net 2015: $      (26.8); 2014: $        22.9
  - Other Liabilities 2015: $        38.6; 2014: $          7.3
  - Other, Net 2015: $        (4.6); 2014: $      105.0
  - Subtotal - Net Difference 2015: $        80.8; 2014: $      307.9
  - Budget Deficit 2015: $    (438.9); 2014: $    (483.4)

### Major changes and implementation implications
- Areas of major change and effort:
  - Nonfinancial assets: identify, quantify, and recognize; time-consuming and resource-intensive; likely material impact on financial statements and net worth.
  - Employee pension benefits (defined benefit plans): require actuarial valuation and recognition; likely material impact on financial statements and net worth.
  - Consolidated financial statements: require financial statements from entities outside BCG (statutory bodies, local authorities, state-owned enterprises) and consolidation after eliminating intra-government transactions and balances; systems and processes for consolidation must be established.
- Consolidated Fund (CF) under accrual accounting:
  - Adoption of accrual accounting does not conflict with CF concept; CF remains a cash concept with cash receipts/payments reflected in the CF.
  - Under accrual accounting the CF will form part of reserves/equity/net worth; cash and bank balances reflected as assets in the statement of assets and liabilities; other reserves including accumulated results and revaluation reserves will be reflected.
  - MoFED confirms Annual Financial Bill can be used to make necessary changes pending full review of public finance legislation.

### Immediate and explicit action recommendations (selected)
- Review and approve the high-level features of the envisioned framework (Treasury, MoFED, January 2017).
- Develop the framework further and adopt formally as the new framework for accounting and financial reporting (Treasury, MoFED, Cabinet by April 2017).
- Review and approve the phased implementation approach (Treasury, MoFED, January 2017).
- Commence preparatory work of Phase I immediately (Treasury).
- Explore with the Application Service Provider options and agree solution for depreciation of assets not acquired through cash transactions (service provider / SIL).
- TAS actions: configure dual cash and accrual ledgers, input opening balances of financial assets and liabilities, commence dual-basis transaction recording from July 1, 2017.
- Prepare and enter opening balances for pensions, debt, accounts payable, provisions, receivables, investments, and leases as per road map timelines (Treasury, Debt Management Unit, MRA, BCG entities, external actuaries where required).
- Develop fixed-asset register and enter finalized opening balances as at July 1, 2018 into TAS GL; conduct rolling physical verification over three years (Treasury, Land and Building Department, Valuation Department, BCG entities).
- TWG actions and staffing:
  - TWG to meet monthly (MoFED, Treasury - Ongoing).
  - Accountant General to coordinate reform; establish task teams (Treasury, MoFED, November 2016).
  - Identify additional dedicated staffing resources (up to 10 professional accountants) (Treasury, MoFED, November 2016).
  - Task teams to prepare detailed action plans consistent with roadmap (TWG Task teams, December 2016).
  - Develop communications strategy within two months (TWG Task team, December 2016).
  - Identify additional resources for recognition/valuation of assets and liabilities (TWG, MoFED, March 2017).
  - Training task team and SIL to undertake training needs analysis and develop Training of Trainers proposal (TWG Task teams, March 2017).

### Audit role and quality assurance
- Role of National Audit Office (NAO) during implementation:
  - NAO may observe, review and comment on opening balances and early-phase financial statements without impairing independence.
  - NAO could provide comments and advice on accounting/auditing issues, systems and processes, and appropriateness of accounting policies.
  - NAO could review (without auditing) the opening balance sheet as at July 1, 2017 and financial statements for 2017/18 to 2019/20 and provide comments to Treasury.
  - Treasury and MoF should consider NAO comments systematically and improve form/content of financial statements, accounting policies, systems, and processes.
  - Full audit of accrual IPSAS consolidated financial statements could commence with the 2020/21 financial statements (subject to agreement).

*Source: cr17326 — IMF staff report (chapter excerpts).*

### PREFACE __________________________________________________________________________________________  4

### PREFACE

### Executive Summary
- Mission: AFRITAC South (AFS) technical assistance mission to Port Louis, Mauritius during the period October 4–24, 2016.
- Mission team: Peter Murphy (PFM Advisor, AFRITAC South) and Abdul Khan (FAD expert).
- Principal objective: Advise on implementation of an accrual accounting framework consistent with internationally accepted standards (IPSAS), with emphasis on how to implement rather than the rationale for reform.
- Key high-level findings:
  - Existing accounting and financial reporting framework provides a sound foundation for a move to accrual accounting and international standards.
  - Advantages in Mauritius versus other jurisdictions include: double entry accounting already followed; a modern financial management application (Oracle E-Business Suite) used as the Treasury Accounting System (TAS) with demonstrated capability to produce both cash and accrual reports; existing reporting of selected assets and liabilities; and presence of qualified accountants and ICT professionals.
  - The accrual framework should aim to produce financial statements that provide a true and fair view of the public finances and enable the Director of Audit to give an opinion on that view.
  - IPSAS should be applied by all public sector entities except where the primary objective is seeking a return on investors’ equity; entities using different standards must make adjustments when preparing consolidated financial statements (CFS).
  - Accrual financial statements should be compared and reconciled with budget and budgetary reports, showing comparisons between actual and budgeted amounts on the same basis as the budget and reconciling accrual-based surplus/deficit with cash-based budget result.
- Implementation timing (phased approach highlights):
  - Commence immediately.
  - Produce first accrual-based financial statements for 2017/18 for Budgetary Central Government (BCG) with nonfinancial assets still reported on a cash basis.
  - Recognize nonfinancial assets on an accrual basis from 2018/19.
  - Expand coverage to Central Government (CG) in 2018/19; General Government (GG) in 2019/20; and the public sector in 2020/21.
- Road map: Integrated road map included in the report covering six phases, starting with preparatory work and culminating with audited IPSAS financial statements for the public sector for 2020/21.
- Change management and capacity building: Governance arrangements, a Technical Working Group (TWG) chaired by the Accountant General, task teams, communication strategy, and progress monitoring and evaluation arrangements are recommended. Emphasis on improved staffing and skills development in Treasury accounting sections and the Directorate of Financial Operations (DFO).

### Mission Engagement and Stakeholders
- Meetings held with: Mr. D. Manraj (Financial Secretary); Mrs. K. Tse Yuet Cheong (Auditor General); Mr. P. Yip (Deputy Financial Secretary); Mr. S. Romooah (Accountant General); Mr. R Chellapermal (Deputy Financial Secretary); Mr. Anandsing Acharuz (Budget Directorate); senior officers of MoFED, the Treasury, and the National Audit Office; the Public Accounts Committee of Parliament; officials of ministries, departments, agencies, statutory bodies, and public corporations.
- Acknowledgements: Assistance by Mrs. Naima Suhootoorah (MoFED) and Mrs. Lowtoo Jadunundon (AFRITAC South) on logistics and scheduling.

### Introduction and Background
- Request: MoFED requested AFS advice on adopting IPSAS-based accrual accounting and on implementing a non-financial assets register (treated as integral to accrual introduction).
- Focus: The mission focused on implementation mechanics rather than the rationale.
- Report output: Road map in Appendix I providing sequencing guidance for implementing accrual IPSAS and a non-financial asset register; recommendations on change management and capacity building.

### Current Framework (as described)
- Basis: Existing accounting and financial reporting framework is based mainly on cash accounting covering central budgetary government.
- Existing disclosures:
  - Annual accounts include a statement of assets and liabilities and notes on selected assets (cash and bank balances, advances, investments, IMF - SDR deposits) and liabilities (accrued interest, government debt, deposits, IMF - SDR allocations).
  - Annual accounts include statements/notes on receipts and payments, detailed revenues and expenditures of the Consolidated Fund (CF), comparison of budget and actual amounts, and other information.
  - Appendix II lists statements included in the annual accounts.
- Annual Budget: Includes a statement of net worth reporting additional assets and liabilities (non-financial assets and pensions and other key liabilities).
  - Fixed assets are estimated by Statistics Mauritius using a perpetual inventory model.
  - Land is estimated using information from the Ministry of Housing and Land based on the cost of land acquired since January 2010.
  - Public service pension liability estimated using a methodology that does not include an actuarial valuation.
- Systems and quality:
  - TAS: Oracle E-Business Suite; demonstrated capability to produce both cash and accrual reports.
  - Certain assets/liabilities are recognized/disclosed already (government debt, cash and bank balances, advances, deposits, IMF-SDR, accrued interest).
  - Auditor General’s reports suggest the accounting system is sound.
  - Latest PEFA report rated the quality and timeliness of both BCG in-year budget reports and annual financial statements as an A (PEFA Mauritius December 2015).
- Capacity: Existing development has facilitated acquisition of ICT and accrual accounting skills among officials, including several qualified accountants and experienced ICT professionals in the Treasury and local TAS service provider.

### Envisioned Accrual Accounting Framework
- Need for conceptual design: A broad overview covering objectives, coverage, accounting basis, financial reporting, relationship with the budget, and other high-level features to facilitate consultation and agreement.
- Fair presentation framework:
  - Government financial statements should provide a true and fair view in all material respects of financial position, financial performance, and cash flows.
  - The government’s general purpose financial reporting framework should be a “fair presentation framework”; laws/regulations should incorporate its requirements.
  - Financial statements should be accompanied by certifications by appropriate senior officials and the Minister confirming that the statements provide a true and fair view; the National Audit Office should audit and opine on that view.
- Box 1: Difference between a Fair Presentation Framework and a Compliance Framework (summary of Box 1)
  - Fair presentation framework:
    - Requires compliance with the framework and
      i. Acknowledges that disclosures beyond those specifically required may be necessary to achieve fair presentation; or
      ii. Acknowledges that in extremely rare circumstances it may be necessary to depart from a requirement to achieve fair presentation.
  - Compliance framework:
    - Requires compliance with the requirements but does not contain the acknowledgements in (i) or (ii).
  - Source referenced: The International Standards of Supreme Audit Institutions (ISSAI) 1700, Forming an Opinion and Reporting on Financial Statements.
- IPSAS as fair presentation framework:
  - IPSASs constitute a fair presentation framework; IPSAS 1 paragraphs 27, 29, and 31 acknowledge the need for additional disclosures or, in extremely rare circumstances, departures from a requirement if necessary to achieve fair presentation, and where regulatory framework permits.
- Coverage and consolidation:
  - IPSAS should be applied by all public sector entities except those whose primary objective is to seek a return on investors’ equity (to simplify framework and implementation and improve efficiency in preparing consolidated financial statements).
  - Entities using different standards must make appropriate adjustments in preparing consolidated financial statements to conform to the government’s IPSAS-based accounting policies.

### Strategy and Roadmap for Implementation (high-level)
- Phased approach summary:
  - Implementation should be phased with progressive expansion in content and coverage of financial statements.
  - Timing already specified:
    - 2017/18: First accrual-based financial statements for Budgetary Central Government (BCG) with nonfinancial assets still on a cash basis.
    - 2018/19: Nonfinancial assets reported on an accrual basis; expand coverage to Central Government (CG).
    - 2019/20: Expand coverage to General Government (GG).
    - 2020/21: Expand coverage to the public sector; aim for audited IPSAS financial statements for the public sector.
  - Emphasis: Recognize assets/liabilities and record fixed assets in a register progressively as specified; disclose in financial statements any assets/liabilities not recognized fully in the specified phase and recognize them as soon as possible.
- Road map contents (integrated):
  - Six phases from preparatory work to audited IPSAS public sector financial statements for 2020/21.
  - Main activity areas include:
    - Finalization of the framework.
    - Agreeing the form and content of financial statements.
    - Making necessary legal changes.
    - Developing a chart of accounts for use in TAS.
    - Progressive recognition and reporting of assets, liabilities, revenues, and expenses on an accrual basis.
    - Expanding coverage from Budgetary Central Government to Central Government to General Government to the public sector.
  - Recommendation: Road map should form the basis of detailed task plans.

### Change Management and Capacity Development
- Governance and coordination:
  - Establish governance arrangements to secure effective engagement of stakeholders.
  - Establish a Technical Working Group (TWG) for coordination, chaired by the Accountant General.
  - Establish task teams for reform implementation.
- Communication and monitoring:
  - Develop a communication strategy.
  - Develop progress monitoring and evaluation arrangements.
- Capacity needs:
  - Transition success depends on availability of suitably trained staff.
  - Recommendations made for improved staffing arrangements and skills development in:
    - Treasury sections dealing with the accounting system and the financial reporting framework.
    - Directorate of Financial Operations (DFO) responsible for processing transactions.
- Future technical assistance:
  - Report details capacity development and future TA needs (specific TA steps are included in the road map and appendices).

*Source: https://www.imf.org/-/media/files/publications/cr/2017/cr17326.pdf*

### 10.      The government financial statements should be prepared in compliance with IPSAS.

### 10.      The government financial statements should be prepared in compliance with IPSAS.

### Recommendation to comply with IPSAS
- IPSASs are designed to meet the information needs of the users of (GPFRs) of which general purpose financial statements are a part, for accountability and decision-making purposes. The users are the resource providers and service recipients including the citizens, the parliament, the donors, and the lenders/investors.
- Financial statements may be described as complying with IPSAS only when they comply with all the requirements of IPSASs.
- The framework should recognize that such full compliance may take several years to achieve and require that during the transition period, the financial statements disclose:
  - the IPSASs that are complied with and those that are not yet complied with fully or partially,
  - the reasons for such non-compliance, and,
  - where practicable, quantify the impact of such non-compliance.
- The form and content of the financial statements must follow guidance provided in IPSAS (particularly IPSAS1) and also international good practice.

### Coverage of IPSAS — which public sector entities should apply IPSAS
- IPSASs should be applied by public sector entities that meet all the following criteria:
  - Are responsible for the delivery of services to benefit the public and/or to redistribute income and wealth;
  - Mainly finance their activities, directly or indirectly, by means of taxes and/or transfers from other levels of government, social contributions, debt, or fees; and
  - Do not have a primary objective to make profits.
- Most entities in the Mauritius public sector satisfy the above criteria and should therefore apply IPSAS. This includes line ministries and their departments, statutory bodies, subnational governments and government owned companies and enterprises.
- Entities whose primary objective is to seek a return on equity to their investors, including the government, should apply International Financial Reporting Standards (IFRS).
- Where any public sector entity applies IFRS and its financial statements are included in the government’s consolidated financial statements, appropriate adjustments shall be made to ensure conformity with the government’s IPSAS based accounting policies. Entities applying IFRS will need to provide to the Treasury, in a timely manner as instructed by the Treasury, the information necessary to effect these adjustments.

### Content of financial statements (recognition and measurement)
- The financial statements shall recognize and report all assets, liabilities, revenues, and expenses of the government. Items should be recognized when they:
  - Satisfy the definitions of assets, liabilities, revenues, or expenses; and
  - Can be measured reliably.
- According to the IPSAB’s Conceptual Framework, an item should be recognized when, in addition to satisfying the definition of an element, it “can be measured in a way that achieves the qualitative characteristics and takes account of constraints on information in GPFRs.”
- Qualitative characteristics: relevance, faithful representation (which incorporates the concept as reliability), understandability, timeliness, comparability, and verifiability.
- Constraints on information: materiality and cost-benefit.
- Professional judgment may be required where qualitative characteristics conflict (for example, when an item cannot be measured reliably it may not be recognized even though it meets the definition of an element).
- If sufficiently reliable estimates cannot be made (e.g., of tax receivables), such amounts should not be recognized; relevant facts should be disclosed in the notes.

Box 2 — Elements of Financial Statements (as provided)
- Asset: A resource (i.e., an item with service potential or the ability to generate economic benefits) presently controlled by the entity as a result of a past event.
- Liability: A present obligation of the entity for an outflow of resources that results from a past event.
- Revenue: Increases in the net financial position of the entity, other than increases arising from ownership contributions.
- Expenses: Decreases in the net financial position of the entity, other than decreases arising from ownership distributions.
- Ownership contributions: Inflows of resources to an entity, contributed by external parties in their capacity as owners, which establish or increase an interest in the net financial position of the entity.
- Ownership distributions: Outflows of resources from the entity, distributed to external parties in their capacity as owners, which return or reduce an interest in the net financial position of the entity.

### IPSAS financial statements and the budget
- Financial statements should include a comparison of actual and budget amounts, presented on the same basis on which the budget is prepared.
- With the move to accrual accounting, differences will arise between the bases on which government budgets and financial statements are prepared.
- The accrual based financial statements shall include a statement showing actual revenues, expenditures, and any other amounts and compare them to the corresponding amounts included in the budget. The comparison will be presented on the same accounting basis—mainly cash with interest expense being budgeted on an accrual basis—, the same classification basis, and for the same entities and period as for the approved budget.
- The actual amounts presented on a comparable basis to the budget shall be reconciled to the net cash flows from operating activities, investing activities, and financing activities as per the cash flow statement included in the accrual based financial statements in accordance with IPSAS 2.
- Reference should be made to IPSAS 24 for detailed requirements and guidance on this issue.
- The financial statements shall include a reconciliation of the accrual-based surplus/deficit and the cash based surplus/deficit reported as part of budget outcome reports.
- Example referenced: U.S. federal government prepares accrual based financial statements while continuing with cash and obligations based budgeting and provides reconciliation (Table 1) and diagrammatic comparisons (Figure 1).

Key figures from the U.S. example (Table 1: Net Operating Cost vs. Budget Deficit, Dollars in Billions)
- Net Operating Cost 2015: $    (519.7)
- Net Operating Cost 2014: $    (791.3)
- Change in Federal Employee and Veterans Benefits Payable 2015: $        46.7; 2014: $      134.3
- Environmental and Disposal Liabilities 2015: $        42.5; 2014: $        20.0
- Property, Plant, and Equipment, Net 2015: $      (15.6); 2014: $        18.4
- Yearend Upward/(Downward) Credit Reform Subsidy Reestimates, Net 2015: $      (26.8); 2014: $        22.9
- Other Liabilities 2015: $        38.6; 2014: $          7.3
- Other, Net 2015: $        (4.6); 2014: $      105.0
- Subtotal - Net Difference 2015: $        80.8; 2014: $      307.9
- Budget Deficit 2015: $    (438.9); 2014: $    (483.4)

### The Consolidated Fund under accrual accounting
- Adoption of accrual accounting does not conflict with the concept of the Consolidated Fund (CF).
- Preliminary consultations with the Solicitor General suggest constitutional provisions related to the CF do not present obstacles to adopting accrual accounting.
- The CF is a cash concept and all cash receipts and payments should be reflected in the Consolidated Fund.
- The Treasury prepared a reconciliation of the amount currently reported as “accumulated deficit in the Consolidated Fund” as at June 30, 2015 and December 31, 2014, into cash and bank balances and other assets and liabilities (e.g., debt, advances, investments, and accrued interest).
- Under accrual accounting the CF will form part of the reserves/equity/net worth of the government; corresponding cash and bank balances would be reflected as assets in the statement of assets and liabilities.
- The statement of assets and liabilities will also reflect any other reserves, including accumulated results and any revaluation reserves.
- The MoFED confirms that pending a full review of the public finance legislation, the Annual Financial Bill can be used to make changes needed to implement an accrual accounting framework.

### Significant changes to existing financial statements (major areas and implications)
- Adoption of accrual accounting and IPSAS will lead to significant changes to the form, content, and coverage of government financial statements. Areas of major change and required effort include:
  - Nonfinancial assets: need to be identified, quantified, and recognized; international experience suggests this is time consuming and resource intensive; amounts likely to have a material impact on the financial statements and net worth.
  - Employee pension benefits liability from defined benefit plans: will need actuarial valuation and recognition; amounts likely to have a material impact on the financial statements and net worth.
  - Consolidated financial statements: consolidated statements for government and entities it controls will have to be prepared, requiring financial statements from entities outside the Budgetary Central Government (e.g., statutory bodies, local authorities, and state-owned enterprises) and consolidation after eliminating intra-government transactions and balances; consolidation systems and processes must be established to ensure reliable, timely statements.

### Immediate recommendations (paragraph 18)
- Review and approve the high-level features of the envisioned framework (Treasury, MoFED, January 2017).
- Develop the framework further as necessary and adopt formally as the new framework for accounting and financial reporting (Treasury, MoFED, Cabinet by April 2017).

### Strategy and roadmap for implementation — phased approach and key milestones
- The mission proposes a phased implementation approach with key milestones:
  - Development of an opening statement of financial assets and liabilities as at July 1, 2017 (Target: February 2018);
  - Reconfiguration of the Treasury Accounting System (TAS) on dual accrual and cash basis (Target: commencing July 2017);
  - IPSAS partial financial statements of Budgetary Central Government (BCG) including financial assets and liabilities for 2017/18 (Target: February 2019);
  - IPSAS partial financial statements of Central Government including nonfinancial assets for 2018/19 (Target: February 2020);
  - IPSAS partial financial statements of General Government (CG) including nonfinancial assets for 2019/20 (Target: February 2021); and
  - Audited IPSAS financial statements of public sector including all assets and liabilities for 2020/21 (Target: February 2022).
- The detailed steps under each phase are set out in the Integrated Road Map (Appendix I).
- The aim should be to complete phases as specified. If specific items cannot be recognized due to delay, relevant facts and, where possible, some indication of amounts involved should be included in notes to the financial statements.
- Existing cash-based financial statements will continue to be prepared and audited during the phases to meet statutory requirements; consideration will be given to merging the cash-based and accrual-based statements after accrual statements have been audited.
- Financial statements will not be described as being in compliance with IPSAS until the final phase when they will also be subject to audit.
- IPSAS 31 First-Time Adoption of Accrual Basis IPSASs allows transitional provisions that permit phased implementation, but applying certain transitional provisions may limit the benefits of IPSAS adoption and may affect fair presentation (examples: employee benefits, financial instruments, property, plant, and equipment).

Phase I specific actions (illustrative)
- Partial balance sheet at July 2017:
  - IPSAS statement of financial assets and liabilities of CG as at July 1, 2017;
  - Review report by Director of Audit to Accountant General and MoF;
  - Target: September 2017.
- TAS on cash and accrual basis from July 2017:
  - TAS on dual cash and accrual bases;
  - Input opening balances of financial assets and liabilities;
  - Nonfinancial assets - opening balances yet to be input;
  - Target: Commence transaction recording on dual basis on July 1, 2017.
- Financial Statements 2017/18:
  - IPSAS partial consolidated financial statements of budgetary CG (2017/18);
  - Include all financial assets and liabilities in accordance with IPSAS;
  - Disclose treatment of non-financial assets;
  - Target: February 2019.
- Financial Statements 2018/19:
  - IPSAS partial consolidated financial statements of CG (2018/19);
  - Nonfinancial assets balances as at July 1, 2018 entered into TAS and asset register (may not be complete);
  - Target: February 2020.
- Financial Statements 2019/20:
  - IPSAS consolidated financial statements of General Government (2019/20);
  - All assets and liabilities reported;
  - LG entities consolidated with segment information (BCG, CG, etc.) disclosed;
  - Target: February 2021.
- Audited Financial Statements 2020/21:
  - Audited IPSAS consolidated financial statements of public sector (2020/21);
  - All assets and liabilities reported;
  - All controlled entities consolidated with segment information disclosed;
  - Target: February 2022.

### Role of the National Audit Office (NAO) during implementation
- NAO could observe the process and review financial statements during early phases without impairing independence.
- NAO could provide comments, advice on accounting and auditing issues, feedback on systems and processes, and comments on the appropriateness of accounting policies.
- NAO could review, without undertaking an audit, the opening balance sheet as at July 1, 2017 and the financial statements for 2017/18 to 2019/20 and provide comments to the Treasury.
- Treasury and MoF should consider NAO comments systematically and make improvements to form and content of financial statements, accounting policies, systems, and processes.
- If arrangements with NAO are agreed, full audit of accrual IPSAS based consolidated financial statements could commence with the 2020/21 financial statements.

*Source: cr17326 - 10.      The government financial statements should be prepared in compliance with IPSAS.*

### 23.      Phase I involves preparatory work and the production of an opening statement of

### cr17326 - 23.      Phase I involves preparatory work and the production of an opening statement of

### Phases and timelines
- Phase I: Preparatory work and production of an opening statement of financial assets and liabilities.
  - Start point: the existing statement of assets and liabilities.
  - Activities: systematic identification and valuation of existing and additional financial assets and liabilities; full specification of the conceptual design of the overall accounting and reporting framework; development of the template for the full set of financial statements including the notes; specification of accounting policies and procedures; development of the accrual based chart of accounts; completing configuration and testing of the system (see Phase II).
  - Resource caveat: achievement dependent on ensuring adequate human and ICT resources are deployed.
- Phase II: The Treasury Accounting System (TAS) on dual cash and accrual bases.
  - Effective date: July 1, 2017.
  - System: TAS based on the Oracle E-Business suite configured to provide two ledgers—primary ledger (cash basis) and secondary ledger (accrual basis)—using one common chart of accounts with transactions entered once.
  - Preparatory work required: acquisition of any needed hardware and software; configuration of the system including loading the accrual-based chart of accounts; determination of accrual accounting entries for each transaction; extensive testing; data migration; formal acceptance for live operation before July 1, 2017; training of official groups to process additional transactions.
  - Identified issue: depreciation treatment—current cash-configured TAS does not allow depreciation until asset paid in cash; this conflicts with recognition under IPSAS 32 Service Concession Arrangements: Grantor in some PPP scenarios. Service provider to explore and recommend solution.
- Phase III: First IPSAS partial financial statements of Budgetary Central Government (BCG) for 2017/18.
  - Coverage: Budgetary Central Government.
  - Reporting basis: financial assets and liabilities on an accrual basis in accordance with applicable IPSAS; nonfinancial assets continue on cash basis.
  - Implementation: Treasury officials to receive intensive training on accrual accounting, IPSAS, preparation and review of new financial statements; some training for ministries and departments; BCG statements to be prepared using TAS (no additional systems required).
- Phase IV: IPSAS partial consolidated financial statements of Central Government (CG) for 2018/19.
  - Nonfinancial assets recognized and reported commencing 2018/19.
  - Preparatory requirements: commence immediately; asset module and asset register pilot already underway; review and revise asset classification using GFSM 2014 classification as basis; develop accounting policies and procedures including basis of valuation where cost information unavailable; specify asset lives before commencement of year.
  - Opening balances: opening balances as at July 1, 2018 to be determined and entered into the general ledger; full inventory of all nonfinancial assets required (work may continue into next phase).
  - Valuation approaches discussed: references to existing records (e.g., lists of government buildings); surveys where records unavailable; use of recent sales records to estimate comparable values; unit cost approaches for roads/highways (e.g., cost per KM).
  - Systems decision: determine whether TAS or Hyperion will be used to prepare the Consolidated Financial Statements (CFS); same IT system should be used for CFS of CG, GG, and public sector.
- Phase V: IPSAS consolidated financial statements of General Government for 2019/20.
  - Full reflection of assets and liabilities in financial statements.
  - Coverage: all controlled entities of the General Government sector; review list of General Government entities to ensure control; issue instructions and explanations to entities outside Central Government; use established consolidation system and processes.
- Phase VI: Audited IPSAS consolidated financial statements of public sector for 2020/21.
  - CFS for government and all controlled entities prepared and audited by the NAO.
  - Full recognition of all assets, liabilities, revenues, and expenses in compliance with IPSAS.
  - Minimize exceptions or departures and fully disclose any that exist; authorities should aim to receive an unmodified audit opinion.

### Key implementation recommendations (explicit)
- Explore with the Application Service Provider the options and agree on a solution for the depreciation of assets, even where the assets have not been acquired through cash transactions.
- Review and approve the phased implementation approach. (Treasury, MoFED, January 2017)
- Commence the preparatory work of Phase 1. (Treasury, immediately)

### Change management — governance and roadmap
- Governance structure:
  - An inter-ministerial stakeholder Technical Working Group (TWG) established under MoFED/Treasury to guide the reform process; stakeholders represented include MoFED, Treasury, Executing Agencies, and the National Audit Office.
  - Mission suggestion: formally establish the TWG with the Accountant General as chair and a representative of the MoFED as alternate chair; TWG to periodically advise the Financial Secretary.
- Initial task teams proposed to service the TWG:
  - The accounting policies and procedures task team;
  - The TAS task team to work in conjunction with the service provider (SIL);
  - The capacity building and training team.
- Roadmap use:
  - Roadmap to act as strategic action plan and implementation progress review instrument for the TWG.
  - TWG envisaged to meet monthly to review progress, resolve challenges, authorize changes, and mobilize resources.
  - Each task team to prepare detailed action plans consistent with roadmap milestones; Accountant General to ensure coordination and production of detailed plans.
  - TWG to use the roadmap as the basis for a communication strategy targeting stakeholders (Cabinet, MoFED, Accounting Officers, Director of Audit, Parliament representatives such as PAC) covering reform vision, timeframe, roles and responsibilities, required actions, resources, training participation, and progress/challenges.
  - Consider a digital methodology (website) to keep participants up-to-date.
  - Annual evaluation of progress by task teams, consolidated by Accountant General, with revised implementation plan presented to TWG.

### Capacity development — organizational structure, staffing, and skills
- Current organizational arrangements for budget execution, accounting and financial reporting:
  - A Central Treasury with 183 staff, including 18 professional accountants and 2 systems analysts, managed by the Accountant General; responsibilities include executing and accounting for payments and receipts (self-accounting units also exist), managing and maintaining TAS, and producing summary budget reports and annual financial statements for the Consolidated Fund.
  - Accounting Officers responsible for authorization of payments in some 90 executing units across Budgetary Central Government; some units undertake non-tax revenue collection.
  - A Directorate of Financial Operations, under MoFED, which posts approximately 100 finance and accounting staff to executing units to facilitate processing of transactions through the TAS.
  - MoFED sector budget analysts who support budget preparation and provide advice to Accounting Officers on budget execution.
  - A local ICT company (SIL) provides, maintains, and supports development of the ORACLE Financials platform on which TAS operates.
- Coverage notes:
  - Current arrangements do not cover Central Government extra-budgetary units or social security funds; subnational government entities use separate accounting systems.
  - Latest PEFA Mauritius December 2015 rated the quality and timeliness of both BCG in-year budget reports and annual financial statements as an A.
- Implementation resource needs:
  - Additional resources (in-house or external) will be needed to support recognition (data collection) and valuation of some financial assets and liabilities (e.g., pension funds, debt, and investments) and of non-financial assets (i.e., land, infrastructure).
  - Options for extending accrual coverage to other Central Government entities should be developed by the relevant task team and discussed by the TWG.
- Staffing requirements:
  - Treasury 2016–20 Strategic Plan identified a need to strengthen staffing due to managing new E-Systems and heavy technical staff turnover; accreditation as an ACCA approved employer recently obtained.
  - In the first two years of implementation it is envisaged that up to 10 additional dedicated professional, technical, and training staff will be required to support: accounting and fixed asset policy development; TAS accrual design (CoA, process review, and definition of accounting entries); TAS set-up with the service provider; user testing; data collection and migration; report design; production testing; and user training including development of user manuals.
  - Proposal to second three staff from the Directorate of Financial Operations (DFO) to the Treasury for the initial implementation phase to develop capacity to understand new policies and processes and to train colleagues and other (DFO) staff on TAS.
  - The staffing requirement may reduce over time once the new system is installed and functioning, but an expanded staff requirement will remain for ongoing management of upgraded TAS, application and ICT help desks, and expansion to other Central Government entities.
- Skills development:
  - Upgrade Treasury existing or new staff skill sets to facilitate adoption and management of an accrual-based framework and management of the fixed-asset module.
  - Provide training to specific functions involved in TAS data capture (e.g., debt management, financial asset management, budget management, cash management).
  - Ensure Directorate of Financial Operations staff located in executing ministries and agencies are available and trained to undertake data entry for new accrual-based transactions (e.g., non-financial assets).
  - Provide training to managers and users to facilitate interpretation of accrual-based financial reports.
  - Brief senior management, Parliament, and other stakeholders.

*Source: cr17326 - 23.      Phase I involves preparatory work and the production of an opening statement of (PDF).*

### 44.      A training of trainer’s approach is proposed commencing with the Treasury. The

### A training of trainer’s approach is proposed commencing with the Treasury

### Training strategy and sequencing
- A training of trainer’s approach is proposed commencing with the Treasury.
- The training task team should undertake, together with the SIL, a training needs analysis, aimed at clearly identifying the training requirements of the key stakeholders.
- Based on this analysis, a proposal for training of trainers should be developed with SIL.
- Once the central Treasury team is trained, members should be assigned to train other users in Treasury, DFO, and MoFED.
- The SIL will need to be involved in the initial training as well as in the development of course materials and manuals.
- Training activities should, however, be progressively undertaken by the trained staff.
- The training task team should undertake together with SIL, a training needs analysis, aimed at clearly identifying the training requirements of the key stakeholders. Based on this analysis, a proposal for training of trainers should be developed with SIL and agreed with the TWG (TWG Task teams, March 2017).

### Future Technical Assistance (AFRITAC South / AFS support areas)
- Potential areas for further TA support from AFRITAC South over the implementation period include support for:
  - Specific assistance with development of the accrual policies and procedures. This would involve remote support, from the IMF STX, to support policy formulation where required, review of proposed policies, and ensuring policy compliance with IPSAS requirements;
  - Determination and monitoring of detailed task group action plans. This would involve periodic support from resident AFS LTX advisors for further elaboration of detailed action plans and assistance with problem resolution;
  - Progress monitoring and quality assurance in respect of the TAS system development. This would entail periodic support from AFS LTX advisors and STX missions; and.
  - Training of Trainers based on the training needs assessment.
- AFS assistance is available to provide support in all these areas, subject to specific requests from the authorities.

### Recommendations (action points, responsibilities, and timing)
- The TWG should meet on a monthly basis to review progress, approve plans, discuss and resolve any challenges arising, and where necessary authorize changes or mobilize resources (MoFED, Treasury - Ongoing);
- The Accountant General should take the initial responsibility for overall coordination of the reform effort. Task teams be established as soon as possible to undertake implementation. Membership of the task teams should be agreed by the TWG (Treasury, MoFED, November 2016);
- Additional dedicated staffing resources should be identified (up to 10 professional accountants) to facilitate the operations of the task teams (Treasury, MoFED, November 2016);
- Each task team should prepare a more detailed action plan consistent with the milestones highlighted in the roadmap (TWG Task teams, December 2016);
- A communications strategy should be developed by the TWG within the next two months to ensure effective engagement by all stakeholders (TWG Task team, December 2016);
- Additional resources to support where necessary recognition and valuation of financial assets and liabilities and of non-financial assets should be identified and options explored discussed with the TWG (TWG, MoFED, March 2017);
- The training task team should undertake together with SIL, a training needs analysis, aimed at clearly identifying the training requirements of the key stakeholders. Based on this analysis, a proposal for training of trainers should be developed with SIL and agreed with the TWG (TWG Task teams, March 2017).

### Roadmap: integrated implementation phases and selected activity highlights
- Roadmap covers Phase I 2016/17 through Phase VI 2021/22 with responsible agencies noted (Treasury, MoFED, BCG entities, Solicitor General, Debt Management Unit, MRA, Land and Building Department, Valuation Department, and others).
- Financial reporting framework:
  - Review high-level framework in this report; develop further as needed and obtain approval; review and refine; continue application with minimal changes (Responsible: Treasury MoFED).
- Presentation of financial statements:
  - Develop and obtain necessary approvals for the form and content of the accrual-based financial statements in accordance with IPSAS (particularly IPSAS 1); progressively refine and include columnar presentation of constituent sectors (Responsible: Treasury MoFED).
- Chart of accounts (CoA):
  - Revise CoA for use in both cash accrual accounting general ledgers (GLs); load and test revised CoA in TAS GL; start operating dual accrual and cash GL; continue to review and refine (Responsible: Treasury MoFED BCG entities).
- TAS to operate on dual cash accrual basis:
  - Service provider to provide dual-cash and accrual operation functionality; test and accept dual functionality including fixed-asset accounting and register; commence live operation of TAS on dual cash and accrual basis; enter opening balances of financial assets and liabilities; generate accrual financial statements during the year from TAS (Treasury supported by Service provider - currently SIL).
- Liabilities (selected items and timeline):
  - Employee pension liabilities: specify accounting policy and new methodology (including actuarial valuation) in accordance with IPSAS (particularly IPSAS 25 and note amendments in ED 59); calculate balance as at July 1, 2017; enter opening balances in TAS; recognize pension liability in 2017/18 financial statements (Treasury supported by government actuaries).
  - Debt: clarify definition of debt; ensure valuation of debt consistent with accounting policy and, if necessary, revalue as at July 1, 2017; enter opening balances of LT and any revised balances of ST and MT in TAS; recognize all debt as liability in 2017/18 accrual financial statements (Treasury Debt Management Unit).
  - Accounts payable: identify and quantify balances as at July 1, 2017; enter opening balances in TAS; recognize in 2017/18 financial statements (Treasury BCG entities).
  - Other liabilities incl. provisions: quantify balances as at July 1, 2017; enter opening balances in TAS; recognize in 2017/18 financial statements (Treasury BCG entities).
- Contingent liabilities and commitments:
  - Specify accounting policy and procedures (IPSAS 19); assess probability of payments related to guarantees and other contingent liabilities; estimate provisions if payments are probable and include in opening balances in TAS; recognize provisions, if needed, in 2017/18 financial statements; disclose all contingent liabilities according to IPSAS 19 (Treasury BCG entities).
  - Commitments: disclose material commitments in 2018/19 financial statements (Treasury BCG, CG, GG, and other public sector entities).
- Financial assets (selected items):
  - Receivables (exchange and non-exchange): quantify receivables as at July 1, 2017; enter opening balances in TAS; report receivables in 2017/18 financial statements; recognize receivables in 2017/18 financial statements (Treasury; MRA for non-exchange).
  - Finance and operating leases (government as lessor): enter opening balances of finance leases in TAS GL as part of receivables; report finance leases in 2018/19 financial statements (Treasury).
  - Investments: revalue investments as at July 1, 2017 according to accounting policies; enter balances in TAS; recognize investments in 2017/18 financial statements (Treasury MoFED).
- Nonfinancial assets (fixed-asset register and land):
  - Fixed-asset register: revise asset classification based on GFSM 2014; incorporate revised classification in Asset register and GL in TAS; complete recording of assets in register and reconcile FAR with GL asset accounts and financial statements; undertake physical verification on a rolling basis to cover all assets over three years (Treasury BCG entities).
  - Land: specify accounting policies according to IPSAS (particularly IPSAS 17); undertake an inventory of land; establish cost or values; finalize opening balances as at July 1, 2018 and enter in TAS GL; report Land in 2018/19 financial statements (Treasury, Land and Building Department, Valuation Department, Other BCG entities).

*IMF staff report (chapter excerpt).*

### Appendix Table 1. Integrated Road Map for Implementati

### Appendix Table 1. Integrated Road Map for Implementati on of Accrual Accounting, IPSAS, and Asset Register

### 9c. Buildings
- Phase I 2016/17:
  - Specify accounting policies, including useful lives
  - Review quality and completeness of existing data including in the booklet “Government- Owned Buildings”
  - Undertake an inventory of all buildings
  - Establish cost or values
  - Enter in register
- Phase III 2018/19:
  - Finalize opening balances as at July 1, 2018 and enter in TAS GL which must agree with register
  - Commence recording transactions in dual cash and accrual TAS
  - Review depreciation calculation
  - Prepare template for notes
  - Prepare information for IPSAS financial statements for 2018/19
  - Report Buildings in 2018/19 financial statements
  - Impairment test
- Phase IV–VI 2019/20–2021/22:
  - Refine and improve data for financial statements for future years
  - Continue to record buildings and related transactions on dual cash and accrual basis
  - Continue to report buildings in financial statements
  - Refine and improve data for financial statements for future years
- Responsible Agency: Treasury Land and Building Department Valuation Department

### 9d. Roads, bridges, tunnels, harbors, dams, and other infrastructure assets
- Phase I 2016/17:
  - Specify accounting policies, including useful lives
  - Review quality and completeness of existing data
  - Undertake an inventory of all infrastructure assets
  - Establish cost or values
  - Enter in register
- Phase III 2018/19:
  - Finalize opening balances as at July 1, 2018 and enter in TAS GL which must agree with register
  - Commence recording transactions in dual cash and accrual TAS
  - Review depreciation calculation
  - Prepare template for notes
  - Prepare information for IPSAS financial statements for 2018/19
  - Report infrastructure assets in 2018/19 financial statements
  - Impairment test
- Phase IV–VI 2019/20–2021/22:
  - Refine and improve data for financial statements for future years
  - Continue to record infrastructure assets and related transactions on dual cash and accrual basis
  - Continue to report infrastructure assets in financial statements
  - Refine and improve data for financial statements for future years
- Responsible Agency: Treasury Road Development Authority National development Unit Valuation Department

### 9e. Machinery, and equipment, including transport, ICT, and others
- Phase I 2016/17:
  - Specify accounting policies, including useful lives
  - Review quality and completeness of existing data
  - Undertake an inventory of machinery, equipment etc.
  - Establish cost or values
  - Enter in register
- Phase III 2018/19:
  - Finalize opening balances as at July 1, 2018 and enter in TAS GL which must agree with register
  - Commence recording transactions in dual cash and accrual TAS
  - Review depreciation calculation
  - Prepare template for notes
  - Prepare information for IPSAS financial statements for 2018/19
  - Report assets in 2018/19 financial statements
  - Impairment test
- Phase IV–VI 2019/20–2021/22:
  - Refine and improve data for financial statements for future years
  - Continue to record assets and related transactions on dual cash and accrual basis
  - Continue to report assets in financial statements
  - Refine and improve data for financial statements for future years
- Responsible Agency: Treasury Valuation Department BCG entities

### 9f. Other fixed assets, including cultivated biological assets, intellectual property products, and computer software
- Phase I 2016/17:
  - Specify accounting policies, including useful lives
  - Review quality and completeness of existing data
  - Undertake an inventory of other assets etc.
  - Establish cost or values
  - Enter in register
- Phase III 2018/19:
  - Finalize opening balances as at July 1, 2018 and enter in TAS GL which must agree with register
  - Commence recording transactions in dual cash and accrual TAS
  - Review depreciation calculation throughout the year
  - Prepare template for notes
  - Prepare information for IPSAS financial statements for 2018/19
  - Report assets in 2018/19 financial statements
  - Impairment test
- Phase IV–VI 2019/20–2021/22:
  - Refine and improve data for financial statements for future years
  - Continue to record assets and related transactions on dual cash and accrual basis
  - Continue to report assets in financial statements
  - Refine and improve data for financial statements for future years
- Responsible Agency: Treasury Valuation Department BCG entities

### 9g. Finance and operating leases (where government is the lessee)
- Phase I–II 2016/17–2017/18:
  - Develop accounting policies consistent with IPSAS particularly IPSAS 13
  - Identify and classify leases as finance or operating leases
  - Prepare template for notes
  - Record leases in TAS or separate asset register
  - Enter opening balances of finance leases in TAS GL as part of nonfinancial assets
  - Record in TAS any additions or reductions of finance leases
  - Calculate depreciation
- Phase III 2018/19:
  - Report finance leases in 2018/19 financial statements
  - Refine and improve data for future financial statements
- Phase IV–VI 2019/20–2021/22:
  - Continue to report finance leases
  - Refine and improve data for financial statements
- Responsible Agency: Treasury BCG entities

### 9h. Public-private partnerships (PPPs)
- Phase I–II 2016/17–2017/18:
  - Develop accounting policies consistent with IPSAS particularly IPSAS 32
  - Identify and review existing PPP arrangements
  - Prepare template for notes
  - Record any fixed assets within the TAS asset register and recognize liabilities
  - Calculate depreciation
- Phase III 2018/19:
  - Report PPPs in 2018/19 financial statements
  - Refine and improve data for future financial statements
- Phase IV–VI 2019/20–2021/22:
  - Continue to report PPPs
  - Refine and improve data for financial statements
- Responsible Agency: Treasury MoFED BCG entities

### 9i. Software and databases
- Phase I–II 2016/17–2017/18:
  - Develop accounting policies consistent with IPSAS (particularly IPSAS 31)
  - Estimate useful lives
  - Prepare template for notes
- Phase III 2018/19:
  - Enter opening balances as at July 1 2018 in asset register and GL in TAS
  - Account for software and leases in dual mode in TAS
  - Calculate amortization
  - Recognize SW and databases in 2018/19 financial statements
- Phase IV–VI 2019/20–2021/22:
  - Refine and improve data for financial statements for future years
  - Continue to report SW and databases
- Responsible Agency: Treasury BCG entities

### 9j. Inventories
- Phase I–II 2016/17–2017/18:
  - Develop accounting policies consistent with IPSAS particularly IPSAS 12
  - Review available data for quality and completeness and prepare plan for identification and valuation of inventories
- Phase III 2018/19:
  - Identify and value inventories as July 1, 2018
  - Prepare template for notes
  - Recognize inventories in 2018/19 financial statements
- Phase IV–VI 2019/20–2021/22:
  - Refine data for financial statements for future years
  - Continue to report inventories in financial statements
- Responsible Agency: Treasury BCG entities

### 9k. Other nonfinancial assets
- Phase I 2016/17:
  - Review and identify any other assets
  - Develop accounting policy and procedures
- Phase III 2018/19 – Phase IV 2019/20:
  - Identify and value assets as July 1, 2019
  - Prepare template for any necessary notes
  - Identify and value any other assets as June 30, 2020
  - Report any other assets in 2019/20 financial statements
- Phase V–VI 2020/21–2021/22:
  - Refine data for financial statements for future years
  - Continue to report in financial statements
- Responsible Agency: Treasury BCG entities

### 10. Consolidated Financial Statements (CFS)
- 10a. Consolidated Financial Statements (CFS)
  - Develop accounting policies consistent with IPSAS (particularly IPSAS 34 – 38)
  - Explore and decide on options for systems and processes for consolidation (Oracle, Hyperion, others)
  - Generate CFs for Central Government
  - Set up systems and processes for consolidating General Government
  - Generate CFs for General Government
  - Set up systems and processes for consolidating public sector
  - Responsible Agency: Treasury
- 10c. CFS of Central Government (CG)
  - Review and, if needed, revise list and classification of controlled CG entities
  - Set up systems and processes incl. eliminations, for preparing CFS of the CG
  - Issue instructions to CG entities to submit financial statements and any supplementary information for 2018/19
  - Prepare CFS for 2018/19 for the CG
  - Refine and improve accounting policies, processes, and data quality and completeness based on experience and any NAO review comments
  - Continue to prepare CFS for CG as part of CFS for GG and public sector
  - Responsible Agency: Treasury BCG and CG entities to be responsible for reconciling intra-CG items
- 10d. CFS of General Government (GG)
  - Document procedures, including eliminations, for preparing CFS for the GG
  - Communicate with Local government and other controlled GG entities and train staff
  - Issue instructions to GG entities to submit financial statements and any supplementary information for 2019/20
  - Prepare CFS for 2018/19 for the GG
  - Refine and improve accounting policies, processes, and data quality and completeness based on experience and any NAO review comments
  - Continue to prepare CFS for GG as part of CFS for public sector
  - Responsible Agency: Treasury GG entities to be responsible for reconciling intra-GG items
- 10e. CFS of Public Sector (PS)
  - Document procedures, including eliminations, for preparing CFS for the PS
  - Communicate with PS entities and train staff
  - Issue instructions to PS entities to submit financial statements and any supplementary information for 2020/21
  - Prepare CFS for 2020/21 for the PS
  - Refine and improve accounting policies, processes, and data quality and completeness based on experience and NAO comments
  - Continue to prepare CFS for public sector
  - Responsible Agency: Treasury PS entities to be responsible for reconciling intra-public sector items

### 11. Project management, training and change management
- 11a. Change management (Treasury MoFED)
  - Establish Governance Arrangements, specify roles and responsibilities, decision making and issues resolution
  - Develop detailed a project plan based on this report and roadmap, including training
  - mobilize and allocate manpower resources
  - Provide training on the new framework particularly to BCG officials
  - Communicate framework to stakeholders
  - Continue to manage project
  - Provide training to officials involved with BCG financial statements
  - Communicate to CG entities about the planned CG financial statements for 2018/19 and necessary preparatory work
  - Provide training to CG entities’ officials
  - Communicate to GG entities about the planned GG financial statements for 2019/20 and necessary preparatory work
  - Provide, if needed, further training to BCG officials
  - Undertake interim post implementa- tion review and revise approach based on lessons learned
  - Provide training to GG entities’ officials
  - Communicate to controlled entities (state owned companies etc.) about the planned CFS for public sector for 2020/21 and necessary preparatory work
  - Provide, if needed, further training to BCG and entities’ officials
  - Undertake interim post- implementation review and revise approach based on lessons learned
  - Provide, if needed, training to controlled entities’ officials
  - Provide further training to others as needed
  - Undertake final post implementation review

### 12. Audit and review
- 12a. Audit and review (NAO)
  - Review and comment on opening balances as at July 1, 2017
  - Review and comment on financial statements BCG for 2017/18
  - Review and comment on financial statements CG for 2018/19
  - Audit CFS of GG for 2019/20 and issue formal audit opinion and recommenda- tions for improvements
  - Audit CFS of public sector for 2020/21 and issue formal audit opinion and recommenda- tions for improvements

*Appendix Table 1. Integrated Road Map for Implementati on of Accrual Accounting, IPSAS, and Asset Register — Fiscal Affairs Department, International Monetary Fund*

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_Source: https://www.imf.org/-/media/files/publications/cr/2017/cr17326.pdf_