French Conceptual Framework for Public Accounts. Feedback

Transcription

1 French Conceptual Framework for Public Accounts Feedback Eurostat Working Group EPSAS September

2 Two main reasons: Why do we need now a Conceptual Framework for Public Accounts in France? 1. Need to describe the specificities of the public sector Legal context: 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. 2. Need for consistency and convergence of the standards Remit of the CNOCP (created in 2008) = harmonization Starting point = several sets of standards A conceptual framework, only for the Central Government (published in 2004) A standard-setter s project = designing a new comprehensive Conceptual Framework, for all public accounts, anchored into the French legal system 2

3 Reminder Key elements of the French Conceptual Framework published in December 2014 Focus on the Sovereign power, the root to public action implemented by government units 3

4 The concept of sovereign power The concept of sovereign power leads to define the Reporting Entities Exercise of part of power attributed according to the Constitution and laws of the French Republic The Sovereign power : powers and general commitments: not a reporting entity Reporting entities : Rights, obligations and specific commitments Entity xx Central Government Public Agency x Social Security Fund 1 Local Authority 1 4

5 Main accounting consequences of the Sovereign power (1/2) Nature of responsibilities: The Sovereign power is not a reporting entity The Sovereign power does not deal with accounting but sustainability Definition of a going concern principle suitable for government units Definition of the nature and of the level of maturity required for rights and obligations specific to public action to be recognized in the accounts The timing of the recognition of rights and obligations in the financial statements of the relevant entity needs to be determined The power to levy tax is an attribute of the Sovereign power: it can not be included in the assets of an entity The general commitments of the Sovereign power have to be distinguished from the obligations and specific commitments of an entity (see next slide) 5

6 Focus on obligations and commitments Main accounting consequences of the Sovereign power (2/2) Identification of commitments versus obligations that are present obligations of the entity Proposal for disclosures in the notes specific to government units Distinguish between: o General commitment Sovereign power o Commitment of an entity similar to the commitment of a private sector entity o Specific commitment proposal for specific disclosures in the notes Identification of the best level of aggregation that would provide useful and fair financial information (further in-depth reflections are needed) 6

7 Feedback Statement Main points of the Feedback Statement 7

8 Main reasons for this support: General support for the introduction of a French Conceptual Framework (1/2) It improves the quality of financial information It increases the readability of the financial statements thanks to enhanced consistency and convergence of the standards It ensures full implementation of the provisions of Article 47-2,II of the Constitution The accounts of public administrations shall be lawful and faithful. They shall provide a true and fair view of the result of the management, assets and financial situation of the said public administrations. It facilitates comparisons with other entities 8

9 Main reasons for this support: General support for the introduction of a French Conceptual Framework (2/2) For the standard setter : it allows the formalization of concepts and of specificities, hence enables better articulation of concepts that helps enhance consistency and high quality standards For a reporting entity, it is helpful to identify what elements it should recognize in its financial statements it explains the French legal environment and the objectives of accrual accounting 9

10 Global support for the concept of Sovereign power, even if Many respondents favour the idea of a Sovereign power that is not a reporting entity Some fear that this new concept may allow to not recognise some liabilities. Next steps: Clarify the concept of Sovereign Power and its consequences Explain more clearly that the concept of Sovereign Power allow to draw a line between what should be covered by accounting principles and what should not. Continue to reflect on accounting maturity of a power or a commitment of the Sovereign Power (in order to facilitate the implementation of the concepts and the related standards). 10

11 Lack of support for the specific disclosures about the Sovereign Power, even though Some respondents favour this idea Many consider that it would be confusing if as part of GPFSs To address those concerns, steps are envisaged: In-depth reflection on: Aggregation of accounts Disclosure of the Sovereign power s rights and commitments Sustainability 11

12 Other technical concerns - Meaning of negative equity - Measurement objectives - Other economic phenomena

13 The French Conceptual Framework for Public Accounts, the comments and the feedback statement can be found at the CNOCP webpage at following link: 13