Are there any benefits for adopting IPSAS for Zimbabwe

Zimbabwe legally adopted IPSAS in 2019 following the promulgation of Statutory Instrument 41 of 2019 which added IPSAS as a reporting framework for use in Zimbabwe. Following this adoption, public sector entities have until 2025 to produce IPSAS compliant financials statements. Following our close involvement as Ellchart is currently supporting the Ministry of Finance IPSAS project team, we examine some of the expected benefits that could be derived in Zimbabwe with this reform.

1. Greater accountability and transparency : There is compelling evidence that IPSAS will provide greater clarity on the financial position of public sector entities in Zimbabwe. IPSAS are important in promoting transparency and thereby curbing fraud and corruption. Financial statements prepared in accordance with IPSAS capture what the government receives and allocates, as well as what it owns and owes.

2. Better decision-making : Knowing both the financial position of an entity and the financial implications of a proposed policy measure helps decision-makers to make better financial judgements about an entity and its activities. Public bodies and other stakeholders are assisted in planning for the future.
3. Improved efficiency : Issue of service delivery by public sector entities now dominate conversations in Zimbabwe. The adoption of IPSAS has become essential in improving efficiency and effectiveness in service delivery by providing relevant information for decision making.
4. Effective reporting : The use of IPSAS is instrumental in forging closer integration between financial and critical non-financial information, providing a more holistic understanding of the true performance of public sector entities. IPSAS can streamline standard reporting processes and support the consolidation of all the activities and accounts of various government entities and sub-entities; so providing a meaningful audit report. Consolidated accounts are the basis for more informed, and subsequently better, decision-making.
5. Data consistency and application: Greater standardisation of the reporting processes and underlying data provides more opportunities to analyse data and improve decision making. Oversight entities like Zimbabwe Treasury, Office of President and Cabinet and Office of the Auditor General can access standardised information created through the use of IPSAS to make meaningful judgements and comparisons through the application of techniques such as data analytics.
6. Sound financial management: The adoption of IPSAS is instrumental in driving improved financial management practices in the public sector, providing a robust platform on which internal reporting practices can flourish, and acting as a catalyst for stronger financial capability and ‘value add’. The pillars of sound financial management practices such as budgetary control, cost accounting, financial performance management, strategic investment planning and forecasting are better supported.

7. Professionalisation and access to talent: The adoption of IPSAS will play significant part in increasing ‘professionalisation’ of the finance function and accounting across the public sector in Zimbabwe. It presents significant opportunities to increase the influence of the finance organisation, while capitalising on the skills of younger entrants into the profession within the sector, ensuring that the public sector becomes a desirable career destination of choice for professional accountants.
8. Broader economic and social advantages: A key driver for IPSAS adoption is the importance of attracting ongoing inward investment into the public sector, particularly in emerging economies. Financial statements prepared in accordance with IPSAS provide confidence and comparability for investors at both local and international level. These investments potentially create spin-off benefits for the broader economy in terms of jobs, welfare and societal improvement.
9. Government stability: Reforms brought about through IPSAS adoption can help create a more stable government, leading to a better investment climate, more jobs and higher incomes. Adoption of IPSAS can support policy makers in explaining, and generating support for, their plans for government. The reporting and consolidation process brings together all stakeholders in the reporting supply chain. Truer and fairer reporting, and greater disclosure, lead to more engagement from stakeholders and service users.
10. International comparability: Speaking the universal IPSAS language leads to better international comparability between public sector entities, while strengthening understandability through uniformity. The adoption of IPSAS also removes additional reporting requirements from donors, many of whom report using the standards.

Ellchart Business School’s objective is to support the Zimbabwe Public Sector in implementing the IPSAS Standards. Ellchart works directly with the Ministry of Finance and Economic Development in spearheading IPSAS Adoption in Zimbabwe