HARARE – The government is expediting public finance management (PFM) reforms as part of efforts to improve efficiency, transparency, and accountability.
The central government, local authorities, and State entities have been using the traditional cash-based accounting system since 1923 when the country was declared the Republic of Southern Rhodesia.
But, they are now migrating to a new accounting system, the accrual-based International Public Sector Accounting Standard (IPSAS).
Finance Minister, Mthuli Ncube, said the government will complete the PFM reforms by 2023.
“We are going to achieve that in the next three years,” Ncube said. He added: “My ministry is taking a leading role.
This requires a competent and skillful government accountant for the new system to drive growth.
We need a competent public sector.
We want to ensure that quality reports are produced. The accounting profession in the public sector should shift into migration mode.”
Institute of Chartered Accountants of Zimbabwe (ICAZ) president, Duduzile Shinya said it was key and exciting to see government and public entities support the move to migrate to IPSAS, a framework that is likely to enhance transparency and improve accountability.
“From the view point of revenues and expenses the accrual basis records revenues and expenses as and when they occur, while the cash basis only transactions are recorded only when the actual funds exchange hands. The accruals basis tends to “smooth out” earnings over time, in line with billing cycles,” Shinya said.
“But more importantly, from a statement of financial position perspective, even though the cash basis accounting basis is easier, the accrual accounting basis portrays more accurately the health of a business or entity by including accounts payable and accounts receivable for example.
This gives a viewpoint of expected earnings as well as expenditure over time.
“The accruals basis will see entities able to communicate a comprehensive viewpoint of their financial health, and lack thereof if that may be the case, however, allowing the right conversations to then take place in the boardrooms about how to correct situations that are going wrong.”
Public Accountants and Auditors Board chairman Brian Njikizana said: “Public sector is too important to ignore.” – Business Times