Government spending has rocketed over the last few months in order to mitigate some of the consequences of the Covid-19 pandemic, with the IMF calculating spending to be $9 trillion. The Association of Chartered Certified Accountants, the World Bank, and the International Federation of Accountants (IFAC) have expressed concern that public sector fiscal commitment and interventions are not being captured accurately by governments due to the way they account for this.
In a recent report, Sustainable public finances through Covid-19, the three organisations are calling for governments to use public sector balance sheets to properly manage their finances through the pandemic, paying attention to their public sector net worth. For some governments, this will mean a change in accounting methods from cash to accrual accounting.
Author of the report and ACCA head of public sector policy Alex Metcalf said: “This global pandemic crisis could be a catalyst for more governments to adopt this approach, which can improve decision-making, act as the benchmark for new fi2scal targets, and support governments to rebuild economies for a more inclusive and greener future.
Read the full article in International Accounting Bulletin here