Public Sector Accounting and Auditing in Europe: The Challenge of Harmonization

Book Preface

During the last 20 years the accounting systems of all levels of government in Europe have undergone substantial changes mainly inspired by the New Public Financial Management. The process of public sector accounting modernization has been recently intensified by the demands imposed by several stakeholders for the disclosure of high quality – and relevant to decision making – financial information to be used for transparency and accountability purposes. The financial crisis in Europe and the development of the International Public Sector Accounting Standards (IPSAS) have contributed to placing the necessity for improvements in governmental accounting high on the priority list of the EU policy agenda. The European Union has recently decided to develop a set of accounting standards that would build upon IPSAS and at the same time satisfy the EU’s policy objectives. This set of standards is called the European Public Sector Accounting Standards (EPSAS). However, the accounting systems used in the public sector across Europe are not homogeneous. On the contrary, they are made up of a pluralistic mosaic of not only the different accounting bases (e.g. cash, modified cash, accrual accounting) adopted by the European countries but also the heterogeneous systems applied by the different levels of government within a given country. While the horizontal and vertical differentiations of governmental accounting systems in Europe are a fact, there is no repository for gathering and analysing this information in a systematic way. Moreover, the substantial accounting and budgeting changes that have taken place over the last 20 years have not always been communicated in a timely fashion beyond country boundaries.

This book is an answer to this shortcoming. It is the co-operative work of 25 reputable researchers who discuss in detail the governmental accounting status quo in their home countries. It is an initiative of the Chairs of the XII Permanent Study Group of the European Group of Public Administration (EGPA) and many of the contributors to this book are members of the group. This is an important advantage in achieving a uniform structure of the country studies, as the authors are familiar with the accounting systems of the countries and are experts in public sector accounting and financial management. In the majority of cases the chapter authors are natives, which not only facilitates access to documents and legislation usually written in local languages but also safeguards the relevance of the text within the country context. The book analyses in a concise, thorough and comprehensive way the public sector accounting, budgeting and auditing systems at all levels of government in 14 European countries. The analysis is followed by a synthesis in which the main similarities and differences between the governmental accounting systems are discussed. The book therefore sheds a light on the challenges that are likely to be faced by European countries moving towards an adoption of public sector accounting international standards like IPSAS, EPSAS or any other system that may emerge.