Special Purpose Vehicle (Purpose, Formation & examples)
Gerhard Steger, Director General Budget and Public Finance Austria - IFAC Sovereign Debt Seminar Presentation
1. From Cash to Accrual Accounting Budgeting in
Government – The Austrian Case
Gerhard Steger
Vienna, 19 March 2012
2. Budgetary Reform in Austria
Primary motivation: Improved budgetary decision-making
Addresses the following weaknesses of the current system:
– No binding medium-term perspective
– Prevailing focus on inputs
– Dominant Cash Perspective
The budget as a comprehensive steering instrument for resources
& outputs & outcomes
Implementation in two stages: 2009 and 2013
Unanimous decision in Parliament
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3. Austrian Federal Budget
Reform - Overview
Budgetary discipline and planning:
binding medium term expenditure framework
Result-oriented Flexibility for line ministries through
management of full carry-forward of unused funds
administrative units
Performance Budgeting
including
Gender Budgeting
New budget structure: Accrual budgeting and
„lump-sum budgets“ accounting
new budget principles: impact-orientation; efficiency; transparency; true and fair view
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4. Accounting system: 1986 – 2012
Cash budget (with some accrual modifications)
Incomplete accrual accounting system:
• No appropriate valuation rules
• No management impact
• IT-infrastructure in place
• Some practical experience of staff with accruals
Cost accounting:
• Implementation in central units of the ministries from 2000 – 2005
• No steering function
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5. Conceptual ideas for accruals in
Austria
Part of a comprehensive reform addressing the whole system and not
only specific elements focus in discussion on performance budgeting,
relieved from discussion about accruals in general and in detail
Pragmatic approach with long-term perspective: Systematic recording and
appropriate valuation of assets
Avoid hyper bureaucracy: Concentration on practical needs for steering the
budget!
Alignment with statistics (reduce duplication) Convergence of
Maastricht deficit and deficit in Austrian system
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6. Reporting entities in the federal
accounting system
Federal accrual system is obligatory for Federal Level:
• Ministry of Finance
• All line ministries
• All federal agencies
Separate reporting:
• Regional level (9 provinces/states)
• Local level (municipalities)
• Off-budget corporatisations
Efforts to develop an aligned framework for regional and local level
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7. Accrual budgeting & accounting
as of 2013
Operating Statement
(~profit and loss
statement)
Statement of
Financial Position Cash Flow
(~Balance Sheet) Statement
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8. Regulations for the
accounting system
Standard set of rules defined by the Ministry of Finance and the Court of Audit
• Basis is laid in the Austrian Federal Constitution: true and fair view as new
budgetary principle as of 2013
• Main features of the accrual system are defined in the organic budget law,
enacted by the Parliament
• Details on the accrual system can be found in detailed regulations
- Regulation on the opening balance sheet issued by the Ministry of Finance
- Accounting regulation issued by the Court of Audit in consultation with the
Ministry of Finance
- Budget regulation issued by the Ministry of Finance in consultation with the
Court of Audit
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9. Standard setting
Austria
IPSAS is the reference standard
Concentrate on Standards which are relevant for Austria
SAP-standard as reference for best booking practices; reduce
implementation complexity
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10. Standards not applicable
Number Name Reason
IPSAS 10 Financial Reporting in Hyperinflationary Economies Austria: no hyperinflationary economy
Mostly delegated to off- Budget Corporations:
Austrian railways (ÖBB), federal real estate
IPSAS 11 Construction Contracts management (BIG), ASFINAG (highway
construction and operation)
Not relevant: investment in property to earn
IPSAS 16 Investment property
rentals is minor in Austria
No management of agricultural assets by the
IPSAS 27 Agriculture
federal administration
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11. Deviating Standards
Number Name Reason
Consolidated and Separate Financial
Full consolidation not by 2013, in a 3rd phase of
IPSAS 6-8 Statements/Investments in Associates/Investments
the reform
in Joint Ventures
Simplicity: measurement by lower of cost principle
IPSAS 12 Inventories
(no options)
Simplicity: measurement by acquisition costs (no
IPSAS 17 Property, Plant and Equipment
options)
IPSAS: assets in respect of taxes are recognised
Revenue from Non-Exchange Transactions (Taxes when taxable event occurs. Austria: tax
IPSAS 23
and Transfers) recognition at cash basis, minor steering
possibility
Retirement benefits: no provision (reason:
IPSAS 25 Employee Benefits Maastricht), but estimation of future benefits in
the annex of the federal financial statement
Simplicity: No activation of internally generated
IPSAS 31 Intangible assets
intanglible assets
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12. Asset valuation
Opening balance sheet
Buildings
• Historical acquisition and production costs
• If not available – 3 options
• Overall refurbishment costs
• Average construction costs of comparable buildings
• Expert opinion if available
• Straight-line depreciation
Property
• Acquisition and production costs
• Asset accounting records used
• Straight-line depreciation
• Impairment
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13. Asset valuation
Heritage assets
• IPSAS ED as reference
• Recognition if acquisition costs are available or if
• Expert opinion is available
If not: Registration in asset accounting without value and disclosure on
aggregate level in final report
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14. Asset valuation
Opening balance sheet
Subsidiaries and associated entities
• More than 130
• Wide variety
• Equity method
• No full consolidation (later stage, 3rd phase of the reform)
• IT tool for systematic data management
Examples:
- unemployment service (AMS) – 100% - 134 Mio. € (2010)
- ASFINAG (highway construction and operation) – 100% -1.871 Mio. €
(2010)
- University of Vienna – 100%- 151 Mio. € (controlling function)
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15. Challenges of project management
and implementation
Standard setting:
• by Ministry of Finance, Court of Audit
• Information of Parliament (specific parliamentary committee)
Budget transition:
• Use of non-cash elements (depreciation, provisions) as steering information is
challenging for accountants at federal level
Opening balance sheet:
• Use of information of „old accounting system“ if existing
• Specific problems: valuation of cultural heritage/historic buildings. Many
paintings, pieces of art in the museums, many other historical sites (monuments,
furniture, etc.)
New accounting system:
• IT-system is crucial!
• Tests and concurrent operation in 2011 and 2012 (f.e. budgeted balance sheet)
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16. Advantages of Accruals
True and fair view established: Is the country poorer or richer than a year
ago?
Transparency: deeper insight of Parliament and public in federal finances:
clearer picture where we stand
Enhanced quality of public staff: To cope with the new system staff needs
additional skills
Helps better steering: As it is clear, where we stand, it‘s easier to identify
the necessary steps to improve the financial state
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17. Thank you for your attention!
Contact address:
Dr. Gerhard Steger
Director General
Directorate for Budget and Public Finance
Austrian Federal Ministry of Finance
Tel: +43 1 514 33 50 2000
gerhard.steger@bmf.gv.at
www.bmf.gv.at