Accounting Standards for Complex Resources of International Organizations
| DOI | http://doi.org/10.1111/1758-5899.12454 |
| Author | Sandro Fuchs,Andreas Bergmann |
| Published date | 01 August 2017 |
| Date | 01 August 2017 |
Accounting Standards for Complex Resources
of International Organizations
Andreas Bergmann and Sandro Fuchs
Zurich University of Applied Sciences
Abstract
This article will describe the implementation of International Public Sector Accounting Standards (IPSAS) in UN System Organi-
zations and consider technically controversial issues such as revenue recognition in more detail. Based on the IPSAS financial
statements of 24 UN System Organizations, the article provides an overview about current funding schemes and key issues
related to conditional contributions. Results show a heterogeneous funding mix for UN System Organizations while, overall,
voluntary contributions remain the most important revenue source. The main accounting implication arises from conditional
voluntary contributions with specified performance obligations, requiring an entity to defer revenue and recognize a liability.
Although all analysed UN System Organizations report under the same accounting principles, there exist differences in the
level of information concerning conditional contributions and outstanding performance obligations. The article concludes that
IPSAS bears the capacity to increase overall financial accountability and to trigger management debates about issues such as
resource dependency, topics being discussed by other contributions in this special issue. Overall it is argued that IPSAS shall
not be seen as a mere technical exercise, but as a management tool to ensure a flexible funding scheme to successfully
achieve an entity’s long-term objectives.
Policy Implications
•See the implementation of IPSAS not as a mere technical exercise, but as a way to increase financial accountability and to
provide better management information.
•Use the newly generated information under IPSAS to trigger management debates about core revenue flows, namely
resource dependency and flexibility.
•Increase the level of transparency with respect to conditional voluntary contributions in order to properly inform and
account for any outstanding performance obligations.
Complex Resources of International Organizations
International Organizations (IOs), such as the United Nations
(UN), the World Health Organization (WHO), the World Food
Programme (WFP), the European Commission (EC) or the
Organization for Economic Co-Operation and Development
(OECD), just to mention a few of them, have recently under-
taken major reforms of their financial reporting. The reforms,
which are in most cases in the context of wider manage-
ment reforms, are aiming for an improvement towards
‘transparent financial reporting, strong accountability and
good governance’(UN, 2006a). Others, such as the EC are
more explicitly targeting the elimination of technical weak-
nesses of previous accounting systems, such as the report-
ing of assets and liabilities (e.g. EC, 2002; Grossi and
Sovericha, 2011).
Surprisingly, despite a wide range of organizations being
involved on a global scale, there is only limited research
coverage of this development by scholars and the account-
ing profession (e.g. Alesan et al., 2012; Bergmann, 2010; Bir-
aud, 2010; FEE, 2007; NAO, 2007a, 2007b). The limited
academic emphasis on this topic is even more amazing,
bearing in mind that the reforms were triggered by some
discontent with the current financial reporting. But also this
discussion, while it is apparently taking place among
diplomats representing the member countries, is not fully
taken into account by the academia and the accounting
profession.
This article will describe the implementation of Interna-
tional Public Sector Accounting Standards (IPSAS) in UN Sys-
tem Organizations and consider technically controversial
issues in more detail. In general, IPSAS requires a closer
scrutiny of assets, liabilities, revenues and expenditures com-
pared to the old accounting regime for UN System Organi-
zations, the United Nations System Accounting Standards
(UNSAS). One material aspect arising from IPSAS implemen-
tation forms, as it is later shown in this article, the proper
recognition of revenue (e.g. Alesan et al., 2012) –and partic-
ularly –the distinction between conditional and non-condi-
tional contributions.
Subject to this special issue, the accounting treatment of
revenues can be seen in a wider context about the rele-
vance, importance and impact of different contributions
schemes. In this special issue, Graham (2017a) considers
©2017 University of Durham and John Wiley & Sons, Ltd. Global Policy (2017) 8:Suppl.5 doi: 10.1111/1758-5899.12454
Global Policy Volume 8 . Supplement 5 . August 2017
26
Special Issue Article
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