TREASURY has threatened to crack the whip on parastatals, departments, local authorities and state-owned enterprises which fail to migrate to a new accounting system amid concern the government could be losing millions of dollars.
According to the Auditor-General’s past reports, poor corporate governance practices, delinquency and financial misappropriation have been perennially flagged for bleeding struggling quasi-government entities, thereby perpetuating their dependence on the fiscus.
This prompted Treasury to partner the World Bank in adopting a new system to plug the leakages and improve transparency.
The Zimbabwe Financial Reporting Manual was prepared for use by Zimbabwe’s public sector in the migration to the International Public Sector Accounting Standards (IPSAS) programme through the facilitation Treasury.
“In conclusion, IPSAS migration in not an option anymore, it is mandatory for every reporting entity,” Finance secretary George Guvamatanga said.
“We will be providing awards and reward mechanisms for entities that perform well and also there will be consequences for entities that underperform. My team from the PIT will be visiting your offices and Treasury is kindly requesting for your support and prioritisation of the IPSAS implementation agenda.”
The ongoing project for the migration to the accrual-based IPSAS framework by December 2025, forms part of the government’s wider Public Finance Management (PFM) reforms and is aimed at enhancing transparency and accountability.
This, according to Guvamatanga, is consistent with the principles of public finance management in section 298 of the constitution of Zimbabwe, which requires transparency and accountability in financial matters as well as responsible and clear financial management and fiscal reporting.
The development of the Zimbabwe Financial Reporting Manual (ZFRM) is a recommendation of the IPSAS Implementation Strategy and Plan (ISP) launched in 2019.
The manual is expected to guide the implementation of IPSAS by providing local interpretations and clarifying options, thereby ensuring consistency of application of the various standards by reporting entities.
The ZFRM should be followed by Public Sector Entities (Reporting Entities) required to apply the IPSAS framework in preparation of general purpose financial statements and reports as required by the Public Finance Management Act (Chapter 22:19).
By the year ending 31 December 2023, staye-owned enterprises have two options: to produce financial statements based on full IPSAS and ZFRM and to produce full IFRS Financial Statements.