As part of the government’s reform agenda, the Auditor General of Pakistan (AGP) has initiated the process of preparing new accounting standards on an accrual basis in accordance with the International Public Sector Accounting Standards (IPSAS).
The reforms aim to strengthen transparency, fiscal discipline and public financial management, the AGP said in a statement on Monday.
“The AGP has initiated a review of the country’s current new accounting model, exercising the constitutional authority granted under Article 170 of the Constitution of Pakistan
“The new accounting standards will be implemented after the approval of the President of Pakistan,” it added.
IPSAS are global accounting rules for governments and public bodies, developed to boost transparency, accountability, and consistency in financial reporting.
Currently, Pakistan’s government accounts are prepared on a cash basis, recording transactions only when cash is received or paid. The model was introduced in 2000.
The new system will be accrual-based, which means financial transactions will be recorded when they occur, not just when money changes hands.
Meanwhile, the AGP said that the transition is a significant step towards aligning Pakistan with globally recognised financial standards. The process is being carried out through the World Bank’s technical assistance.
“For the first time in Pakistan, government financial reporting will be aligned with the internationally recognised IPSAS accrual system under the reforms
“The transition to an accrual-based accounting system will significantly improve government financial reporting,” said AGP.
The new system will provide a complete and accurate picture of assets, liabilities, income and expenditure, the AGP added, while also increasing the quality and reliability of financial information.
“The revised accounting framework will be equally applicable to federal, provincial and local governments,” said AGP.
“It is a clear expression of the institution’s commitment to accountability, transparency and better governance,” said the AGP.
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