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Following our successful delivery of the first ever open training workshops on IPSAS (International Public Sector Accounting Standards) in Cyprus in April-May 2016, we at GnosisLearning and F. Zempylas & Associates have been taking stock of lessons learned, what’s been achieved and what’s next for those involved with public finances! 

Reporting Great Confidence in Cyprus Public Sector Accountants

We had the privilege of dealing with very capable and professional public sector accountants/managers, who showed great engagement and involvement with the issue of public finances and how best to account for them.

There was great interest in the topic, with some approaching the subject with more (initial!) scepticism than others. Though some in the audience expressed reservations about the introduction of accruals-based accounting to replace the status quo cash-basis reporting, the consensus emerging from the workshops was that the introduction of IPSAS accounting will help the Cyprus government’s image as a stable and trustworthy economy when it can consolidate accounting and increase the transparency of public finance. The introduction of accruals-based reporting would also help in restructuring public finances, making the economy more agile.

There is clearly enough knowledge and capability among the Cyprus public sector financial staff and managers to carry forward the project of the implementation of accruals-based reporting. This can be confidently stated. The remaining, and key, factor is that of political and administrative commitment to steer the adoption of new systems: those without the financial background but who are the likely decision-makers in this context will require training, to gain the relevant knowledge that will enable them to appreciate, approve and apply the rules.

The adoption of IPSAS on its own will not deliver miracles and/or absolute transparency; the political capacity to carry it through is what will make the difference. Assuming that a proper management process is in place and free from corruption and bias, reporting on accruals basis will only contribute to increasing efficiency in public finances. The recent and many court cases and scandals indicate that reform is needed at the same time that IPSAS will be introduced – one will help the other and also result in recognition of the good work of public accountants.

Preparing the Workforce and Decision-Makers

A key aspect of the upcoming changes will be taking care to foster and develop the necessary technical capabilities to carry this forward. Training of staff at all levels will be required as a priority, i.e., not just the accounting teams around the country who will be dealing with the day-to-day of government reporting, but also of executives and decision-makers. And yes, this will include training Members of Parliament to ensure they have the knowledge necessary to read financial statements and be able to keep Government accountable to the people they represent! Additionally, training will have to extend beyond accounting techniques under IPSAS as managers will need to reinforce their managerial skills, e.g., communication, negotiation, knowledge management.

To meet this demand for comprehensive training on the subject, our approach is to insist on keeping the subject matter relevant, practical and always relating to real life scenarios. These were elements that were especially liked by our IPSAS workshop attendees, who took them also as an opportunity to interact with each other and compare best practice on various real-life examples and experiences. Our approach has been to continue providing detailed examples, engaging with financial statements and working through them together, to ensure that what participants gain from the workshops is not just theory, but real and relevant skills and knowledge that they can apply at work.

For example, we spoke during the workshops about a seemingly banal issue: the different paintings and frames that one may see in public offices. Where do these come from and how do they figure in the Government’s budgeting and reporting processes? The paintings and frames themselves derive from the Central Art Gallery, which loans these out to all Cyprus Government departments, and indeed gives office-holders the right to choose a particular painting that they might want in their office. How do we calculate the value of these paintings, and importantly, how do we account for them? The paintings are donated to the Government, so there is no value attached to them as this is not a recorded cash transaction. With accruals-based reporting, there will be an initial entry on the value of the paintings, and from there the painting will be transferred from department to department on an accruals basis, the value of each painting accounted for as part of the furniture/items of each office. Nothing can be lost in such a situation.

Cyprus-Specific Challenges?

Frixos Zempylas leading an IPSAS workshop at Semeli Hotel,
Nicosia, April 2016

What surfaced in our workshops was a clearer idea of how the budgeting process works and should be working. What became clearer was the scope of government, not just over its own various departments, but also over other, more autonomous organisations that operate on a part-governmental basis. For some such organisations, which continue to report on a cash-basis, it is still unclear how IPSAS will impact on their budgeting and reporting processes. This is again something that will have to be clarified once the appropriate political commitment to accruals-based reporting is made.

I may sound repetitive but this is important: One finding that came from the workshops, and has always been of professional concern for meeting the country’s challenges responsibly was that the technical expertise in implementing IPSAS properly is potentially there. Adding to the technical competences and not least important is also the will and the enthusiasm that comes from these very same people. As we see the turn to accruals-based reporting as signalling a greater and growing appetite for transparency among Cypriots themselves, we are very happy we were part of this positive development.

Having received excellent feedback from participants on our April-May 2016 workshops – on both the training and administrative side of things – we are looking forward to welcoming more professionals to our next workshops in Autumn 2016, developed to meet varying levels of skills and knowledge.

We will also be very interested in getting more professionals’ views and feedback on the coming changes to accounting processes in Cyprus, and developing our professional conversations and collective knowledge on the subject.

Frixos Zempylas is a Certified Public Accountant and a Registered Auditor, member of the Institute of Certified Public Accountants of Cyprus (ICPAC), a fellow of the Association of Chartered Certified Accountants (ACCA), member of the Association of Certified Anti Money Laundering Specialists (ACAMS) and an HRDA (AnAD) certified trainer.

Frixos holds a P.D. in Financial Strategy from Said Business School (OXON) and an MBA from the Cyprus International Institute of Management (CIIM). He has extensive experience in a Big 4 audit firm with realms in financial management and strategy, tax restructuring, valuations and liquidations. He is the Managing Director of F. Zempylas & Associates.


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