Public Sector
Occasional Paper No. 7
January 2004
Committee
The Governmental Accounting
System in Argentina
This Occasional Paper was approved for publication by the Public Sector Committee of the
International Federation of Accountants. It was published in January 2004.
Information about the International Federation of Accountants can be found at its web site
http://www.ifac.org.
The approved text of this Occasional Paper is that published in the English language.
Copies of this Paper may be downloaded free of charge from the IFAC internet site.
International Federation of Accountants
545 Fifth Avenue, 14th Floor
New York, NY 10017 USA
Fax: +1 212-286-9570
Email: [email protected]
Copyright © January 2004 by the International Federation of Accountants. All rights reserved. No
part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or
by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior
written permission of the International Federation of Accountants.
ISBN: 1-931949-17-4
Acknowledgement
The Public Sector Committee (PSC) of the International Federation of Accountants (IFAC) is
indebted to Carmen Giachino Palladino for preparing this Occasional Paper. The views expressed are
those of the author and are not necessarily those of the PSC or IFAC.
Carmen Giachino Palladino is a member of the PSC. The former Accountant-General of Argentina,
Carmen is a consultant to the Inter-American Development Bank for government accounting in Latin
America. She is also the Argentine representative of the Peacekeeping Missions Working Group
which is organized by the United Nations and the Chairperson of the Public Sector Committee of the
Federación Argentina de Consejos Profesionales de Ciencias Económicas (FACPCE). She now
teaches at the Technical College of the Argentine Army and the Postgraduate Institute of
Governmental Economists, Public Budget Argentine Association and previously has taught at the
Training and Investigation Center of the Secretariat of Financing.
Preface
This Occasional Paper describes the major reforms affecting the federal government of Argentina
and the Governmental Accounting System in its migration to accrual accounting. It traces the steps
taken in the development and implementation in governmental financial administration in Argentina
from 1993 as a consequence of the Government’s decision to prepare the financial statements on the
accrual basis. The reforms are part of an ongoing evolution to improve and increase efficiency in
financial reporting in the public sector.
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
CONTENTS
EXECUTIVE S UMMARY........................................................................................................................................................1
1. BACKGROUND AND INTRODUCTION............................................................................................................................2
1.1 GOVERNMENT AND THE PUBLIC S ECTOR ACCOUNTING PROFESSION IN ARGENTINA...........................2
1.2 PREVIOUS LEGISLATION AND CURRENT R EFORM .........................................................................................2
2. CURRENT S ITUATION......................................................................................................................................................4
2.1 R EFORM OF THE GOVERNMENTAL FINANCIAL ADMINISTRATION.............................................................4
2.1.1 THE ROLE OF THE NATIONAL ACCOUNTING OFFICE ....................................................................................5
2.1.2 REFORMS AT THE NATIONAL LEVEL ................................................................................................................8
2.1.3 PROVINCIAL LEVEL AND GOVERNMENT OF THE CITY OF BUENOS AIRES .................................................8
2.1.4 INTERNATIONAL PARTICIPATION.......................................................................................................................8
2.1.5 REGIONAL LEVEL ................................................................................................................................................8
3. THE GOVERNMENTAL ACCOUNTING S YSTEM ....................................................................................................... 10
3.1 THE ACCOUNTS PLAN (CHART OF ACCOUNTS )
AND ITS RELATIONSHIP WITH THE BUDGETARY PROCESS ........................................................................10
3.2 THE ACCRUAL BASIS IN ARGENTINA...............................................................................................................10
3.3 GOVERNMENT ASSETS ........................................................................................................................................12
3.4 INVESTMENT ACCOUNT......................................................................................................................................13
3.5 FINANCIAL S TATEMENTS OF THE FEDERAL GOVERNMENT C ENTRAL ADMINISTRATION...................14
4. OBJECTIVES FOR FUTURE D EVELOPMENT IN THE GOVERNMENTAL ACCOUNTING S YSTEM ..................... 16
5. CONCLUSION.................................................................................................................................................................. 17
APPENDIX I: S UMMARY OF FINANCIAL S TATEMENTS OF THE C ENTRAL ADMINISTRATION
OF THE ARGENTINE GOVERNMENT .............................................................................................................................. 18
EXECUTIVE SUMMARY
Executive Summary
The Paper provides a background of the development of the accounting profession in Argentina and
its influence in the public sector. It also provides an overview of the evolution of the public sector
accounting system in Argentina from the onset of the Argentine Confederation. The cash basis of
accounting was adopted in 1859 and in 1947, the financial statements were modified to include
recognition of expenses on a commitment basis. (For the purpose of this Paper, the “commitment
basis” refers to a basis which recognizes the total contract value upon contract signature by all
parties.) In 1993, a decision was made to adopt accrual accounting in the federal government.
The Paper outlines the weaknesses in the public sector accounting system which led to the Reform of
the Governmental Financial Administration and, consequently, the adoption of accrual accounting in
1993. This reform first focused on the Central Administration, decentralized bodies, state universities
and government business enterprises and public societies, but will be extended to provincial and
municipal governments in the near future. The reform, overseen by the Ministry of Economy and
relevant ministries, includes maintaining a newly developed Governmental Accounting System and
coordinating with the professional bodies and academics to ensure that the system is appropriately
maintained and updated.
The governmental accounting and budget systems are largely integrated, that is, they utilize the same
type of accounts, except for certain accounting transactions. Where there are differences between the
accounting transactions and the government budget appropriations, a comparison table is generated
to explain the differences. The reform has brought about a positive impact in the Government
Financial Administration, including an increase in efficiency and effectiveness in public
administration, and delivered more accurate information to support political decision- making.
The Paper also outlines other challenges and issues that arose in data collection, practice and culture.
In this context, it is noted that the current information system does not have sufficient data to
accurately determine reliable information for receivables arising from tax revenues for the current
period. Therefore, the Argentine financial statements are prepared on the accrual basis, except for tax
revenue which is recognized on a cash basis. The Government is currently considering mechanisms
to enhance disclosure on tax receivables.
Finally, the Paper outlines anticipated future developments in the Governmental Accounting System.
These include improving the management accounting of the public sector to further enhance
decision- making, consolidation of all public sector entities, creating a continuous training program
for public sector employees and harmonizing the Argentine public sector generally accepted
accounting principles with International Public Sector Accounting Standards (IPSASs).
The Governmental Accounting System is now considered a significant tool in providing
accountability and transparent financial information in the public sector.
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
1.
Background and Introduction
The objective of this Paper is to present the reforms undertaken within the Financial Administration
area of the Argentine Government and the progress achieved in relation to the Governmental
Accounting System.
1.1
Government and the Public Sector Accounting Profession in Argentina
Argentina is organized into independent provinces under the Federal and Republican Constitution.
The accounting profession in Argentina was first recognized as an independent accounting
profession in legislation in 1945.
It is organized in “Professional Councils” who are responsible for the accounting profession in each
province. The “Professional Councils” in turn merge into the national body of accounting — the
Federación Argentina de Consejos Profesionales de Ciencias Económicas (FACPCE, Argentine
Federation of Economic Science Professional Councils). The FACPCE is responsible for setting the
accounting standards and rules for the private sector. The accounting profession in Argentina has
always been oriented to the private sector with no influence in the public sector. The National
Accounting Office, which is a government body, is responsible for setting the accounting standards
and regulations for the public sector. In 1993, the decision was made to adopt accrual accounting,
and the first balance sheet was prepared at the end of the 1998 fiscal year. Before 1993, the
accounting profession in the public sector was primarily focused on the legal aspects of recording
transactions, and monitoring compliance with contractual and other obligations. During this period,
lawyers were more prominent in the profession than accountants.
Significant development of the profession in the public sector occurred with the implementation of
the accounting principles in 1995. After 1998, the academic sector started to work together with both
sectors (public and private) to provide expert assistance in accounting issues.
1.2
Previous Legislation and Current Reform
The National Accounting Office was created in 1826 to be responsible for developing and
implementing the governmental accounting system. Since 1826, several legal frameworks have been
implemented to address accounting issues. The earliest of these was passed at the beginning of the
Argentine Confederation and was in operation from 1859 to 1870 (Law # 217). Other Laws relating
to account ing were passed for the periods: 1870 to 1947 (Law # 428), 1947 to 1956 (Law # 12.961),
and 1956 to 1992 (Law # 23.354). The current Law, “Financial Administration and Control Systems
of the National Public Sector”, has been in force since 1993. The major features of these are attached
in figure 1.
BACKGROUND AND INTRODUCTION
Figure 1: The progressive change of the principal accounting regulations
that ruled the Argentine public sector accounting systems
Period which Law
Applies
Law
Criteria
1859–1870
# 217
•
Cash basis — no payments without budget approval
1870–1947
# 428
•
•
•
Cash basis — Double entry system
Budget uniformity throughout the public sector
Only budget information reported to the public. Budget
reported on a cash basis.
1947–1956
#12.961
•
Cash basis for revenue — Commitment basis* for
expenses
1956–1992
# 23.354
•
Cash basis for revenue — Commitment basis * for
expenses
•
Preparation of Asset Accounting started
# 24.156
•
Financial Administration
and Control Systems of
the National Public Sector
•
•
Accrual basis for non-tax revenue — Accrual for
expenses — Cash for tax revenue
Accrual basis — Double entry system
Implementation of the Accounting Principles —
Financial Statements
National Accounting Law
1993
*For the purpose of this Paper, the “commitment basis ” is used to refer to the recognition of the total contract value
upon contract signature by all parties.
The first regulations had a positive influence on financial management and reporting and allowed for
certain developments, such as the law of 1870 (# 428) which implemented the double entry system
on a cash basis and drafted out clear responsibilities of public officers. However, it was only with the
current law (# 24.156) that the principle of “accrual” was implemented.
The design of the National Accounting Law applying from 1956 to 1992 (Law #23.354) reflected
political as well as judicial needs for information for the control of legal and third party matters.
However, it did not require the establishment of a chart of accounts or the preparation of
consolidated financial statements and management reports. Therefore, it did not provide an overview
of the financial situation. As a consequence, the final product — the General Accounts of the Fiscal
Year — did not apply comprehensive and homogeneous criteria for the recognition of revenues,
expenses, assets and liabilities or for the consolidation of the financial statements. Consequently, the
information was not prepared on a consistent basis and was not drawn together in the consolidated
statements.
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
2.
Current Situation
2.1
Reform of the Governmental Financial Administration
Before the 1993 Reform, there were weaknesses in the Financial Administration of the National
Government. These weaknesses are summarized below.
•
The system did not generate complete, reliable information about the financial management of
the resources managed on behalf of the community. It reported only cash and near cash
resources.
•
There was no department or office in charge of the administration and regulation of the national
debt, which was growing both internally and externally. This meant that there were no
regulations governing the Public Credit System or an entity in charge of its management.
•
The Treasury undertook the administrative tasks of cash payments without being involved in the
management of the monetary or financial aspects of the National Public Sector.
•
The amount of public assets, as well as actual liabilities and contingent liabilities, were
unknown.
•
There was little commitment to training the workforce for financial management and reporting in
the public sector.
This situation required a major change in order to achieve the objectives of the Governmental
Financial Administration which was to operate the economy in an efficient and effective manner.
As a consequence, a reform program was initiated in 1993 with the support of the World Bank. This
project called “Reform of the Governmental Financial Administration” was overseen by the Ministry
of Economy with direct involvement from the Secretary of Finance and the Budget Undersecretary.
The reform process commenced with legislation enacted in 1992 and implemented in 1993.
The first stage of the reform was undertaken in the non-financial public sector as a whole — that is,
the Central Administration, decentralized bodies, state universities and government enterprises and
public societies. The reform process will also be extended to provincial and municipal
administrations in the future through their acceptance of the modernization and updating processes
which are already under way. The reform program includes the development of the following
integrated systems:
•
Budget System;
•
Public Credit System;
•
Treasury System;
•
Accounting System;
•
Contracts System (governing all government purchases of assets and services); and
•
Assets Administration System.
CURRENT SITUATION
The Contracts and Assets Administration Systems referred to above have not been formally
legislated. This means that they do not have a legal framework yet but are necessary for the
government to continue to operate and comply with relevant rules and regulations.
This reform program has had a positive impact on all the systems of the Governme ntal Financial
Administration. Its impact includes an increase in efficiency of public administration and interrelated
systems at all levels. It also means that better information is generated to support informed political
decision- making and a more effective administration system is developed to implement the
decisions.
2.1.1 The Role of the National Accounting Office
The National Accounting Office is responsible for developing and maintaining the Governmental
Accounting System as well as the issuance of the applicable accounting regulations.
Law # 24.156, enacted in 1993, requires that the Governmental Accounting System be developed to
present the following general characteristics. The system should:
•
Be common, unique, uniform and applicable to all the entities within the National Public Sector.
This system only affects the federal government; it does not include either municipalities or
provinces within the Argentine Federal and Republican Constitution jurisdiction. The Federal
Government includes:
?
The Central Administration (Ministries and State Secretaries);
?
Decentralized organizations (i.e., National Assessment Tribunal);
?
Social security institutions;
?
State universities; and
?
Government business enterprises.
•
Integrate budget, assets management and treasury information within each entity, and with the
National Accounts.
•
Present the budgetary execution, movements and financial position of the Treasury and public
institutions.
•
Enable cost assessment of public operations. This aspect of the system has to be further
developed since it is a pending issue which will be considered in the future.
•
Be based on the generally accepted accounting principles, applicable to the public sector, and
developed by the National Accounting Office. Those principles require that the budget and
accounting systems be integrated; that is, the budget and accounting system use the same
principles of recognition, terminology and concepts. They also require that the accrual principle
be implemented and applied to register expenditures and non-tax resources, and tax resources be
effectively registered on a cash basis. The cash basis is used for tax resources because it is very
difficult to pinpoint the exact taxable event which affects the reliability of measurement.
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
In relation to the organization of the system itself, the main methodological aspects are as follows:
•
Within the national public sector, there are two different types of accounting entity: one is the
Central Administration and the other is related to Decentralized Organizations or Institutions.
Each entity is a separate legal entity – this means that each entity has a separate legal name,
independent funding and independent accounting system.
•
The departments responsible for managing the accounts of the institutions are technically
dependent on the National Accounting Office (that is, they follow the regulations developed and
used by the office), and the Operating Accounting Systems follow the design determined by this
Central Body.
•
Within the Central Administration, the accounting system is organized as follows:
?
Registration Units are established as satellites of the system. Registration Units are those
organizational centers where economic events of the institutions originate and are accounted
for (i.e., Ministries, Secretariats, Armed Forces, etc.) by the National Accounting Office (as
the administrator of the central database of the system). The National Accounting Office
governs the Decentralized Organizations, that is, it sets the rules to be followed and is a part
of Registration Units.
?
The data necessary to produce the information outputs which are required by the National
Accounting Office are transferred to the central database of the system. Within the
Registration Units, the information administered is unique for each particular unit.
?
The Registration Units centralize and accumulate the information provided by lower level
offices, which are responsible for the basic budget, treasury and assets operations.
?
The system requires that transactions are registered only once, and the outputs of information
required for accounting purposes, either at central or satellite level, are obtained from this
unique registration.
CURRENT SITUATION
Figure 2: The Governmental Accounting System
National Accounting Office
Administrator Database System
All transactions registered once only for unique registration
Registration Units
Satellite Systems
Independent Accounting System
(i.e., National Assessment Tribunal)
(Ministries, Secretariats
and Armed Forces)
National Accountant
(Accounting responsibility)
Central Administration Net
Assets/Equity
All independent entities are:
• Independently funded
• Have separate legal name
• Have independent accounting
System
Entity Accountant
(Independent accounting
responsibility)
Institutional Net Assets/Equity
Total Net Assets/Equity
Independent Accounting Systems
Central Administration
(One Accounting entity )
Central Systems
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
2.1.2 Reforms at the National Level
The Financial Administration 1993 reform also led to (based on Law # 24.156 and its supplementary
regulations) the requirement of the National Accounting Office to interact with the following
representative professional bodies in order to coordinate and combine efforts to update the
accounting system: Economic Science Professional Council of the City of Buenos Aires Government
(Consejo Profesional de Ciencias Económicas del Gobierno de la Ciudad de Buenos Aires, CPCE);
the Argentine Federation of Economic Science Professional Councils (Federación Argentina de
Consejos Profesionales de Ciencias Económicas, FACPCE); and the academics.
A priority of the National Accounting Office has been the training of staff of the satellite units. This
has been accomplished through the coordinated efforts of the public and private universities, together
with the Training Center of the Secretariat of Finance. The training was to achieve the objective of
enhancing the economy, implementing efficiency and effectiveness principles in the collection and
application of public revenue.
2.1.3 Provincial Level and Government of the City of Buenos Aires
A working program has been prepared and is being implemented with the objective of promoting and
coordinating the application of integrated systems of the Governmental Financial Administration
which apply the principles ruling at national level with: the Provinces, the Government of the City of
Buenos Aires and, through the Provinces, with the municipalities.
Once the program is completed as planned, Argentina will be ready to activate an information system
which provides up-to-date information on an ongoing basis that provides constant consultation on
the management of individual components and on the consolidated position of the Argentine Public
Sector as a whole. This system will allow the analysis and assessment of the performance of the
public sector to be undertaken from an economic, financial and social point of view. Of a total of 23
provinces, only the province of La Rioja has issued financial statements similar to the ones issued by
the National Government of Argentina. The rest of the provinces are in the process of change and/or
financial administrative reform.
The National Accounting Office, together with the Provincial Accounting Offices, created the
Argentine Association of General Accountants (Asociación Argentina de Contadores Generales) with
the purpose of improving the management of the accounting resources of the Argentine Public
Sector.
2.1.4 International Participation
The development of the Governmental Accounting System has been enhanced by the participation of
the National Accounting Office in the Iberoamerican Forum of Public Accounting. A public sector
expert representing FACPCE is now a member of the IFAC Public Sector Committee (PSC).
2.1.5 Regional Level
Other countries in the region also develop accounting systems in managing their governmental
accounting system. The following chart (figure 3) shows a comparison among five South American
countries on the integration of the accounting and budget systems and their recognition criteria.
CURRENT SITUATION
Country Comparative Chart: (Perú, Paraguay, Brazil, Argentina and Uruguay)
Figure 3: A Comparison among Five South American Countries on the Integration
of the Accounting and Budget Systems and their Registration Criteria for the
transactions.
Integration of Accounting
and Budget
Perú
Paraguay
Brazil
Argentina
Uruguay
Not
integrated
Integrated
Not
integrated
Integrated
Not
integrated
Accrual
Modified
accrual (**)
Accrual
Modified
accrual (**)
Budget
Information
(***)
Cash Basis
Modified
accrual (**)
Commitment
basis (*)
Modified
accrual (**)
Modified
accrual (**)
Registration Criterion of
transactions
Accounting
Budget
(*) Commitment basis : Recognition of total contract value upon Contract Signature of both parties.
(**) Modified Accrual: Accrual principle to recognize expense and non-tax revenues. Cash basis for recognition for
tax revenues.
(***) Currently, the Uruguayan government does not prepare general purpose financial statements. It only prepares
and publishes budget information. However, Rule #81/2002 was recently passed by the Accounting Tribunal — it
provides that IPSASs will be adopted.
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
3.
The Governmental Accounting System
3.1
The Accounts Plan (Chart of Accounts) and its Relationship with the Budgetary Process
A substantial aspect of the reforms which have been implemented is the establishment of an
appropriate relationship between budget and accounts. This relationship occurs automatically
through the Financial Information Integrated System (Sistema Integro de Información Financiera,
SIDIF). The following outlines the major features considered when developing the system:
•
The application of the concepts of universality and budget unity — that is the same system is to
be applied throughout the public sector and the accounts are to articulate with the budget
designation.
•
The links between the budget registrations and the chart of accounts, such that recognition of
amounts “accrued” and “paid”, trigger an automatic conversion matrix of the budget registrations
into general accounting registrations.
•
In relation to the wider concept of inflow and outflow of funds, the system recognizes receipts
being generated either from:
a. traditional current income ;
b. the sale (decrease) of assets; or
c. the increase of liabilities.
On the other hand, the system recognizes expenditures being ge nerated from:
a. current expenses;
b. the purchase (increase) of assets; or
c. the decrease of liabilities.
•
The unique nature of each transaction will require each operation to be registered only once, at
its input, which will then feed through the rest of the systems.
However, not every accounting operation, transaction or event is included in government budgets,
i.e., amortizations. Therefore, there are differences between the budgets and the accounts at closing
date of each fiscal year. Thus, the National Accounting Office has developed a “Contrast Table”
which generates and explains the movement from the budgetary result (surplus or deficit) to the
accounting result.
3.2
The Accrual Basis in Argentina
Resolution # 25/95 of the Secretariat of Finance establishes the following General Accounting
Principles which encompass matters such as: the economic entity, going concern, reporting period,
financial assets, local currency, valuation at cost or fair value, explanation/ note disclosures,
materiality, universality, consistency, prudence and the accrual basis.
The accrual principle as recognized in IPSASs is that transactions and events are recognized when
they occur (and not only when cash or its equivalent is received or paid). Therefore, the transactions
THE GOVERNMENTAL ACCOUNTING SYSTEM
and eve nts are recorded in the accounting records and recognized in the financial statements
of the periods to which they relate. This is consistent with the underlying principles of
accrual accounting as adopted in Argentina. (See Figure 4 below.)
Figure 4: The Accrual Principle
In Argentina, the accrual principle is described as follows:
“Reconocimiento de las Transacciones”: “…la concurrencia de hechos económicos-financieros
motivo de las transacciones que afecten a los entes, las que determinan modificaciones en el
patrimonio como así también en los resultados de las operaciones, deben ser reconocidos, a través
de las registraciones contables, en el momento que se devengan…”
In English, this translates as follows:
“…the occurrence of economic-financial events giving rise to the transactions affecting entities,
which modify the patrimony (net assets/equity) as well as the result of the operations, shall be
recognized, through accounting registrations, at the moment of accrual…”
The reason why the accrual basis is adopted for recognition in the budget and in the general purpose
financial statements, is because it reflects the time at which the budgetary credit is executed and also
the time at which general accounts are affected, either in respect of assets and liabilities or from
revenues and expenditures and therefore the operating result.
The criteria for expenditures to be recognized are as follows:
•
When the expenditures are authorized by the budget process, they are recognized in the financial
statements as expenditures. Examples of such expenditures include donations and subsidies.
•
A change in the net assets/equity component of each entity, arising from specific occurrence.
Examples of such expenditures include those incurred when making capital assets purchases and
other transactions which have economic or financial effect.
•
The incurrence of an obligation to make a payment due to the acceptance of goods or services
hired in the course of business.
While the timing of recognition of the expenditure is clear, it is not so clear in the case of revenue. In
the public sector, revenues arise from tax and non-tax sources such as fines/fees, contributions,
grants, property rentals and exchange transactions. Determining the timing of recognition of each of
these is complex.
When analyzing the circumstances under which each of the items arise, it can be seen that the
amount and date of collection of certain revenue (rates, rentals, sale of assets, etc.) are clear because
there is a basis of calculation (a table of charge s, the provision of goods or services) and the precise
identification of the beneficiary, and thus of the debtor.
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
The situation becomes more complex when there are miscellaneous factors affecting the basis of
recognition of the revenue and of its respective debtor. This is the case for tax revenue and other
transactions and events which are declared in tax statements. The determination of the amount of
these can depend on a number of factors (i.e., other revenues and expenses of the taxpayer) not
connected with the Administration.
In these cases, even if the date at which the Government’s right to receive tax revenue arises can be
clearly identified, the operative procedures of the information systems do not receive the data until
the taxpayer settles the debt with the Tax Office. At that point, the revenue is accrued. Therefore, the
accrual coincides with the amount “collected”. To this end, the basis of “accrual” reflected in the
government data collection systems requires recognition when there is “objective” knowledge of the
right. [IPSASs identify that the criteria for recognition is reliable measurement. Currently the
position adopted is that adequate reliable measurement only arises when objective knowledge arises.
The PSC has also formed a Steering Committee to contribute in the development of guidance on the
accounting treatment of revenue from non-exchange transactions (including taxes and transfers).An
Invitation to Comment (ITC) on this topic will be issued in January 2004.] Nevertheless, there is
concern on the part of the Administration, in relation to this approach — in particular, that the
information system does not record information on tax revenue until payment is received.
Mechanisms to disclose information about tax receivables prior to the receipt of cash and broad
enhancements to the system are currently under review, including enhancements which will impact
on the information providers — that is the taxpayer, as a way of improving the accounting
disclosures, and also as a tool to control incomplete data or tax evasion.
It is hoped that in the future, a tax data system might be developed to analyze the information
gathered from the tax statements submitted and, at that stage, recognize the Government’s right as a
receivable.
Summing up, the Governmental Accounting System is based on the “accrual principle”, except for
the particular characteristic of tax revenue, which can be defined as a mix of accrued and collected
taxes.
3.3
Government Assets
The reforms undertaken for property, plant and equipment began with a revaluation of infrastructure
assets. This was undertaken jointly by the National Accounting Office and the National Assessment
Tribunal, which is the ruling body on real estate valuation issues.
This revaluation has proved beneficial since it provided an up-to-date inventory of the current stock
of infrastructure assets and enabled the coordination of records displaying physical characteristics of
these assets (asset registers) with accounting records. Furthermore, the useful life of property, plant
and equipment can be more readily identified and assessed. This enables proper amortization and the
recognition of improvements and enhancements to the stock of infrastructure on an ongoing basis.
This information is entered in the system through the scanning of files, to connect it with the deeds
and inventory registrations kept by the National Accounting Office. This process assures the faithful
representation and reliability of the financial statements.
THE GOVERNMENTAL ACCOUNTING SYSTEM
Currently, property, plant and equipment including infrastructure assets and military
equipment, are recognized and valued at their “acquisition or construction cost”, according
to the requirements (Resolution # 25/95) of the Secretariat of Finance. Where such
valuations are not available or current, all assets measurement bases that can be used are: fiscal
valuation (Resolution # 47/97 of the same Secretariat), a value determined by the tax office and
“appraisal valuation” (Administrative Decision # 56/99), a value given by an independent appraiser,
will in turn, update the previous valuation. After initial recognition as an asset, property, plant and
equipment will be depreciated and that amount will be disclosed in the notes to the financial
statements.
It is important to note that t his new approach to the recognition and measurement of property, plant
and equipment has resulted in a revision of the treatment given to “Infrastructure Assets”. Previously
the assets were recognized as they were being constructed and then derecognized when they were
put into use, notwithstanding that they have service potential for many future periods, such as in the
case with roads and bridges. This approach has given rise to certain anomalies and, arguably,
misrepresentations when financing assets through, for example, foreign loans. This is because,
consistent with this treatment, when the asset is “activated” and “derecognized” from the financial
statements while the emerging debt is kept, it does not represent an accurate and reliable picture of
the net asset position. Moreover, if we consider the case of roads and bridges acquired through grants
or granted in concession, the entity would recognize and report the revenue but not the assets.
In response to these problems, the accounting regulations have been amended (Accounting Office
Provision # 19/02) so that these assets could be recognized. The process of recognition of
infrastructure assets is set out below:
•
Infrastructure assets, includ ing assets which are under construction or recently completed assets
at the closing of the fiscal year, will remain as part of the Government assets.
•
Next, in 2002, the existing infrastructure assets will be recognized as part of the Government
assets as appropriate, consistent with the modification of the chart of accounts as necessary.
•
All infrastructure assets which were not recognized in previous years will be valued in the future
with the National Assessment Tribunal.
More reliable valuation and disclosure of Infrastructure Assets will help reflect the basic equation:
Assets = Liabilities + Net Position. Currently, the net position shows a negative result which affects
the ability of the government to raise foreign debt and also suffers from the distortion which results
from not recognizing these assets but recognizing the debt incurred to develop and maintain them.
Once the accounting reform has been achieved, a more reliable and better disclosure of financial
statements will result.
3.4
Investment Account
The Investment Accounts are prepared according to the regulation issued in 1993 (article 95 of Law
# 24.156). Major features of the Investment Account are the following:
•
Financing -Investment -Savings Account : relates the economic classification of public revenue
with the economic classification of public expenses, allowing for the calculation of the following
results:
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
?
Operative: Current revenue - Current expenses (Debt interest is not included).
?
Economic: Current revenue - Current expenses (Debt interest is included).
?
Financial: Total revenue (Current revenue + capital income) - Total expenses (Current
expenses + capital expenses).
•
Statement of the Treasury of the Central Administration: presents the changes of the
balances of the Treasury’s cash and cash equivalents.
•
Statement of the Public Debt of the Central Administration: presents changes of the Public
Debt classified in domestic, foreign, direct and indirect. Direct Public Debt is debt contracted by
the Central Administration. Indirect Public Debt is debt contracted by any public or private entity
endorsed by Central Administration.
•
Financing -Investment -Savings Account of the non-financial national public sector: presents
the operative, economic and financial results at each Institutional Level.
•
Budgetary execution of revenue and expenses: reports budget approved by law and its
execution.
•
Information on contributions to the Treasury and pending amounts: reports contributions to
the Treasury by centralized and decentralized organizations and the revenue distributable balance
at the close of the fiscal year by decentralized organizations.
•
Management Result: reports the financial and physical results.
•
Financial Statements: Balance Sheet, Statement of Current Results, Statement of Changes in
Net Position, and Statement of Origin and Application of Funds. See Appendix I for an example
of the format used to present the financial statements or visit the National Accounting Office
(CGN) web page http://www.mecon.gov.ar/hacienda/cgn/cuenta/.
3.5
Financial Statements of the Federal Government Central Administration
For the first time in the history of the National Public Sector in Argentina, the Public Accounts for
fiscal year 1998 included the financial statements of the Central Administration, in which the net
position of decentralized bodies, social security institutions, national universities and government
business enterprises were combined.
The first financial statements were prepared at the close of the 1998 fiscal year. They inherited the
opening balance of the 1993 fiscal year from the previous system, following the Accounts Plan
implemented by the new system. As part of this process, it was necessary to implement a review
process of balances and changes of valuation of the assets to ensure that the amounts reflected were
reliable and justifiable. The tasks undertaken were the following:
•
Review of old credit (creditors) and debt (receivables), and a reliable valuation of those amounts
for disclosure.
•
Changes in methodology for the valuation of infrastructure assets to reflect the actual economic
situation (fair value).
THE GOVERNMENTAL ACCOUNTING SYSTEM
Combination of the net assets of decentralized bodies, social security institutions,
national universities and government business enterprises as non current assets of
Central Administration at the close of the financial year. The process of combination is
listed below:
•
1) For the balance at the closing of the fiscal year, every credit or debt movement between the
parties is eliminated from the Net Assets of the combined entities. The remaining balances
are then accounted for as “Contributions and Capital Shares” account as Non Current Assets
in the Financial Statement of the Central Administration.
2) The difference between the balance at beginning and the end of the fiscal year of the Net
Assets of the combined entities is adjusted in the Result of the Central Administration.
•
New disclosure of public debt and accrued interest at the closing of the fiscal year.
•
Analysis of any claim involving the Government as a party, so as to estimate their effect on the
financial position of the Government and to include relevant information on contingent liabilities
in the notes to the financial statements.
It should be noted that there are no standards or regulations that require the recognition of the effects
of a hyperinflationary economy in the financial statements. Therefore, the effects of hyperinflation
are not reflected in the financial statements.
The National Public Sector of Argentina requires the presentation in t he Financial Statements which
are similar to the format of IPSASs. As noted in section 4, further developments proposed in
Argentina include the adoption of all the requirements of IPSASs as well as the presentation formats.
A table identifying the Financ ial Statements required by IPSAS 1 and the Financial Statements
IPSAS 1
Financial Statements of Argentina
Balance Sheet (or Statement of Financial Position)
Balance Sheet (or Statement of Financial Position)
Statement of Financial Performance
Statement of Current Results (Resources and
Expenditures)
Statement of Changes in Net Assets/Equity
Statement of Changes in Net Position
Cash Flow Statement
Statement of Origin and Application of Funds
Accounting Polic ies and Notes to the Financial
Statements
Valuation Regulations and Notes to the Financial
Statements
prepared by the Argentine Government follows.
Since fiscal year 1998, the National Accounting Office has continued analyzing and enhancing the
presentation of the Financial Statements elaborated for fiscal years 1999, 2000 and 2001.
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
4.
Objectives for Future Development in the Governmental Accounting System
Further objectives which the Government has committed to achieving to optimize Governmental
Accounting System for the coming years are stated belo w.
•
Costs System
The costing system is to be further developed to enable calculation of costs by activity.
•
Management Accounting
The development and enhancement of “systems” and reports for management and for decision
makers at higher levels.
•
Consolidation of Financial Statements
The preparation of consolidated financial statements for all entities. A training plan has been
undertaken by the decentralized organizations of the Central Administration to enable proper
implement ation of the accounting regulations within all the entities in the public sector. It will
include consolidation of all the financial statements of the public sector within the different
provinces of the country.
•
Training
Further improvements of the permanent training process of public sector employees. Additional
training will be undertaken by the Universidad de Buenos Aires (UBA, University of Buenos
Aires), private universities, and the FACPCE (Argentine Federation of Economic Science
Professional Councils).
•
International Standards
To continue to the process directed at harmonizing Argentine public sector generally accepted
accounting principles with all the IPSASs.
CONCLUSION
5.
Conclusion
The objective of the Governmental Accounting System in Argentina is to maintain an appropriate
record of the transactions of the government and its agencies, and is to be a key tool to achieve
greater transparency in the information and disclosure of the accounts of the public sector.
In Argentina, it is considered a matter of the utmost importance that the Governmental Accounting
System has an even more relevant role than the one given to the Budgetary System, that is to achieve
the objectives of accountability and transparency. This implies a change of concepts within the
organizational culture of the public sector and recognition of the role and benefit of financial
reporting.
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
Appendix I: Summary of Financial Statements
of the Central Administration of the Argentine Government
FINANCIAL STATEMENTS OF THE CENTRAL ADMINISTRATION
BALANCE SHEET AS OF DECEMBER 31/2003 — IN PESOS
Fiscal Year 2003
Fiscal Year 2002
Assets
Current Assets
Cash and other monetary assets
Short-term credits
Inventory and related property
Total of Current Assets (A)
X
X
X
X
X
X
X
X
Non-current Assets
Long-term credits
Property, plant and equipment
Intangibles
Contributions and Capital Shares
Other assets to be allocated
Total of Non-Current Assets (B)
Total Assets (F)=(A) + (B)
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Liabilities
Current Liabilities
Short-term debt
Third parties and collateralized debt
Deferred Liabilities (prepayments)
Forecasts
Other liabilities
Total of Current Liabilities (C)
X
X
X
X
X
X
X
X
X
X
X
X
Non-current Liabilities
Long-term debt
Deferred Liabilities (prepayments)
Contingencies/ Provision
Other liabilities to be allocated
Total of Non-Current Liabilities (D)
Total of Liabilities (E)=(C)+(D)
X
X
X
X
X
X
X
X
X
X
X
X
NET POSITION (F) -(E)
X
X
Total of Net Position — according to Statement
Total of Liabilities and Net Position
X
X
X
X
Note:
The financial statements of the Central Administration integrate the net position of decentralized organizations, social
security institutions, national universities and governmental business enterprises, but not the independent provinces and
the City of Buenos Aires. The financial statements are prepared on the accrual accounting basis, except for tax revenue
which is recognized on a cash basis.
APPENDIX I: SUMMARY OF FINANCIAL STATEMENTS
OF THE CENTRAL ADMINISTRATION OF THE ARGENTINE GOVERNMENT
FINANCIAL STATEMENTS OF THE CENTRAL ADMINISTRATION
STATEMENT OF CURRENT RESULTS (RESOURCES AND EXPENDITURES)
FOR THE TERM ENDED DECEMBER 31, 2003 IN PESOS
Fiscal Year 2003
Fiscal Year 2002
Resources
Tax revenue
Contributions to social security
Sales of goods and services of public administration
Transfers received
Other revenue
Total Revenue (a)
X
X
X
X
X
X
X
X
X
X
X
X
Expenditures
Excise expenditures
Rent on goods
Social security services
Transfers granted
Other losses
Total Expenditures (b)
X
X
X
X
X
X
X
X
X
X
X
X
ECONOMIC RESULT OF CENTRAL
ADMINISTRATION (a) — (b)
X
X
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
FINANCIAL STATEMENTS OF THE CENTRAL ADMINISTRATION
STATEMENT OF CURRENT RESULTS (RESOURCES AND EXPENDITURES) FOR THE
TERM ENDED DECEMBER 31, 2003 — IN PESOS
Intra-national Public Sector (NPS) Transactions
and Capital Shares Result
Contributions Received
Central Administration
Decentralized bodies
Social security bodies
Fiscal Year 2003
Fiscal Year 2002
X
X
X
X
X
X
X
X
Result of Capital Shares Result
X
X
X
X
X
X
X
X
X
X
Intra-NPS and Capital Shares Result
X
X
MANAGEMENT OVERSPEND
X
X
Contributions Granted
Central Administration
Decentralized bodies
Social security bodies
APPENDIX I: SUMMARY OF FINANCIAL STATEMENTS
OF THE CENTRAL ADMINISTRATION OF THE ARGENTINE GOVERNMENT
FINANCIAL STATEMENTS OF THE CENTRAL ADMINISTRATION
STATEMENT OF CHANGES IN NET POSITION
FOR FISCAL YEAR ENDED DECEMBER 31, 2003 — in Pesos
CURRENT ACCOUNT RESULTS
RECEIVED
FISCAL CAPITAL TRANSFERS
PUBLIC
PUBLIC
PROPERTY
CAPITAL AND CONTRIBUTIONS PREVIOUS
FINANCE
CONCEPT
OF
TOTAL
(5)
(1)
(2)
FISCAL YEARS FISCAL YEAR (3) (4)=(1)+(2)+(3)
TOTAL (6)=(4)+(5)
Balance — beginning of period
X
X
X
X
X
X
Over financial statements of previous fiscal year
X
X
X
X
X
X
Change of balance
X
X
X
X
X
X
Balances changed at beginning of fiscal year
X
X
X
X
X
X
Fiscal Year increase
X
X
X
X
X
X
Fiscal Year decrease
X
X
X
X
X
X
Fiscal Year Result
X
X
X
X
X
X
Balance at closing of fiscal year
X
X
X
X
X
X
THE GOVERNMENTAL ACCOUNTING SYSTEM IN ARGENTINA
FINANCIAL STATEMENTS OF THE CENTRAL ADMINISTRATION
STATEMENT OF ORIGIN AND APPLICATION OF FUNDS
FOR THE PERIOD ENDED 31 DECEMBER 2003 — In Pesos
BALANCE OF MONETARY ASSETS AT BEGINNING OF PERIOD
X
ORIGIN OF FUNDS
ANNUAL FLOW
Management saving/overspend
Provisions variations and technical reserves
Fiscal Year Amortizations
NET ASSET POSITION
Increase of Fiscal Capital
Adjustment of Results of Previous Fiscal Years
ASSETS VARIATIONS
Decrease of Current Assets
Financial
Credits
Real
Inventory and Related Property
Decrease of Non Current Assets
Financial
Financial Investment
Contributions and Capital Shares
LIABILITIES VARIATIONS
Increase of Current Liabilities
Debts
Other liabilities
Increase of Non Current Liabilities
Debts
Other liabilities
TOTAL OF ORIGIN OF FUNDS
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
APPENDIX I: SUMMARY OF FINANCIAL STATEMENTS
OF THE CENTRAL ADMINISTRATION OF THE ARGENTINE GOVERNMENT
FINANCIAL STATEMENTS OF THE CENTRAL ADMINISTRATION
STATEMENT OF ORIGIN AND APPLICATION OF FUNDS
FOR THE PERIOD ENDED 31 DECEMBER 2003 — In Pesos (CONT.)
APPLICATION OF FUNDS
NET ASSET POSITION
Increase of Fiscal Capital
Adjustment of Results of Previous Fiscal Years
ASSETS VARIATIONS
Increase of Current Assets
Financial
Financial Investment
Other assets
Increase of Non Current Assets
Financial
Credits
Real
Property, Plant and Equipment
Intangibles
Other Long Term Assets
LIABILITIES VARIATIONS
Decrease of current liabilities
Guarantee and Third Parties Funds
Deferred Liabilities
TOTAL APPLICATION OF FUNDS
FINAL BALANCE OF MONETARY ASSETS
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
The classifications and adjustments at beginning performed during fiscal year 2003 have been segregated so
as to reasonably disclose the Origin and Application of Funds of the fiscal year.
The Notes and Annexes are an integral part of these Statements.