28 April 2006
CIPFA has urged the UK's Department for International Development to promote a new international reporting standard to minimise the multiple reporting burdens placed on poor countries.
In a letter responding to the department's recent consultation on its forthcoming white paper, CIPFA chief executive Steve Freer urges DfID to support the International Public Sector Accounting Standards Board's proposal for a single financial reporting standard for aid recipients, published last year.
The proposals follow widespread criticism from academics, developing countries and aid agencies that much development assistance is swallowed up by the need to conform to separate reporting standards for each donor.
While Freer acknowledges that 'the most significant barrier to development is corrupt government', and that DfID must therefore focus its efforts on ensuring greater accountability for aid, he also advocates the standard board's 'streamlining' approach.
Attempts to implement the new standard were stalled last year when respondents to an exposure draft complained that it might be too onerous for developing countries.
Although the IPSASB sought to implement field trials of the standard, no donor country has yet volunteered to participate.
'Achieving the millennium development goals by 2015 is widely recognised as a challenging task, even with the increase in aid from donor countries, including the UK,' said Freer.
'Streamlining accounting processes, reducing duplication and increasing transparency should greatly assist progress towards the goals, enhancing accountability to the citizens of developing countries and donors.'
In February 2003, 23 donor countries – including the UK – 28 aid recipient countries and 23 multilateral agencies such as the World Bank and European Commission signed the Rome Declaration on Harmonisation. This pledges to harmonise reporting requirements and reduce 'unproductive transaction costs' caused by diverse monitoring requirements.
Although CIPFA's contribution to the consultation supports DfID's move towards direct budgetary support for developing countries (rather than ring-fenced aid), Freer argued that 'a reasonable level of “conditionality” is essential to build confidence in the aid system'.
He added that making governments accountable to their poorest citizens – who often lose out to corrupt elites – requires 'a balance between providing local autonomy, via direct budget support where it is warranted, and guiding the use of aid by attaching conditions that facilitate efficiency and effectiveness'.
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