EY CGAS Insights Event

Government Accounting Reform: Advancing towards enhanced transparency and accountability

Ireland is embarking on a significant reform of its government accounting practices, transitioning from a cash basis to accruals-basis of accounting to align with the International Public Sector Accounting Standards (IPSAS). This positions Ireland alongside other OECD countries in adopting more modern and transparent accounting methods.

The transition offers substantial advantages, though it also presents certain challenges. It is essential for government departments to carefully strategise and prepare in order to facilitate a seamless shift.  

Understanding the shift

Historically, Ireland adopted a cash basis of accounting, which provided clear insights into fiscal resources. However, recommendations from the OECD have prompted a shift to accruals-based accounting, which records transactions when they are earned or incurred, regardless of cash flow. This method offers a more accurate representation of a government’s financial position.

To respond to the OECD’s recommendations, the Government of Ireland issued the Central Government Accounting Standards (CGAS) which are customised adaptations of IPSAS designed specifically for Ireland. The phased implementation of CGAS has already begun, with the first nine standards effective for accounting periods starting on or after 1 January 2024. Departments facing challenges in complying with these standards can apply for temporary derogation through the Department of Public Expenditure, NDP Delivery and Reform. Where derogation is sought it must also be accompanied by a timeline of when and how the body will be compliant and specify what aspects of the released CGAS it currently cannot meet. 

Navigating potential challenges

The transition to CGAS is more than a mere accounting change. It will affect systems, processes, and personnel across government functions. A superficial conversion to CGAS will not suffice as the impact is far-reaching and requires a comprehensive approach. Government departments must be prepared to tackle several potential challenges during the transition:

• Grasping the nuances between cash-based and accrual-based accounting.
• Providing extensive timely training and capacity building for staff.
• Adapting IT systems and financial reporting processes.
• Ensuring accurate and timely capture of all financial transactions.
• Assessing completeness of existing financial data to successfully adopt the new standards.
• Managing stakeholder expectations throughout the transition.

The reform plan: A three-pronged approach

Ireland's Financial Reporting Reform Plan is a comprehensive strategy that:

• Aims to standardise accounting practices and principles to be consistent with international public sector accounting standards.
• Provides for a phased approach to the implementation of CGAS that will serve as a foundational framework in preparing robust financial statements.
• Includes the ultimate consolidation of Central Government Financial Statements with the ability to monitor risks and performance at a higher level.

The accounting reform is a bold step towards aligning with global best accounting and reporting practices. The transition will help enhance financial transparency, comparability, and accountability, thereby strengthening public trust in the Government’s financial management and prudence. 

How EY can help 

EY’s Financial Accounting Advisory Services (FAAS) in Ireland can offer crucial support to government departments during this pivotal transition. EY is well equipped to provide strategic planning, project management, technical accounting assistance, and guidance on implementing CGAS, including associated policies, processes, and internal controls. EY has a global IPSAS Centre of Excellence (COE) with local expertise in various early adopting countries, including Latin America, the United Arab Emirates, Italy, and South Africa. Additionally, our COE includes Board Members of the International Public Sector Accounting Standards Board (IPSASB), underscoring our deep involvement and commitment to public sector accounting excellence.