“United in diversity” public sector financial, statistical and budgetary reporting in the European Union

• Published date: 07 October 2019
• DOI: https://doi.org/10.1108/IJPSM-12-2018-0272
• Date: 07 October 2019
• Pages: 265-283
• Author: Adriana Tiron-Tudor,Cristina Silvia Nistor,Cristina Alexandrina Stefanescu
• Subject Matter: Public policy & environmental management,Politics,Public adminstration & management

“United in diversity”public sector

financial, statistical and

budgetary reporting in the

European Union

Adriana Tiron-Tudor, Cristina Silvia Nistor and

Cristina Alexandrina Stefanescu

Department of Accounting and Audit,

Faculty of Economic Sciences and Business Administration Babes-Bolyai University,

Cluj-Napoca, Romania

Abstract

Purpose –The purpose of this paper is to approach, both theoretically and empirically, public sector

reporting at European Union (EU) level. It contributes to the accounting harmonisation literature by revealing

the actual status of governmental reporting at the national level.

Design/methodology/approach –The paper carried out an exploratory data analysis of the harmonisation

of statistical, budgetary and financial reporting at the EU level. A mapping visualisation offers a

comprehensive overview of the current state of connections between these reporting systems.

Findings –The results reveal the complexity of governments’reporting systems homogeneity, although all

stakeholders recognise the struggle for the principles of performance and transparency in the public sector.

Thus, these are following the EU Commission’s study, which concludes that there is significant heterogeneity

in the accounting and reporting practices applied transversely throughout all Member States.

Research limitations/implications –The relevance of the study is comprehensive, from the economic

environmentto the practitioners,from the internationalregulatorybodies to the nationalones, all can assess and

quantifythe significance of the past,present and future changes,considering their needs.The limitations of the

researchregard the documentationbackgroundbecause uniformly accessingsome informationpresented by the

EU MemberStates is relativelytricky. Future researchmight focus on the effectsof these changes as theyoccur.

Originality/value –The study contributes to the scientific literature in the public sector through a

comprehensive, well-supported and statistically grounded analysis performed at EU level, able to provide

reliable results and to support valuable future recommendations towards harmonised reporting. Moreover, it

supports and encourages all national and international efforts for improving the comparability of financial,

budgetary and aggregated statistical reports.

Keywords Statisticalreporting, Financial reporting, Budgetary reporting, EU, Harmonization, Public sector

Paper type Research paper

Introduction

After the year 2008, financial crisis and the last sovereign debt crisis, the European Union

(EU) has become more focussed on financial stability supervision, control of the deficit and

debt in the EU and the stability of the monetary and economic union. To achieve this aim,

the EU, through the European Commission (EC) and EUROSTAT, started a challenging

task to improve the budgetary surveillance of its member states through a more reliable and

high-quality government statistics, by reforming the governmental financial and budgetary

reporting. A robust and comparable reporting system for all member countries should allow

governments to report their macro-level statistical and fiscal data and information on the

national debt in a timely, reliable and transparent manner.

Council Directive 2011/85/EU (the Budgetary Frameworks Directive) requires the

Member States to have complete and reliable budgetary data that enable comparability and

avoid excessive government deficit. While the accounting systems should cover all

sub-sectors of general government and produce the needed information to generate accrual

Received 22 December 2018

Revised 29 July 2019

Accepted 18 August 2019

The current issue and full text archive of this journal is available on Emerald Insight at:

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United in

diversity

InternationalJournalof Public

SectorManagement

Vol.33 No. 2/3,2020

pp.265-283

©EmeraldPublishingLimited

0951-3558

DOI10.1108/IJPSM-12-2018-0272

265

data for producing statistical reports according to European System of Accounts (ESA). It

thereby acknowledges the essential incoherence between public sector accounts, which only

record cash flows. Another issue is that the ESA accruals represent the data of EU

budgetary surveillance. The lack of coherence between primary public sector accounts and

ESA accruals data has drawn the attention of the EU. Therefore, Eurostat promotes a

system of harmonised accruals-based accounting standards, for all entities of the

government sector, supporting statistical reporting consistent with the ESA.

In this context, the paper analyses the government reporting systems of the EU member

states including statistical, financial and budgetary reporting and the relation between them.

This paper is in line with Dabbicco (2015), who argues that better monitoring and

improved managerial (information) decision making is expected to be achieved with accrual

accounting (and budgeting). Following the economic crisis, the EU context encourages

research in this area, as a response to the high interest of the European institutions for a

harmonised or even standardised public sector reporting system across all member states.

At least the follows four arguments support this idea. First, at the EU level the preparation

of statistical reporting and national accounts is regulated and harmonised through ESA,

and their requirements “will still dominate over any reporting standards that will apply to

governmental”reporting ( Jones and Caruana, 2015a, b). Second, the EU strongly supports

the harmonisation of public sector financial reporting based on accrual accounting, both

within countries and across countries to increase the comparability of public sector financial

reports (Nistor, 2017). Third, the budgetary reporting in Europe is very diverse, with a

predominance of cash and modified cash accounting (Manes Rossi et al., 2016). Furthermore,

a possible solution is converg ence/compromise between gove rnmental macro-level

reporting (statistical) and micro-level ( financial/budgetary) reporting and macro-fiscal

rules adopted by EU Treaties (Dabbicco, 2018).

Particularly in the European context, the harmonisation of micro-level reporting

(financial and budget) has been placed at the top of the policy agenda of the EC because it

would help in the preparation and comparability of macro-level reporting (statistical) and

EU member states compliance with the Maastricht Treaty criteria. The literature underlines

the need for and advantages of integrated development of these systems in the public sector

and the features they should have (Brusca et al., 2018) and proposes partial or specific topics

solutions (Dabbicco, 2018).

This paper aims to contribute to the analysis of the harmonisation process in the EU

public sector reporting as a tool to improve the comparability of general-purpose financial,

budgetary and statistical reporting. Furtherm ore, it can promote sound financial

management, good governance principles and the accountability of the public sector. The

paper carried out an exploratory data analysis (EDA) to provide the most recent evidence on

the harmonisation of the public sector at the EU level from a broad perspective

encompassing statistical, budgetary and financial reporting. Besides, throughout a mapping

visualisation, it offers a comprehensive overview of the current state of connections between

these reporting systems.

In doing so, it contributes to the ongoing international debate on the harmonisation of

governmental reporting at European level. Even if the European Public Sector Accounting

Standards (EPSAS) are in a continuous process of development and will become the EU

governmental reporting standard in 2025, the International Public Sector Accounting

Standards (IPSAS) constitute a reliable benchmark for the EU harmonisation process

between the EU members concerning their financial reporting and even more considering

their convergence with statistical reporting.

The paper follows a logical argumentative structure developed in several phases. First

of all, a set of theoretical assumptions and arguments drawn from the literature that

emphasise the conceptual perspectives concerning the financial, statistical and budgetary

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