The Progress with the Implementation of IPSAS for the year 2020
Period: 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009

In 2009, as part of its agreements with the International Monetary Fund (IMF) and the European Union (EU) 1, the Government of Georgia (GoG) committed to the implementation of International Public Sector Accounting Standards (IPSAS). The implementation strategy was included in the Ministry of Finance Order 701 of 3 November 2009. The strategy envisaged a phased implementation with full transition to IPSASs by 2020. This meant that in that year a consolidated financial statements of public agencies would be prepared in accordance with the standards. By the implementation of IPSAS, the GoG aimed to align its accounting and reporting standards to an international recognized one. This would improve the quality of the financial information on which basis the GoG and the Parliament makes its resource allocation decisions.

With the support of a EU-funded project, the State Audit Office (SAO) conducted this performance audit which examines the progress in the implementation of the standards and concludes on the readiness of the GoG to implement the standards in accordance with the agreed timelines. Specifically, the audit examined the quality of the decisions and measures to implement IPSAS and the degree of implementation of these measures. The audit has resulted in recommendations on the necessary future steps and resources to support the implementation process.

According to MoF, in line with the recommendations set out in the IMF report, the strategy document will be amended from 2020, and instead of full compliance (direct reference) with the IPSAS, financial reporting will be prepared based on IPSAS.

The progress of preparations at local government levels (autonomous republics and municipalities) is weaker and requires much more efforts. The implementation of the IPSAS in Georgia requires better planning, coordination and implementation of the process, following the recommendations below.


The current implementation strategy and action plan are severely limited and will require significant improvement. The MoF should take urgent steps to:

• Prepare a more detailed and costed implementation plan that includes clear timelines, milestones, deliverables, selected implementation approach, benefits, risks and their mitigation measures, and a mechanism for the regular monitoring of progress

• Develop a new more detailed action plan with agreed more realistic timeline, which specifies responsibilities, costs, expected results and progress monitoring

• To define the resources requirements for the IPSAS implementation including necessary financial, human and IT resources

• Communicate clear and full information on the necessary resources of IPSAS implementation to the GoG and those responsible for implementing the standards


The current GoG approach to implementation assumes only full implementation of IPSAS. In this respect the GoG should take urgent steps to:

• Identify the customers, key stakeholders affected by the implementation, and their expectations. Especially, the GoG is urged to engage with Parliament in the process

• Revisit the need to fully implement the IPSAS (direct approach), including deliberations on alternatives such as indirect approach

• Define the benefits expected from the implementation of IPSAS, develop realisation plan of the benefits identified and perform the CBA. The expected benefits of adoption of a new financial reporting framework needs to be documented and tracked during and after the implementation process


Successful implementation will require an effective and well managed governance framework. The GoG should revisit arrangements for the oversight of the implementation and ensure that:

The Board has the appropriate levels of authority for implementation oversight and managerial decision making

• The role, authority, objectives, responsibilities, and accountability of the Board are clearly defined

• Minimal requirements for the functioning of the Board are defined including the frequency of meetings and documentation of the Board’s deliberations and decisions

• The Board deliberates at least twice a year to assure that the action plan and set objectives are aligned .The Board requests the progress reports at least quarterly. These reports should contain the results achieved and measures taken in response to the Board instructions


There are several key indicators of readiness that need to be met if the process is to have a good chance of a successful outcome. The MoF and the Board should ensure that:

• Audit findings are considered, the impact of these findings on the consolidated financial statements are defined and significant weaknesses at the entity level are properly addressed

• Guidelines are developed to address the systemic weaknesses revealed by the SAO’s audit

• The new standards and amendments in the existing provisions of the standards are translated and transposed into the legislation

• Unified accounting policies are developed and applied to all public entities

• Financial officers trained are required to take the test and those who pass are certified; the effectiveness of the trainings are assessed by those attending; This will allow to evaluate the proficiency of the financial officers across the country. The agencies will be able to better plan and make better decisions

• For the staff engaged in the implementation process a new detailed guideline and practice notes are developed that will help them properly apply the standards and prevents the risks of misinterpreting the standards. The practice notes will also help in complying with unified accounting policies and will make themes clearer those that require explanations

• Before the standards are fully implemented IPSAS based trial balances are produced. This allows for the evaluation if the standards are properly applied and for preparation of the opening balances by the date of the full implementation

• The revised implementation plan includes deployment of appropriate financial management information systems, the phases of development and implementation of the new accounting modules of the system and the trainings necessary to implement these modules. It is important to train staff in accounting and application of new accounting modules

• Under the Board supervision the consolidation plan is developed, which ensures proper accounting for the intra-group transactions and subsequent eliminations. Modules of the approved consolidation plan should be added to the information financial management information system and IPSAS implementation plan

• Define the MoF’s obligation to prepare consolidated financial statements and the role of the Audit Office in conducting audit of these financial statements, with the interaction of the legislature and other stakeholders. Legislative changes are needed to fully prepare and audit the financial statements