UNHCR's Guide to IPSAS Implementation

Implementing IPSAS
at UNHCR
Implementing IPSAS at UNHCR
Target Audience
This course is for all UNHCR staff.
Course Outline
Unit 1. When will UNHCR implement IPSAS?
Unit 2: What is IPSAS?
Unit 3: Why is UNHCR Adopting IPSAS?
Unit 4: Who Should Know About IPSAS?
Unit 5: What are the Impacts of IPSAS on UNHCR?
1. Important vocabulary
2. Areas of the Organization IPSAS Will Impact
3. IPSAS Implementation = Accrual Based Accounting at UNHCR
4. Impacts of Accrual Based Accounting
5. IPSAS Financial Statements
6. Challenges of IPSAS Adoption for UNHCR
Unit 6. How You can Help Make IPSAS a success.
Unit 1:
When Will UNHCR Implement IPSAS?
IPSAS AT UNHCR
UNHCR is using a progressive roll-out approach so that implementation can
take place gradually. IPSAS Implementation at UNHCR will be accomplished
using a phased approach. Phased Implementation refers to whether we are
Early Adopters or Fast Followers. UNHCR is a Fast Follower among UN
agencies.
The IPSAS Project Team has been working since 2008 in preparation of the
various implementation dates, for full compliance by 2011.
2008
Planning
Establish
Governance
Establish
Working Groups
2009
Leases
Related Party
Disclosure
Contingencies
and Provisions
The IPSAS Phased Implementation
2010
Inventory
and PPE,
Depreciation
of PPE - July
Staff Benefits
Effect of Foreign
Exchange
2011
Recognition of
Revenue when
earned
Recognition of
Expense when
delivered
Financial Reporting
Budget Reporting
Financial
Instruments
Full
Adoption
3
Unit 1:
When Will UNHCR Implement IPSAS?
UN IPSAS TRAINING
UN IPSAS training will soon be available on the UNHCR
intranet in the Resource Management section of the Global
Learning Center webpage.
This course will become compulsory in 2010.
Unit 2:
What is IPSAS?
IPSAS stands for International Public Sector Accounting Standards.

IPSAS is a set of rules called accounting standards regulating many
of UNHCRs business transactions.
It is mandatory for all UN organizations to implement IPSAS by 2011.
IPSAS will improve the quality of financial reporting and resource
management.
Unit 3:
Why is UNHCR Adopting IPSAS?
IPSAS and its Benefits

The major benefits of the IPSAS Adoption for the UN organizations in general,
and for UNHCR in particular, are:
A.
B.
C.
D.
One UN
Consistent UN Financial Reports
Increased Transparency
More Information About How We
Spend Money
E. High Quality Financial Reports
Unit 3:

A. One UN
UNHCR must align itself with all of the
other UN organizations as we move
toward One UN. At the same time,
adopting IPSAS is part of the UNs
ongoing efforts to align UN systems with
internationally recognized standards and
best practices.
Unit 3:

B. Consistent UN Financial Reports
IPSAS provides numerous, rigorous guidelines and describes financial
transactions in high detail. These rules result in a consistent and comparable
recording of economic transactions among all users of the UN system.
Thus UNHCRs financial statements can be reviewed with increased
confidence and recognition in the international community.
Unit 3:

C. Increased Transparency
Accounting under IPSAS will increase transparency in UNHCR. The increase
of transparency results in better knowledge what UNHCR owns, or in other
words, what resources we have. In financial language this is called our
assets. Assets can mean cash, stocks, property and equipment we own and
amounts that other people owe us.
We also enhance our knowledge of the range of items UNHCR owes to
others, or in other words, what outstanding obligations UNHCR has to pay. In
financial language, these are called liabilities.
Better knowledge supports better management of UNHCRs assets and
liabilities. Improved resource management eventually results in better services
provided to the Persons of Concern to UNHCR.
Unit 3:

D. More Information About How We Spend Money
IPSAS uses accrual based accounting whereas the UN accounting system
has been using a modified cash basis accounting system. The advantages
of the accrual based accounting is, that it gives a clearer picture of
commitments, such as purchase orders and salaries that are due to be paid
at the end of the month, in our financial statements.
10
Unit 3:

E. High Quality Financial Reports
The adoption of IPSAS will result in
improved financial reports for UNHCR.
Member states and donors will be able
to hold UNHCR to a higher standard of
accountability.
This will lead to UNHCR being a more
credible organization with the entities
that fund us and with the countries
where we work.
11
Unit 4:
Who Should Know About IPSAS?
Advantages of IPSAS for UNHCR

While implementing IPSAS has far reaching benefits for all UN
organizations, it is highly advantageous for the different
stakeholders in UNHCR as well.
Let us see why different groups of stakeholders should
know about IPSAS
A.
B.
C.
D.
E.
Executive Committee (ExCom)

Global and Regional Managers
Representatives
Admin/Finance Staff
Supply, Programme and
other Field Staff
F. Staff at Large
G. Donors and Member States
H. Persons of Concern
12
Unit 4:

know about IPSAS
A.
B.
C.
D.
E.

Representatives
Admin/Finance Staff
other Field Staff
F. Staff at Large
The adoption of IPSAS will immediately result

in financial reports that are more clear and
credible. These reports will be easier for
international organizations and governments
to compare and analyze. Reliable financial and
operational information promotes trust
amongst our donors and member states, and
may result in increased fiscal and political
support.
13
Unit 4:

know about IPSAS
A.
B.
C.
D.
E.

Representatives
Admin/Finance Staff
other Field Staff
F. Staff at Large
Improved financial management and sound

financial information provides our senior
management with insights into our complex
operations and can improve decision making,
especially when it comes to allocating and reallocating resources amongst regions and
competing operational priorities. IPSAS will
also impact how we record contributions and
the effects of foreign exchange rate
differences.
Trustworthy and realistic financial reports will
also improve general governance and promote
a culture of transparency within UNHCR.
14
Unit 4:

know about IPSAS
A.
B.
C.
D.
E.

Representatives
Admin/Finance Staff
other Field Staff
F. Staff at Large
IPSAS implementation will provide

Representatives with in-depth knowledge on
the assets and inventory in the country and
region. This information allows them to make
better decisions on deploying items in favor of
the Persons of Concern.
IPSAS will also give Representatives a more
accurate picture of their financial position
including commitments such as purchase
orders and unpaid vouchers that will soon be
due.
IPSAS will also impact how we manage our
leases for offices and warehouses, etc.
15
Unit 4:

know about IPSAS
A.
B.
C.
D.
E.

Representatives
Admin/Finance Staff
other Field Staff
F. Staff at Large
Admin/Finance Staff will change the way they

enter and document transactions. They will
need to understand the new processes and
impacts of IPSAS on financial reports so they
can explain these to their colleagues.
Admin/Finance Staff will also begin working
with two additional accounting statements to
improve the clarity of financial information.
16
Unit 4:

know about IPSAS
A.
B.
C.
D.
E.

Representatives
Admin/Finance Staff
other Field Staff
F. Staff at Large
IPSAS adoption will provide field based staff

with more accurate and detailed information
on the status of property deployed with
Implementing Partners and the availability of
inventory stockpiles for distribution to Persons
of Concern.
17
Unit 4:

know about IPSAS
A.
B.
C.
D.
E.

Representatives
Admin/Finance Staff
other Field Staff
F. Staff at Large
IPSAS will help UNHCR to link financial and

accounting information more closely with our
budgets and Results Based Management.
Also, all staff benefits will be recorded directly
in the financial statements, not as notes to the
statements.
IPSAS will contribute to a more transparent
and accountable organizational culture in
UNHCR.
18
Unit 4:

know about IPSAS
A.
B.
C.
D.
E.

Representatives
Admin/Finance Staff
other Field Staff
F. Staff at Large
IPSAS implementation will lead to higher

donor confidence in UNHCR because we will
provide more reliable and standardized
reports.
Accountability and transparency are especially
important in public sector accounting during
times of a credit crisis or other financial
upheavals.
On the UNHCR side, we will record
contributions differently as per the conditions
stated by the various donors.
19
Unit 4:

know about IPSAS
A.
B.
C.
D.
E.

Representatives
Admin/Finance Staff
other Field Staff
F. Staff at Large
Greater efficiencies in resource management

will increase the effectiveness of operational
delivery and will make us more agile and
strategic in responding to the needs of the
Persons of Concern to UNHCR.
20
Unit 5:
What Are the Impacts on UNHCR?
So far we have learned about

the benefits and advantages of
IPSAS adoption across the UN
and UNHCR. Before
proceeding to IPSAS and its
impact on various business
areas at UNHCR, let us
understand some new and
essential vocabulary. These
terms are included in this
document:
21
Unit 5:
Important Vocabulary
A
Accounting standards
Accounting standards are principles that provide for the standardization of accounting processes and
the presentation of financial statements. The primary role of these standards is to bring about
uniformity across organizations that are similar in nature of operations and functions, so that you can
understand, analyze and compare the business performance of different organizations.
Accrual Basis of Accounting

Business transactions are recognized when they occur rather then when money comes in or goes out.
This concept affects when we record revenue and expenses. (Please see definitions on those
subjects).
Assets and Property Plant & Equipment (PPE)

Assets are what you own or control and what other people owe to you. This includes cash,
investments, property, equipment and amounts people owe you. In UNHCR, we use currently use the
word asset to mean non-expendable property and serially tracked items (STIs). With the introduction
of IPSAS, the term non-expendable property will no longer be used; instead we will refer to Property,
Plant and Equipment (PPE), which are items that costs more than 5,000USD and have a useful life of
more than a year. STIs will continue to be tracked for safeguarding purposes but are not be
considered PPE.
22
Unit 5:
C
Cash Basis of Accounting
Cash accounting is a type of accounting where transactions are only recognized in
financial statements when actual cash changes hands. UNHCR used a modified cash
basis of accounting under the UN System Accounting Standards (UNSAS).
D
Depreciation
All property and equipment, usually referred to as assets in UNHCR, loses value as it
ages. Depreciation is the systematic way to show this loss of value on our financial
statements. Example: UNHCR purchases a car for 10,000USD. The useful life of a car
is 5 years. The depreciation amount of the car will be 2,000USD each year and
2,000USD will be deducted for 5 years until the car is worth 0USD.
23
Unit 5:
E
Expenses
Expenses refer to the cost of goods and services that UNHCR has received and
the cost is reflected in the accounts at the time that the goods and services are
received. This includes invoices to suppliers and consultants, travel costs, rent,
utilities etc.
F
Fund Balance (Equity)
It is the carry over of UNHCRs Income from the prior financial year.
24
Unit 5:
I
Inventory
Items held in stock by UNHCR for distribution purposes among Persons of Concern.
Inventories are held in warehouses or are in transit to the delivery point for the
Persons of Concern.
L
Liabilities
Amounts UNHCR owes. This includes salaries payable at the end of the month,
unpaid vouchers, health insurance for staff, etc.
R
Revenue
Revenue is recognized under IPSAS when UNHCR has control over the contribution
and not when cash is received. Control means that the donor has not specified
conditions as to how UNHCR can spend money that would require refunding the
contribution if the money is not spent in the way specified by the donor.
25
Unit 5:
S
Serially Tracked Items (STIs)
STIs are valuable items such as digital cameras and satellite phones that cost less
than 5,000USD each.
Because of the low cost per item, they are not classified as PPE, nevertheless we track
these items in MSRP.
Statement of Financial Position (formerly known as Balance Sheet )

Statement listing the total PPE, Liabilities and Fund Balance (Equity) indicating the net
worth of UNHCR at a certain point of time.
Statement of Financial Performance (formerly known as Income

Statement )
Statement reporting UNHCRs revenue minus expenses for a specific period, a month or
a a year. If the amount is positive, it is a surplus, if the amount is negative, it is a
deficit.
26
Unit 5:
Areas of the Organization IPSAS will Impact

IPSAS Implementation: An Integrated Exercise
IPSAS implementation requires the involvement of all divisions
within UNHCR. IPSAS issues affect and must be discussed
not only with DFAM, yet also with DHRM, DESS and DIST.
All changes must be immediately communicated to the
Bureaux and key, field-based staff.
27
Unit 5:
Areas of the Organization IPSAS will Impact

Procurement
Audit
Inventory &
Warehousing
Logistics
PPE
Budget
Section
DESS
Office of the
Controller
Financial Control
Section
DFAM
Regional Offices
Country & Field

Offices
IPSAS
Treasury
Section
Legal Affairs
Section
Bureaux
DHRM
DER
Donor Relations
Global Learning
Center
DIST
Payroll & Benefits

Business Solution
Services
Fundraising
28
Unit 5:
IPSAS Implementation = Accrual Based Accounting at UNHCR

Today UNHCR is using Modified Cash Basis Accounting
In cash accounting, the only time a transactions is recorded is when money is paid out or
received.
Managers and donors cannot assess commitments that have been made on behalf of
UNHCR prior to actual payments and receipts. We are not able to assess if the financial
status of UNHCR is at risk or not.
Different bases of Accounting
Accrual Basis
Modified Cash Basis

29
Unit 5:

Under IPSAS, UNHCR accounts will be converted to Accrual Basis.
Accounting on a modified cash basis differs significantly from accounting on a full accrual
basis. The accrual basis is used by most organizations.
Accrual Basis
Modified Cash Basis

30
Unit 5:

Accrual Basis Accounting
Accrual accounting recognizes transactions as soon as the goods or services have been
delivered, regardless of whether a payment has been made, or if we have received the
cash.
Accrual Basis
Modified Cash Basis

31
Unit 5:

Example of Modified Cash vs. Accrual Accounting
There is a timing difference between when transactions are recognized in these two
different bases. In accrual accounting transactions are recognized in the financial period
in which delivery occurs. Under modified cash, the transaction is recorded when a
commitment such as a Purchase Order is entered into with a third party.
Financial periods refer to that period for which UNHCR prepares its general purpose
financial statements from January to December.
Accrual Basis
Modified Cash Basis

32
Unit 5:
Impacts of Accrual Based Accounting

The change to full accrual basis of
accounting under IPSAS will have a
significant impact on accounting
procedures. Lets briefly describe some
major changes in the main positions of the
financial statements:
33
Unit 5:

Property, Plant and Equipment (PPE)
Until IPSAS, UNHCR did not report inventories, e.g. Non-Food
Items in the warehouse, and PPE, such as cars and
equipment, on the Statement of Financial Position (formerly
known as Balance Sheet). We just recorded these items on
our Statement of Financial Performance (formerly known as
Income Statement) as expenses. Now all PPE over 5,000USD
will appear on our Statement of Financial Position. It is also
noteworthy that the level for the PPE has moved from
1,500USD to 5,000USD.
34
Unit 5:

Liabilities
All liabilities related to employee benefits, e.g. after service
health insurance, accrued annual leave and repatriation
benefits, will be recorded in the financial statements.
Previously they were only recorded as notes to financial
statements.
35
Unit 5:

Expenses
The pattern of expense recording will also change with IPSAS:
Expenses will be recognized when goods and services are
actually delivered to UNHCR. Purchase Orders will now be
recorded only as internal commitments of funds to facilitate
budget control.
There will be a new category of expenses called depreciation.
Depreciation is the systematic devaluation of PPE over a
scheduled period of time. Example: UNHCR purchases a car
for 10,000USD. The useful life of a car is 5 years. The
depreciation amount of the car will be 2,000USD each year
and 2,000USD will be deducted for 5 years until the car is worth
0USD.
36
Unit 5:

Revenue
With IPSAS the specific conditions in donor agreements will
determine when and how UNHCR records revenue.
37
Unit 5:
IPSAS Financial Statements

The Implementation of IPSAS will also affect Financial Statements.
Financial statements are a structured representation of the fiscal status of an
organization.
They give useful information to decision-makers how to allocate resources.
Financial statements also demonstrate the accountability of the entity in terms of
the sources and uses of financial resources
how UNHCR is financed
how we meet our cash requirements, and
UNHCRs financial condition and how it has changed
an evaluation of our overall performance
38
Unit 5:
IPSAS Financial Statements

Currently UNHCR produces three key financial documents: a Statement of
Financial Position (formerly known as Balance Sheet), a Statement of Financial
Performance (formerly known as Income Statement) and a Cash Flow Statement.
The Statement of Financial Position shows the relationship between our PPE and
liabilities and our carry over amounts at a specific point of time.
The Statement of Financial Performance shows the net profit or loss for a given
month or year.
The Cash Flow Statement shows how much cash we will need at a certain date.
IPSAS will add two more Financial Statements:
Statement of Changes in Net Assets
A Comparison of Budget and Actual Amounts
39
Unit 5:
Major Challenges of IPSAS Adoption for UNHCR

There are many challenges ahead as UNHCR
implements IPSAS.
These include:
Timing
Human Resources
Processes
Information Systems
Communication & Training
Financial Reporting
Coordination
Auditors
40
Unit 5:

Timing
There is a short implementation timeframe for IPSAS if we
take into consideration how complex the changes across all
of UNHCR will be. The first step of IPSAS implementation
needs to be ready by the end of 2009.
Human Resources
The timely implementation of IPSAS needs additional
manpower to meet the targets. We will need to train key
functions to do their jobs differently with IPSAS.
Processes
New processes and procedures will be set up.
Information Systems
MSRP will be modified to support IPSAS.
41
Unit 5:

Communication & Training
Focused training will be required to support key staff as they
collect, process, report and utilize new information.
Financial Reporting
A more complex financial reporting will be setup with the IPSAS
adoption. New Financial Rules and Guidelines will be introduced by the
UN.
Coordination
The involvement of all Divisions across functions and geographical
locations will be required at some point when adopting IPSAS.
Coordination with other organizational changes within UNHCR are taking
place at the same time - i.e. Focus and the new budget structure.
Auditors
Compliance with IPSAS will be assessed and reported in our audits.
42
Unit 6: How
You Can Help Make IPSAS a Success?
IPSAS adoption is about more than management, dedicated project teams and detailed
plans. A wide group of staff from different parts of UNHCR will need to support this
change in order for it to happen successfully.
Though support from a variety of stakeholders is essential, ultimately it is the support of
individuals in UNHCR that will make the difference between success and failure.
Your support and open mindedness is highly appreciated!
Thank you for taking the time to learn about IPSAS.
43

UNHCR's Guide to IPSAS Implementation

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UNHCR's Guide to IPSAS Implementation

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Implementing IPSAS

Implementing IPSAS at UNHCR

Unit 6. How You can Help Make IPSAS a success.

When Will UNHCR Implement IPSAS?

The IPSAS Phased Implementation

When Will UNHCR Implement IPSAS?

IPSAS stands for International Public Sector Accounting Standards.

Why is UNHCR Adopting IPSAS?

IPSAS and its Benefits

Why is UNHCR Adopting IPSAS?

IPSAS and its Benefits

Why is UNHCR Adopting IPSAS?

IPSAS and its Benefits

Why is UNHCR Adopting IPSAS?

IPSAS and its Benefits

Why is UNHCR Adopting IPSAS?

IPSAS and its Benefits

Why is UNHCR Adopting IPSAS?

IPSAS and its Benefits

Who Should Know About IPSAS?

Advantages of IPSAS for UNHCR

Executive Committee (ExCom)

Who Should Know About IPSAS?

Advantages of IPSAS for UNHCR

Executive Committee (ExCom)

The adoption of IPSAS will immediately result

Who Should Know About IPSAS?

Advantages of IPSAS for UNHCR

Executive Committee (ExCom)

Improved financial management and sound

Who Should Know About IPSAS?

Advantages of IPSAS for UNHCR

Executive Committee (ExCom)

IPSAS implementation will provide

Who Should Know About IPSAS?

Advantages of IPSAS for UNHCR

Executive Committee (ExCom)

Admin/Finance Staff will change the way they

Who Should Know About IPSAS?

Advantages of IPSAS for UNHCR

Executive Committee (ExCom)

IPSAS adoption will provide field based staff

Who Should Know About IPSAS?

Advantages of IPSAS for UNHCR

Executive Committee (ExCom)

IPSAS will help UNHCR to link financial and

Who Should Know About IPSAS?

Advantages of IPSAS for UNHCR

Executive Committee (ExCom)

IPSAS implementation will lead to higher

Who Should Know About IPSAS?

Advantages of IPSAS for UNHCR

Executive Committee (ExCom)

Greater efficiencies in resource management

What Are the Impacts on UNHCR?

So far we have learned about

What Are the Impacts on UNHCR?

Accrual Basis of Accounting

Assets and Property Plant & Equipment (PPE)

What Are the Impacts on UNHCR?

What Are the Impacts on UNHCR?

What Are the Impacts on UNHCR?