ASSESSING THE QUALITY OF IPSAS-BASED FINANCIAL REPORTS OF THE SUPRANATIONAL ORGANIZATIONS

Abstract

Abstract. The study aims at accessing the quality of IPSAS-based financial reports of intergovernmental organizations, which have fully adopted the accrual basis of accounting. The quality assessment contemplates the empirical estimation of the financial reports’ conformity with qualitative characteristics proclaimed in the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities. The research database encompasses 20 financial reports estimated by 190 disclosure requirements aggregated in 31 indicators. The score assessment of financial reports has provided the data to build a multiple linear regression model that depicts the relation between the quality and the qualitative characteristics of the IPSAS-based financial reports. Adequacy checking has shown that the model meets the adequacy requirements, while the F-testing and T-testing have proven the statistical significance of independent variables and β-parameters, respectively. In particular, qualitative characteristics of predictive value, completeness, neutrality, absence of material errors, timeliness, and verifiability have substantiated their significance, while the qualitative characteristics of confirmatory value, understandability, and comparability were identified as insignificant and, therefore, excluded from the model. The model can be applied for estimating whether financial reports prepared under the IPSAS comply with the qualitative characteristics of public sector financial reporting. These findings enable making judgments on transparency and relevance of information disclosed by public sector organizations in their financial reports. Findings meet up-to-date demand for estimating the financial reports’ quality in terms of the recent transition to IPSAS-based principles of accounting and reporting by governments and supranational organizations worldwide. Keywords: accounting, public sector, IPSAS, financial reporting quality, qualitative characteristics, regression model. JEL Classification H83, M41 Formulas: 3; fig.: 0; tabl.: 3; bibl.: 35.