Conceptual Framework for Public Accounts

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The CNOCP has published its Conceptual Framework for Public Accounts

The French Public Sector Accounting Standards Council (CNOCP) is in charge of setting the accounting standards of all French entities with a non-market activity and primarily funded by public funding, including contributions. The Central Government and the government- organisations, territorial authorities and local public agencies, social security organisations are all within the jurisdiction of the CNOCP. Extending the scope of the former Public Accounting Standards Committee which used to only regulate the French Central government accounting standards has empowered Public Finances with the ability to deal with a consistent accounting policy for the whole of French Public Administrations. The CNOCP has just published its Conceptual Framework for Public Accounts in English.

The Conceptual Framework for Public Accounts presents and clarifies the concepts underlying accounting standards. By defining the scope of accrual accounting and conversely by identifying the information excluded from it, the Conceptual Framework for Public Accounts clarifies the benefits and limitations of accounting information, thus making it easier to understand.

As a matter of principle, the accrual accounts of public entities are based on the accounting rules applicable to business entities except for features specific to public action. A precise definition of such features is necessary in order to provide a conceptual basis for their accounting treatment and may lead to the development of specific requirements. This Conceptual Framework for Public Accounts is designed precisely to establish the link between the concepts applicable to business entities and public entities and the concepts specific to the latter.

This Conceptual Framework therefore identifies a power, arising from sovereignty, that oversees public entities and which, by convention, it calls the sovereign power. It determines the content of public policies as well as the organisation responsible for their implementation.

Public entities are responsible for the implementation of public policies that translate the will of the sovereign power into acts. These entities are managers of the competence and resources attributed to them by the sovereign power and are as such accountable.

The sovereign power is embodied in different political processes, “commissions” different entities and does not act as an operating unit or meet the definition of a reporting entity. The sovereign power is not accountable and therefore has no accounts. The notion of accounts is not relevant for the sovereign power. The accounts do not deal with powers.

As other international conceptual frameworks, the Conceptual Framework for Public Accounts is not a standard and does not define accounting rules. It defines elements (asset, liability, equity, revenue, expense, surplus and deficit), recognition and measurement principles for public entities. Its purpose is notably to assist the Public Sector Standard–Setter (CNOCP).

The publication of the Conceptual Framework for Public Accounts brings the first phase of the project on the fundamental accounting concepts underlying public sector accounting standards to a close. Two main subjects have already been identified for examination in a second phase: the first relates to the possible combination of the accounts of “complementary” entities. The second subject relates to the presentation and the nature of information to be disclosed by public entities.

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Conceptual Framework for Public Accounts [PDF]