Governments and public entities around the world historically have grappled with measuring their financial performance and position based on events that have transpired, or are likely to transpire, to enhance transparency, accountability and comparability among others benefits. Moving from a cash basis of accounting to an accrual basis is considered to be the way towards better financial reporting and accountability. The Government of Rwanda has made major strides towards migration from cash based to accrual based accounting and financial reporting under IPSAS Accrual (International Public Sector Accounting Standards). This is a transformative project that has redefined its public financial management landscape. The implementation of IPSAS Accrual over the past six years represents a significant leap forward, promising lasting benefits for the country’s fiscal transparency, accountability and governance. The journey to IPSAS compliance has brought about numerous positive changes that will continue to impact Rwanda’s financial ecosystem in profound ways. Some of the major outcomes of this project include: 1. Substantial increase in asset and liability recognition: For the first time, the Government of Rwanda has recorded over 13 trillion Rwandan francs in both its assets and liabilities as per the published financial statements for the year ended 30 June 2024. This monumental addition to the Government’s financial statements ensures a more accurate and comprehensive view of the nation’s fiscal health. The inclusion of these assets and liabilities is a direct result of adhering to IPSAS Accrual, which requires the recognition of all financial resources and obligations, offering a clearer picture of the country’s financial position. 2. Enhanced data integrity in custodian entities: Through this initiative, key custodians of Rwanda’s public assets, such as the National Land Authority (NLA), Rwanda Housing Authority (RHA) and the Ministry of Infrastructure (MININFRA), have successfully cleaned and updated their asset databases. This enhanced data integrity is crucial for tracking the nation’s wealth and ensuring that assets are properly managed, valued and safeguarded for future generations. The accuracy and timeliness of this information also contributes to more informed decision-making by public sector leaders. 3. Improvement in tax receivables management: The Rwanda Revenue Authority (RRA) has made significant strides in improving its management of tax receivables. By adopting IPSAS 23, which guides the accounting for non-exchange revenue, and aligning with IPSAS 19 on provisions and impairments for doubtful receivables, the RRA has been able to clean its accounts and enhance the recoverability of outstanding tax receivables. 4. Recognition of complex assets in financial statements: One of the most notable changes brought about by IPSAS Accrual is the recognition of previously unaccounted-for complex assets. These include biological assets and intangible assets. For the first time, these assets are now recognised in the Government’s financial statements, with their values determined in full compliance with IPSAS standards. Other complex assets such as natural resources, service concession arrangements and leases are scheduled to be recognised in the next few years as capacity to value is being built. Moreover, public entities responsible for managing these assets, such as the Rwanda Development Board (RDB), Rwanda Water and Sanitation Corporation (RWB), Rwanda Agricultural Board (RAB) and Rwanda Information Society Authority (RISA), have been equipped with the necessary skills to collect data, assign values and manage these assets effectively. This capacity building ensures that even newly acquired assets will be accurately reflected in the financial statements, enhancing transparency and accountability in asset management. The IPSAS Accrual implementation project represents more than just a technical financial reform. It is a foundational step towards strengthening Rwanda’s public financial management system and boosting investor confidence in the nation’s economic stability. By embracing international best practices, Rwanda is positioning itself as a leader in the region and Africa, committed to transparency, accountability and sound fiscal governance. As the project nears completion, the Government’s financial statements will be fully aligned with IPSAS standards, reflecting the country's ongoing commitment to good governance and sustainable development. The long-term benefits of this initiative will be felt across the public sector, from improved budgeting processes to enhanced financial reporting, all contributing to better decision-making for the people of Rwanda. Anthony Njeeh is an Associate Director at PwC Rwanda while Mwangi Karanja is a Partner at PwC Rwanda and the Project Director for the IPSAS project implemented in Rwanda.
