Government finance functions are on the front lines of the economic tsunami brought on by the COVID-19 pandemic. In addition to the record debt levels for governments around the world, the pandemic is re-writing the social contract between governments and citizens and emphasizing public expectations of transparency and accountability for financial management decisions like never before.
Finance functions at all levels of government have been challenged to meet their ongoing financial reporting responsibilities despite severe capacity limitations, while ensuring the integrity of financial information critical to the government's COVID-19 response. Finance functions rose to the challenge in 2020 and are prepared to do the same for 2021. Finance functions have clearly demonstrated the value they bring to the timely spending and financial management decisions made by elected officials.
From a financial reporting perspective, the biggest issues may lie with what is to come for the 2021 fiscal year end, as governments address the first full year of spending in the COVID-19 environment. In addition, governments must account for additional measures of financial support provided to individuals and businesses. The historical nature of the pandemic is challenging the assumptions finance functions have traditionally made and is requiring a rethink of financial reporting.
How are governments doing in their efforts to enhance financial reporting? KPMG held discussions in November 2020 with senior personnel from 11 government finance functions from around the world outside of the Crown Dependencies to understand the impacts of COVID-19 on their financial reporting. We consulted financial statements for an additional four governments issued since the pandemic, to consider how the pandemic has impacted accounting policy choices and financial statement presentation.
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