Establishing a financial reporting framework for the housing authority : a case study

Abstract

Purpose: The objective of this study is to establish a sound financial framework for the Housing Authority, either through IFRS or IPSAS. With implementation of either of these standards, the Authority will be able to produce transparent, comparable, and reliable fiscal information to present to its users. Design: The objectives of the study were achieved through unstructured interviews with the Housing Authority officials and relevant stakeholders to gain an understanding of the existing financial reporting framework adopted by the Housing Authority. Results were then compared to the relevant accounting standards in order to assess the impact, if any, on the financial position of the Authority. Findings: The study specifies that the current accounting framework adopted by the Housing Authority is a hybrid accrual-cash basis of accounting, and as a result, does not present a consistent picture of the overall financial position of the Authority. Accounting policies applied in the preparation of the annual accounts are established by the Board of Directors, further proving that the financial statements may not be as reliable as presumed. As expected, many are inconsistent with the requirements of IFRS and IPSAS. Conclusions: The study concludes that the Housing Authority should adopt IPSAS since these standards are developed for public sector entities. However, at present, the Authority lacks the necessary financial and human recourses to adopt these standards. Value: This study hopes to offer the Board some useful insight into implementation of an internationally recognised financial framework. Attempts have been made in the past to adopt either IFRS or IPSAS. Almost forty years have elapsed from the incorporation of the Housing Authority. Notwithstanding that attempts have been made to adopt either IFRS or IPSAS, the Housing Authority still produces a set of financial statements which are below par and not in line with the aforementioned standards. This dissertation will therefore look at material line items, as well as other key factors to assess which standard would be adequate for the Authority.