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SAP Assists the European Commission in Accounting Transformation Process |
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European Commission Achieves Greater Financial Transparency;
Increases Taxpayer Confidence with SAP for Public Sector Solution
BRUSSELS, Belgium - April 25, 2005 - SAP AG (NYSE: SAP) today announced the completion of the European Commission’s accounting transformation project, making the European Commission the first European institution ready to comply with International Public Sector Accounting Standards (IPSAS). The accounting transformation project team developed the European Commission’s accounting system to deliver the budgetary and accounting transparency required for meeting modern accounting standards such as IPSAS, using accrual accounting and funds management functionality from the SAP for Public Sector solution.
With its adoption of modern economic accounting standards, the European Commission is setting the path for governmental organizations in EU member states to follow. The project will provide the European Commission with greater transparency into its financial data, increased budgetary management control, easier comparison of accounting data and more efficient use of its accounting system. By providing transparency into its budget management processes, the European Commission will also increase taxpayer confidence in the sound financial management of its organization.
“This project identifies the European Commission as a pioneer among the majority of the world’s administrations,” said Brian Gray, the European Commission’s chief accountant and deputy director general of the Budget Directorate General. “We have succeeded in implementing a ‘dual system’ based on accrual accounting principles for general accounting and on cash accounting for running the budget. Furthermore, in addition to assisting the European Commission with compliance of IPSAS, the new management system will guide our users intuitively through the various stages of coding and payment.”
Accounting Transformation to Meet Higher Standards
The European Commission’s annual budget amounts to around EUR 100 billion. As a result of a European Commission decision of July 24, 2002, it became mandatory to manage this sum using accrual accounting1 in accordance with international standards. International Public Sector Accounting Standards are requirements for financial reporting by governments and other organizations in the public sector that seek to improve public sector financial management and accountability.
The European Commission chose the SAP for Public Sector solution for the integration of its general, budgetary and analytical accounting, all of which are crucial issues for the transformation of public institutions. The new system is connected via a Java front-end to each of the Commission’s 36 directorate generals, who can now encode invoices, manage budgets and authorize payments without major changes to their normal workflow. This solution also puts an end to cash-accounting system problems concerning the difficult budgetary management of multiyear projects in which only receipts and disbursements are recorded. For example, budgetary monitoring of fisheries agreements as well as structural and research funds will be made much easier.
“Government organizations at all levels are under the same strict scrutiny for effectiveness and efficiency as the private sector,” said Tom Shirk, president, SAP Global Public Services. “The European Commission’s successful transformation of its accounting system with SAP will enable compliance to new regulations such as IPSAS, while simplifying processes, improving productivity and lowering operational costs. In helping the European Commission on its accounting transformation project, we were pleased to work with the strong public sector experience of IBM Business Consulting Services, which conducted the implementation effort.”
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Gain insight into the future of service-enabled enterprise software and learn how enterprises of all sizes across diverse industries around the world are using SAP® solutions to adapt to market changes, evolve their businesses and achieve competitive advantage at SAPPHIRE® ’05, SAP’s international customer conference, being held in Copenhagen, Denmark, April 26 – 28, and in Boston, Massachusetts, May 17 – 19.
1 Note to Editors – Accrual Accounting
Accounting method whereby transactions are recorded when they occur and not merely when a sum of money or its equivalent is received or paid. Consequently, transactions and accounting operations are recorded in the books and appear in the financial statements for the financial year to which they relate. (IPSAS 1)
About the European Commission
The Commission is the politically independent institution that represents and upholds the interests of the EU as a whole. It is the driving force within the EU’s institutional system: it proposes legislation, policies and programmes of action and it is responsible for implementing the decisions of Parliament and the Council. The European Commission consists of 25 women and men assisted by about 24 000 civil servants. The Commission is appointed for a five-year term, but it can be dismissed by Parliament. The Commission acts independently of the governments of the Member States. Many, but not all, of its staff work in Brussels, Belgium.
About SAP for Public Sector
SAP for Public Sector provides comprehensive solutions to help governments and public organizations improve economic viability and increase process efficiency and transparency while better serving the needs of the public. With more than 1,080 customers in 65 countries, SAP is the leading provider of enterprise business solutions to the public sector. |
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