Accountability & transparency vital in public sector finances
There is a critical need to build financial capacity and expertise in the public sector in order to ensure openness, trust and accountability in its finances.
With government’s spending on public services accounting for more than one-third of GDP in most countries around the world, public sector finance professionals have a role as important as custodians for the reputation of this vital sector.
Globally, the public sector is rapidly changing and the demands on public services are growing, together with the tax bill.
At a time when austerity measures are still biting and public services across Europe are facing huge cuts, a common challenge is the need to grow financial expertise and capacity and retain skills within the public sector.
This is particularly valid in the UK, where most public services are cutting out on average 25 per cent of their budgets.
It is not just austerity that public services have to contend with either. The toxic mix of ageing populations, rising healthcare costs, reform of welfare support, and infrastructure costs are all complex challenges that governments are attempting to navigate.
This is at a time when public expectations of public services are growing along with a desire for transparency and accountability in the way public funds are handled.
Without financial expertise, it is difficult for countries to develop the effective public financial management that will support growth.
An absence or lack of accountants also makes it difficult for governments to implement effective financial reporting based on accounting standards, as only technically trained staff can understand and apply the standards.
At ACCA’s recently held fifth international public sector conference Financial Reporting for an Open World, Anthony Harbinson, deputy president of the Association of Chartered Certified Accountants, said there was a view “that the public sector is plagued by poor institutional fiscal management”.
This, he says, is “exacerbated by issues of poor public financial management and reporting”.
In economies where accountability structures are underdeveloped, the above could be held to be true, especially where there appears to be a lack of political interest in reform.
Although trust in public services is falling in some areas, many countries in the developed and developing world are making significant improvements.
However, much more needs to be done in improving many aspects of public financial management and financial reporting.
There is an urgent need to build financial expertise in the public sector. Accountability and transparency are central to public sector finances – only with this expertise can governments ensure openness and trust.
Gillian is Head of Public Sector for ACCA Global responsible for developing international policy on technical matters affecting finance professionals in public services
The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of The Information Daily, its parent company or any associated businesses.
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