Article published on IFAC Gateway | An Opportunity to Make a Difference in the Public Sector for PAOs
The Confederation of Asian and Pacific Accountants (CAPA) has released its latest ground-breaking public sector related thought leadership, to be used by professional accountancy organizations (PAOs) around the globe as they consider opportunities to support public sector membership, and more importantly, address matters of public interest.
For most leaders around the world, the past year has been defined by a laser focus on navigating the COVID-19 crisis. Government leaders led the way. A fundamental tenet around the world was the safeguarding of lives at ‘whatever cost’, followed by the safeguarding of livelihoods and the economy. A speedy response by governments was necessary, expected and warranted.
As correctly pre-empted by many, the necessity for speed and the sheer magnitude of government interventions to address the health, social, and economic consequences of the pandemic have challenged governments’ capacity to manage resources in a transparent and accountable manner. In fact, a recent report1 published by the International Budget Partnership (IBP) in May 2021 found the situation less than desirable with over two thirds of the governments across 120 countries looked at having only provided limited or minimal levels of accountability in the introduction and implementation of their early fiscal policy responses.
The call for greater transparency and accountability in response to the crisis is not new. A World Bank Policy Note last year describes the risks and impacts of corruption in the context of the pandemic, providing guidance for addressing and mitigating such risks. In a similar vein, another article discusses the need for advanced accountability for special emergency funds to address COVID-19, that fall outside regular government budget.
If we take a step back, the issue or risk of a lack of transparency and accountability stems from wider root causes, namely weak public financial management (PFM) and governance. If the dual pillars of strong PFM and good governance exist, strong accountability and transparency will already be in place in ‘normal’ times and should flow into times of crises. This correlation is echoed by the IBP’s pre-pandemic 2019 Open Budget Survey, which suggested that countries with stronger accountability during ‘normal’ times tend to remain transparent during a crisis.
The case for strong PFM and good governance has therefore only been amplified as public sector spend has sky-rocketed, and who or which profession can be more ‘fit for purpose’ to support this call for and implementation of greater accountability and transparency, than the accountancy profession. If ever there was a time in history that the accountancy profession is needed, the time is now.
CAPA has through many years, advocated for quality PFM and has focused on the accountancy professions’ role in this regard. Besides holding roundtables with PAOs and key stakeholders such as officials from Ministries of Finance, other government departments and national audit offices, CAPA has worked on delivering thought leadership materials to support PAOs to engage or increase engagement with the public sector. An article on the IFAC Knowledge Gateway, “PAOs – Time to Step Up in the Public Sector”, written by Brian Blood, CAPA Chief Executive expounds on the content and objectives of these core materials.
Based on a survey, which inter alia found that PAO involvement in the public sector is ‘limited’ or ‘non-existent’ in certain jurisdictions, CAPA produced a report titled: “PAOs: Engaging with the Public Sector”. This publication, which encourages PAOs to consider increased engagement, is being supported by national case studies which demonstrate how certain PAOs have engaged with the public sector successfully. Case studies to date describe certain activities of the PAOs in India and Malaysia, with more to come.
Taking feedback and listening to PAOs and other stakeholders on supporting stronger PFM, the need for a more in-depth analysis to assist PAOs respond to the key messages in the CAPA survey was apparent, and reverberated even stronger against a pandemic backdrop. The timing is therefore apt for this deeper dive to assist PAO leadership further consider their involvement with the public sector in their jurisdictions, especially through a public interest lens. In fact, CAPA’s latest addition to its public sector thought leadership library “PAOs: Extending Activities into the Public Sector” indicates that the key reason for the accountancy profession and PAOs to be active around the public sector is that it is a matter of public interest.
To assist PAOs develop or strengthen their focus on the public sector, the publication is designed to:
- provide the reasons why a PAO may wish to focus more on the public sector, highlighting the benefits and opportunities; and
- identify and describe the types of public sector related activities a PAO can pursue.
In recognizing that the extent and type of engagement with the public sector and the pursuit of associated opportunities will be different in each jurisdiction, and will depend on the context within which the PAO operates, PAOs are encouraged to consider twelve (12) activities across four (4) categories. Viewed from the perspective of PAOs, the four (4) categories are:
- Building demand
- Creating supply
- Providing opportunities
- Enhancing skills
Each of these categories are further explored, with real life examples and experiences from PAOs around the world, to assist PAOs consider their next steps. The publication also explains how it can be viewed from the perspective of the members of the PAO.
At the onset of the pandemic, CAPA undertook a survey to understand the impact of COVID-19 on the changing accountancy profession. The survey found that COVID-19 was an accelerator for change as the profession and the industries accountants operate in, faced the onslaught of uncertainties of an unprecedented health and economic crisis. The report of the survey showed that while the shorter term goals of the PAO were on ‘survival’ including adapting operations and managing finances, the longer term goals were to focus on sustainability and ensuring the profession and the PAO stay relevant.
Staying relevant has many facets and PAOs will undoubtedly have many competing priorities. However, recognizing that many PAOs have a limited focus on the public sector, and that the demands on the public sector to spend citizens funds wisely has never been greater, this would seem an area any PAO cannot ignore.
The coming months will certainly provide more challenges for everyone, in some jurisdictions more than others, and many will likely be pandemic-related. The importance for all stakeholders to come together to manage in a recession and support economic recovery as access to vaccinations progress, is imperative. The accountancy profession needs to take up its responsibility and role to support good PFM practices and see that public finances are effectively and efficiently spent for the purpose that it was identified for in a transparent and accountable manner. To do this, the public sector needs well trained and highly-skilled finance personnel, and PAOs have a role in both encouraging the demand and in providing the supply. This new publication from CAPA provides the necessary direction and information.
1. Managing COVID funds – The accountability gap, IBP, May 2021
This article was first published on the IFAC Knowledge Gateway on 12 July 2021.
To access the article on Gateway, please refer here.