By Gillian Fawcett, head of public sector, ACCA
The consequences of the 2008 financial crisis continue to play out and have led governments across the globe to reassess the delivery of public services in an age of prolonged austerity.
However, the outlook in the accountancy sector remains positive with developments showing that the profession is coming up with innovative solutions to meet the needs of public financial management.
ACCA’s recent paper Breaking out: public audit in a post-crash world shows that efforts are being put forth by numerous governments around the world to address the challenges surrounding public audit.
Contributors from Scotland to Bhutan, Australia to Jamaica, offer their perspectives on what has worked, what could be improved and what should be considered in this important area going forward.
The reports’ contributors highlighted certain areas of best practice and different approaches such as in Canada, where chief audit executives are now required to hold an internal audit designation. They also have a direct and exclusive reporting relationship with the deputy minister in their department. This change, quite early on, demonstrates the strategic role accountants are playing.
All the essays highlighted the importance of early intervention in saving money on big projects, particularly where governments outsource public services. Important lessons can, and should be, learnt from the crisis; there was clearly a systemic failure in both the private sector and the public sector to properly account for risk, and more must be done to account for this in the future.
All the contributors were in agreement that better financial reporting and risk management results in better decision making.
ACCA will be hosting a roundtable discussion at the end of April to look at these issues. Being held at the Palace of Westminster, the event will feature participation from the Rt. Hon Margaret Hodge MP, who will offer her insights about what Government should be doing to ensure public finances are not only properly managed, but that the right systems are in place to avoid costly mistakes.
Some of the key questions to be considered at the event will include: Are short-term cost saving exercises storing up long-term failures in accountability? Is there a case for auditors to be involved much earlier on in significant public procurement projects, particularly when considering the National Audit Office estimates the UK central government spends £40bn with third parties, if so what needs to change? Should private companies undergo the same audit rigor as their public sector counterparts? And, considering the increasing fragmentation of public service delivery, are there enough checks and balances in the system for parliament to follow the money?
Radical change is taking place across the UK government and public sector. In part it is being driven by the need to recover the public finances, an objective shared by all major political parties. As spending is set to fall by more than one fifth in real terms from 2009/10 to 2017/18, we must ensure resources are allocated to scrutiny. The government must take bold decisions about where to allocate funding therefore, resources for proper scrutiny must be a priority.
What this publication demonstrates is that despite the varying systems, there is a DNA which runs through all parliamentary public account committees and audit systems.
Five years on from the crash, there are positive conversations about how we can achieve more with less.