ACCA Claims that Financial illiteracy among Policy Makers and Parliamentarians is responsible for not attaining rewards associated with Consolidated Government Accounting
In a new study conducted across the globe by a group of international universities which had been commissioned by ACCA, it has established that a combination of excessive complex financial reporting and financial illiteracy on parliamentarians is responsible for making it difficult for policy makers to benefit from the available advantages of having consolidated government accounts.
The usefulness of consolidated government accounts is very timely because governments strive to gain from having tight budgets in order to achieve high quality public services and also in remaining transparent and accountable. However, if government consolidated accounts have to go beyond getting viewed by commentators with accounting central functions, more attention will have to be given to potential users before governments can embark to prepare consolidated accounts.
The head of ACCA public sector, Gillian Fawcett said that change is necessary if parliamentarians have to gain from consolidated government reporting. Fawcett emphasized that if consolidated government accounts are used correctly, they are potentially great assets for bringing change in fiscal and financial management which are government areas of paramount importance given the present social and economic climatic conditions across the globe. The move towards consolidated government accounts across five of these countries is an effective stimulus in making transformations of quality accounting standards practices in governments. The political buy in is however a major factor determining the usefulness of consolidated government accounts and especially if their reform is to succeed. Ms Fawcett’s words, this is due to the fact that those who are placed best in reaping the advantages of good consolidated reporting haven’t got the skills required in doing so.
Drastic improvements are required by governmental officials and the parliamentarians’ basic financial literacy in order to facilitate thorough scrutiny of consolidated government accounts. As such, for new parliamentary members, development programmes need to be introduced as standard matters and also supplemented with professional guidance in this field. Together with greater finance understanding among policy makers, Gillian Fawcett is calling for a new approach in reporting that favors high level accessibility and usability coupled with high quality information. Presentation of consolidated reports has to be simplified with information that is timely and forward looking.