PUBLIC SECTOR FINANCES – ADDING VALUE IN TOUGH TIMES?
“Unprecedented squeeze on public finances will continue into 2017”, says SMF’s Ian Mulheirn
"Audit and financial management adding public value" was the theme of ACCA’s (the Association of Chartered Certified Accountants) third international public sector conference held on 15 December 2011.
Ian Mulheirn, director of the Social Market Foundation (SMF) delivered the key note address, while the Rt Hon Margaret Hodge MP, chair of the Public Accounts Committee took part in a session on audit and scrutiny with Lazaros Lazarou member of the European Court of Auditors and John Doyle, auditor general of British Columbia Canada.
The conference was organised to draw out lessons learnt over recent years, and understand the key challenges fr om a range of high profile international speakers and focus on new developments, such as strengthening the role of audit and whole of government accounts.
Gillian Fawcett, head of public sector at ACCA, said: "At our first conference three years ago we asked attendees ‘how long will the downturn last?’ and 50 per cent said for 10 years or more; we thought this was an overly pessimistic prediction at the time, but it is now abundantly clear that we are in this together for the long term.
The conference considered how audit and financial management can and do add public value. The value of audit and scrutiny are in the spotlight unlike never before. Auditors in the public sector are operating in financially constrained environments which bring new pressures and risks, as well as having to take account of the environment and climate change. Similarly, at the same time the demand for efficient and effective public finances and financial reporting are growing around the globe."
In the session on audit and scrutiny, Ms Hodge said that more can and should be done by government to identify systematic issues around value for money. Ms Hodge added that the Public Accounts Committee makes value for money the focus of its work, adding: "Parliament needs to improve its track record on financial scrutiny as a whole. By ensuring all Sel ect Committees take a closer look at the budgets and expenditure, massive savings can be realised in future. At the moment, there is not enough thorough analysis of the risks involved within potential projects, prior to their commencement. Billions of pounds are being lost because of a lack of proper scrutiny of the available data."
Ms Hodge added: "Government needs to step away from being too focused on defining policy and instead needs to begin looking at how to best implement policy. Thorough analysis is required before implementation in order to ensure a fool-proof system. For example, it is counter-productive to cut expenditure on education and training for young people as is happening at the moment. The effect of this will be an increase in the future bill of benefits to be paid out."
Mr Mulheirn’s key note speech ended the event, wh ere he said there is an unprecedented squeeze on public finances that will continue into 2017: "Restoring sustainable public finances in the years ahead will require three ingredients: spending cuts or tax rises; making public service delivery more efficient; and stimulating economic growth in the private sector. On the last of these, a reformed Private Finance Initiative will be essential to boosting the investment in infrastructure that is so badly needed if the British economy is to flourish once the crisis has passed."
The event also attracted public sector financial experts from around the world, including:
- Ibrahim Fazeel, director of audit, Auditor General’s Office, Maldives
- Jill Goldsmith, director of climate change and VFM, National Audit Office UK
- Professor Ron Hodges, Sheffield University
- Alan McGill, Sustainability and Climate Change reporting lead, PricewaterhouseCoopers
- Emmanuel Millard, head of the mission, performance of the public administration, directorate of the budget, France
- Karen Sanderson, deputy director, financial management and reporting group, HM treasury, UK
- Ian Trumper, trustee and treasurer, Transparency International (UK)
- David Watkins, head of strategic technical resource planning, Foreign and Commonwealth Office
These experts gathered to discuss:
- Environmental audit, reviewing the role of the auditor, techniques and developments fr om across the world to audit and assess environmental and climate change impacts.
- Audit and scrutiny adding public value, discussing the value of audit and scrutiny for ensuring accountability, governance and the stewardship of public funds. It will draw out lessons learnt and key challenges and focus on developments such as strengthening the role of audit committees in public bodies.
- Financial management and reporting adding public value, which looked at the actions taken to tackle the on-going challenges and the actions being taken to turn around public financial management and provide more transparent financial and performance reports by governments.
Gillian Fawcett concluded: "The public sector is facing a tough future, but it is its finance professionals and experts who will steer it through choppy waters. Clear thinking and clear policy lines will also help, and this is why ACCA also launched at the event two research reports about public sector finances- PPP/PFI around the globe and Parliamentary Financial Scrutiny in Hard Times."