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Conference on Improving Public Sector Financial Management - May 2011

May 2011

CAPA staged a conference titled "Improving Public Sector Financial Management" in Seoul, Korea. The Conference was co-organised with the Korean Institute of Certified Public Accountants (KICPA), and supported by various international and Korean organisations. Sponsorship was provided by the Korean Big 4 Accounting firms.

Key theme of the conference was strengthening accounting in the public sector. The Conference program provided an overview of the International Public Sector Accounting Standards (IPSAS), as well as regional case studies. The experiences of countries in various stages of transition from cash-based accounting to accrual-based accounting provided a real hands-on perspective to the program.

The Conference opened with an address by Director General, Jaeseek Park who presented an overview of the Korean Government's accounting reform system and the three-year roadmap towards a new accounting system. A case study of the Korean government's journey of improvement delivered by Sang Ro Kim set out the key steps.

The Conference presented a range of issues and processes that are the building blocks in improving public sector financial management. They are:

  • Any change in the public sector financial management process needs a clear vision and will of legislators and senior officials towards the imperative for accountability, transparency, and good governance. This is usually implemented with legislation to mandate the transition to enable better decision-making in public sector undertakings, improved financial systems, guidance, and reporting.
  • The proposed change processes must be well-planned with due regard for all stakeholders, and importantly, allowing realistic time horizons.
  • It is crucial to have financial information systems to enable management information to be readily utilised and facilitate drawing of agency level information into central or consolidated whole of government accounts; and such systems require significant capital investment, programmed implementation, and education for users.
  • The process of integration and reconciliation of financial information with cash-based budgetary systems is extremely important at an agency level and whole of government level, and appropriate systems must be developed to facilitate critical budgets and forecasts.
  • Education of public sector managers during the process of change is critical to ensure success. Similarly, legislators must be involved in the education process to understand the implications of information they are dealing with.
  • An oversight body should be apointed to ensure agencies perform in the transition, to provide technical and practical implementation support, research, and consultation on day-to-day basis.
  • Supreme Audit Institutions have a critical role in supporting public sector governance, accountability, and compliance. They must take active roles with agencies and central government in all aspects of financial management, improvement processes, and education, with experience in identifying areas for improvement and providing suggestions for rectification.
  • Similarly, as in the private sector, parliamentary audit committees or Public Accounts Committees must play a key role in ensuring that the process of financial management, reporting, and auditing are first rate.

While discussions have been steered towards accrual accounting being the solution for public sector accounting, the cash basis is utilised in many jurisdictions and is recognised through certain IPSAS standards. Whilst the financial reporting benefits are significant, experienced public sector financial managers see some of the greatest gains as being able to determine the true cost of programs and activities, as indicated by Neil Wallace of the ADB in the concluding session. Ultimately, this delivers better information for economic planning and decision-making at both the agency and whole of government levels.

The accounting profession has significant international experience and capacity to support the development of public sector financial managers. Access to international experience, benchmarking, and support should be sought through engagement with organisations such as IPSAS, the International Federation of Accountants (IFAC), and CAPA, which could facilitate sharing of knowledge with other experienced nations.

Click on the links below for the Conference Program and speakers' presentations

Conference Program

Keynote Address ~ Jaeseek Park

Session 1: Strengthening Accounting in the Public Sector

Session 2: International Public Sector Accounting Standards

Session 3: The Improvement Journey - A Series of Case Studies

Session 4: Managing the Transition to Accrual Accounting