In this series of video case studies, taken from a June 2019 IFAC and ACCA joint series, we highlight the real stories and positive impacts of implementing strong Public Financial Management.
The core objective of Public Financial Management (PFM) is to improve citizens' lives through better management of public money. PFM affects how funding is used to address national and local priorities. It also affects the availability of resources for investment and the cost-effectiveness of public services. The general public are likely to have greater trust in public sector organisations where there is strong financial stewardship; accountability; and transparency in the use of public funds.
The state government of New South Wales in Australia has introduced an asset and liability committee to take a total balance sheet perspective, improving the management of liabilities and selling assets to the private sector. This has enabled the state to unlock AUS$33bn for new infrastructure construction.
Tanzania has introduced IPSAS (International Public Sector Accounting Standards) to portray a true and fair view of the government's financial position. This has led to better management of public money and improved public sector outcomes, with more medicines and equipment in hospitals and more children attending schools.
Canada's Mississauga city has designed a targeted financial reform to deal with the impact of more frequent acute storms, resulting from climate change. Through the introduction of a 'hard surface tax', those who contribute to the local flooding challenges pay for the solution.
The government of Pakistan has implemented a new flagship project that has improved their entire PFM structure. It was implemented through the technical assistance of the World Bank and included the introduction of financial auditing manual and a new accounting model.
New South Wales has introduced new initiative - a debt retirement and communities dividend fund called Generations Fund. It's a world-leading fund that’s sharing the benefits of its returns by funding community projects.
HM Treasury share the success of their PFM initiatives: Whole of Government Accounts (WGA) and the Balance Sheet Review (BSR). WGA is a single consolidate set of IFRS compliant financial statements for the entire public sector. It provides a single authoritative picture of assets, liabilities, income and expenditure and is the foundation of the BSR. Through better balance sheet management, they see where to reduce the costs of their assets and liabilities and thereby reduce the overall risk. The main outcome is transparency – a way for citizens and taxpayers to see where their money is being spent.
Malaysia has been in the spotlight for its corporate governance issues in the past decade. High profile incidents such as the 1MDB saga and cases of alleged mismanagement in the public sector have not helped in fostering trust among Malaysians. The new government has pledged to create a better environment for transparency and accountability.