via World Bank urges better management of public funds – NewsDay Zimbabwe August 19, 2015
A SENIOR financial management specialist at the World Bank has called for better management of public sector funds after Zimbabwe scored 21 on a public sector corruption index.
BY TATIRA ZWINOIRA
The index measures on a scale of 0 (highly corrupt) to 100 (very clean).
Speaking during his presentation at the first Association of Certified Chartered Accountants (ACCA) regional public sector conference 2015 in Victoria Falls over the weekend, World Bank specialist Daniel Domelevo said there needed to be use of accrual-based accounting through the adoption and implementation of international public sector accounting standards (IPSAS).
“Governments must implement the necessary institutional arrangements required to enhance public sector financial management transparency and accountability,” Domelevo said.
“It provides the opportunity for feedback from the society that is, meeting their needs. It brings about better performance, one cannot be transparent about inefficiencies without demonstrating how he or she is resolving them.”
The two -day conference had different regional institutions giving presentations on the benefits of having a better budget transparency and accountability to avoid abuse of public sector funds.
Participants included Botswana Accountancy College, Royal Bafokeng National Trust CEO Obakeng Phetwe and CEO of Uganda Water and Sewerage Alfred Okot Okidi among others.
Domevelo said the use of accrual-based accounting through the adoption and implementation of IPSAS allows for enhanced monitoring of government debt and liabilities for their true economic implications.
The argument was that this method promotes greater transparency and accountability in public sector finances. It was stated that transparency can help attract cheaper international credit.
The event was hosted by ACCA, who will be providing training and support to the Office of the Auditor General and interested parties on accrual-based accounting on public sector funds.
“After controlling of various economic variables, countries with higher levels of fiscal transparency have higher credit ratings and lower spreads between borrowing and lending rates, thus reducing governments’ borrowing costs,” Domelevo said.
A study by the International Monetary Fund showed that an important predictor of a country’s fiscal credibility and performance was the level of transparency in its public finance systems and practices.
In other words, opacity in fiscal matters contributed significantly to the suffering being felt directly by the citizens of the
crisis-stricken countries.
Domevelo said accrual accounting facilitates better planning, financial management and decision-making in government as well as a robust and accepted way of measuring the economy, efficiency and effectiveness of public policies.
He said the system allowed accurate comparison to be made between different organisations. By using the accruals basis for public financial statements, there was increased comparability of public sector and private sector organisations, whilst retaining the comparability of an individual organisation on a period-by-period basis.
There are 39 countries which prepare government financial statements on an accrual basis, including the United States, the United Kingdom, Japan, France, Canada, Brazil, Switzerland, Australia and New Zealand.
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