improving pfm: the need for a global pfm profession
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cipfa.org.uk
Improving PFM
The need for a Global PFM profession
Alan Edwards, International Director, CIPFA
cipfa.org.uk
The sovereign debt crisis…
‘We traded over-leveraged banks for over-leveraged governments.’
Steve Freer,CIPFA Chief Executive
The Sovereign Debt Crisis (or GFC Mark 2)
Exposure of long standing weaknesses in public finances and public financial management
Bail-outs – at best a temporary fix
What next?
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The root cause....weak PFM
Poor largely cash based reporting
Lack of timely information, clear advice and transparent decision
making
Insufficient professional capacity
Causes of the crisis …
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It’s not as though we were not aware …
“It was an error because Greece
entered with false [economic] figures …
it was not ready.” President Sarkozy
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We should have seen it coming …
“We’ve never had this kind of accumulation of debt in world history” said Bass.
Critically, the big banks were no longer treated as private enterprises but as extensions of their governments, sure to be
bailed out. “The first thing we tried to figure out was how big these banking systems were,” said Bass, “in relation to government revenues. We took about four months to gather the data. No one had it.”
The numbers added up to astonishing totals: Ireland had debts of more than 25 times its annual tax revenues, Spain and France of
more than 10 times their annual revenues. Historically, such levels of government indebtedness had led to government default.
Summer 2011 I returned to see Kyle Bass, Greek credit default swaps were up from the 11 basis points he had paid to 2,300.
Michael Lewis describing Hedge Fund Manager Kyle Bass
The man who sold the worldThe Texan investor who made a fortune in the sub-
prime chaos. Now gambling big money on the collapse of entire countries
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Even in mature economies PFM can be improved…
German finance ministry officials own up to accounting mistake that overstated national debt by €55.5 billion.
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International standards are revealing new information …
First set of Whole of Government Accounts shows pension liabilities of
£1 trillionLandmark documents show that the government’s liabilities for
public service pensions are more than £1.13 trillion.The figures, which also show Private Finance Initiative liabilities
of more than £40bn, are included in the first set of Whole of Government Accounts, published by
the Office for Budget Responsibility in its first report on the sustainability of the public finances.
The documents showed total public service pension liabilities of £1.13 trillion or 78.7% of gross domestic product. Meanwhile,
total capital liabilities arising from PFI contracts amount to £40bn, or 2.9% of GDP. Only £5.1bn of these were included on
the public sector balance sheet inthe National Accounts. The publication of Whole of Government accounts is the culmination of ten years work. It was delayed to
2009/10 to tie in with the introduction ofInternational Financial Standards.
Public Finance July 2011
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New analysis suggests we all have PFM issues to address …
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Implications for equity, accountability, trust and confidence in government
Impacts service delivery outcomes, living standards, quality of life
Affects investor confidence, economic performance, development and opportunity
Outcomes of poor PFM are huge …
“It directly affects the quality of decision-making and gnaws
away at public trust in governments.”
Steve Freer,CIPFA Chief Executive
cipfa.org.uk
In the public interest...
A global step change in public financial management
Collaboration throughout the profession and with all the other players and stakeholders
Growing professional capacity to sustain PFM for the long term
Is there a solution that we can effect …
“We plan to shift this issue from the 'Too Difficult' tray and make it happen .”
Chris Bilsland,CIPFA President
cipfa.org.uk
Making high quality PFM the norm – building on…
IPSAS
ISSAIs
Donor commitment – reconfirmed at HLF4 in Busan
PEFA assessments
CIPFA’s Whole System Approach
ICGFM
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What more is needed …
Global PFM qualifications
Global PFM community
Global PFM thought leadership
In short a Global PFM profession
Global PFM bursary fund
Global approach to PFM capacity building
Global PFM products and services
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The characteristics of a professional body… members bound to act in
the public interest
entrance by examination
practical skill blended with concepts
members trained to appropriate standard
skills kept up to date
regulation, ethics, discipline gives assurance
of qualitySustainable
organisation and genuine capacity
development
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Outputs from PFM professionals…
prepare budgets and financial statements
design PFM systems
give assurance
provide advice
certify accuracy and integrity
monitor compliance
Quality accounts and unqualified audits
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Outcomes from PFM professionals…
better quality decision making
more effective targeting of resources
stronger accountability
more efficient use of resources
greater comparability
Donor/ lender confidence in country
systems
improved transparency
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CIPFA’s experience of professionalisation…
South Africa
Lesotho
Egypt
Tanzania
Eastern Europe
Canada
Australia
New Zealand
Nigeria
Different approaches
different results
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CIPFA cannot do this alone. We want global alliances…
International agencies
National governments
Multi lateral development banks
Charitable foundations
Professional accountancy institutes
Accountancy and other firms
Academic institutions
Representative international bodies
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CapacityDevelopment
ValidatedQualificationFramework
AccreditedExaminations
CIPFAInternationalMembership
Public Financial Management Training
Influencing Accounting and Public Financial Management Organisations
Influencing Governments, Donorsand other Stakeholders
CIPFA International PFM Certificate
CIPFA International PFM Diploma
a global PFM profession …
Global PFM Certificate and Diploma
Global PFM Professional and
Strategic Qualifications
Advanced PFM Certificate
CPD
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We know partnerships work eg Nigeria…
The Accountant General of the Federation
The Auditor General for the Federation
The Federal Treasury Academy
The World Bank
The Institute of Chartered Accountants of Nigeria
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Scope of the Nigerian programme…
joint qualification
capacity development plan
quality assurance system
business strategy & planAim to train 2,000 Federal level
staff within 5 years
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Together we can help create a sustainable Global PFM profession…
PFM and professional training
Systems and
processes
BehaviourNorms
Short course training and IFMIS
Support from national
governments
50,000 PFM students by 2020
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Meanwhile pressure for change continues to mount…
cipfa.org.uk
improving PFM
The need for a global PFM profession
Alan EdwardsInternational Director
CIPFAalan.edwards@cipfa.org.uk
Tel +44 207 543 5690
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