financial reporting to improve governance and build trust · • kahf, m. (1987) “the principle...
TRANSCRIPT
Financial reporting to improve governance and build trust:
Developing countries’ perspective
NIDA NAEEM, CHAIRPERSON, SUBCOMMITTEE FOR THE PUBLIC SECTOR, ACCA
PAKISTAN
Quality of governance
DEVELOPED COUNTRIES Developmental orientation of political leadership Established systems Functional check & balances System mutually reinforcing and self-correcting Knowledgeable and vigilant public
DEVELOPING COUNTRIES Political leaders following powerful private interests Weak or absent systems Check and balance institutions bypassed Uneducated public
CASE STUDY: ZAKAT
1. Does the Pakistani public trust its government for effective Zakat administration?
2. Is disclosure of financial reports a significant factor in winning the public’s trust?
ZAKAT
• Zakât is a portion of one’s wealth that must be given to the poor and needy
• In Islam, it is obligatory for all those who are financially able
• Zakat constitutes a big welfare fund in Pakistan
• Can be given to government’s programme OR privately
Globally = 40% In Pakistan (2009) = 60%
% of population living under $ 2 a day
• Pakistan leads South Asia in philanthropic giving as % of GDP.
• Most funds disbursed privately
PHILANTHROPIC NATION
• Patron’s integrity, charisma and fanfare
• Media portrayal
• Observation of achievements
REASONS FOR PUBLIC’S PREFERENCE FOR PRIVATE CHARITY
Audited financial statements of SKMCH are publicly available.
But not for EDHI: the largest private charity receiving organisation in Pakistan.
Edhi has strong media and civil society support based on his achievements on ground.
Public perception affected by:
Non financial indicators
× Financial reporting
OBSERVATIONS FROM CASE STUDY
The case for investing in financial reporting improvements must be based on evidence
of its impact on public trust…
Systems
Better Governance
Visible improveme
nt on ground
Enhanced public trust
Common Man
Improvement
How will improved financial reporting affect public perception?
EXPERIENTIAL • Observation • Experiences
PERSONAL • Values & Beliefs • Education • Ability to interpret
EXTERNAL INFLUENCES Media Word of mouth Political affiliations
Educate users
Improve financial reporting
• Research from countries which have advanced public financial reporting systems is required
– to prove link between improved financial reporting and enhanced public trust
– in order to make a stronger case for FR improvement initiatives in resource strapped developing countries.
• Reporting formats should include non-financial indicators to meet users needs.
KEY MESSAGES
References • Naeem, N. (2013) “Lessons from Pakistan”. Accounting and Business Magazine, International
edition, June 2013: ACCA.
• Pradhan, S. (2006) “Improving governance in developing countries”. Available from: <www1.worldbank.org/publicsector/anticorrupt/.../SanjayPradhan.ppt> [Accessed 27 November 2013].
• Khan, G.M. (2013) “Literacy and Pakistan” [online]. Available from: http://x.dawn.com/2013/05/22/literacy-and-pakistan/ [Accessed 28 November 2013]
• Klugman, J., Human Development Report 2009: Overcoming barriers: Human Mobility and Development. 2009, United Nations Development Programme.
• Income share held by highest 10%. Indicators 2008 [cited 2012 December 14]. Available from: http://data.worldbank.org/indicator/SI.DST.10TH.10.
• Income share held by lowest 10%. Indicators 2008 [cited 2012 December 14]. Available from: http://data.worldbank.org/indicator/SI.DST.FRST.10.
• Poverty in Pakistan. Socio-Economic Issues in Pakistan 2012 30 November, 2012 [cited 2012 December 14]. Available from: http://en.wikipedia.org/wiki/Poverty_in_Pakistan.
• The World Factbook - Pakistan. The World Factbook 2012 5 December 2012 [cited 2012 December 13]. Available from: https://www.cia.gov/library/publications/the-world-factbook/geos/pk.html.
References • Kahf, M. (1987) “The principle of socio-economic justice in the contemporary fiqh of Zakah”.
• Ahmed, H. (2004) “Role of Zakat and Awqaf in Poverty Alleviation”.
• Nasim Shah Shirazi et al. (2009) “Prospects of Poverty Elimination through Potential Zakat Collection in OIC-member Countries”: Reappraised.
• Candland, C. (2011) “Faith and Philanthropy in Pakistan”. Guest Lectures 14 June 2011 [cited 2012 14 December]. Available from: http://www.ahkrc.net.pk/christopher-candland.html.
• Bank, T.W., (1970) “Pakistan: A Profile of Poverty”.
• Shirazi, N.S. (1996) “Targeting, coverage and contribution of Zakat to households' income: The case of Pakistan”. Journal of Economic Cooperation Among Islamic Countries: 17(3-4), p. 165-168.
• Al-Abidin, T.Z., (2003) “The Disbursement of Zakah”. Islamic Studies: 42(1), p. 126-136.
• Bonbright, D. & Azfar, A. (2000) “Philanthropy in Pakistan: A report of the Initiative for Indigenous Philanthropy”. Aga Khan Foundation, Pakistan.
• Government of Punjab (2012) “Zakat and Ushr Department” . Available from: http://www.Zakat.gop.pk [Accessed 28 November 2013].
• AFP (2012) “GEO-TV: Rs 8,500 bn corruption mars Gilani tenure”.
