Public sector governance framework proposed

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20 Jun, 2013

The International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA) have issued a Consultation Draft of an international framework on governance in the public sector. The aim of framework is to promote the development of robust governance by establishing a benchmark for good governance in the public sector around seven fundamental principles, which include good practices in transparency and reporting to achieve accountability.

The draft framework, titled Good Governance in the Public Sector, was developed by an 'international reference group' of individuals drawn from a wide range of organisations, although each member acted in their personal capacity. The draft framework is not intended to replace national and sectoral governance codes, but instead is designed to be used in updates and reviews of any such codes. It covers a broad array of topics, including a commitment to integrity, ethical values, and the rule of law, stakeholder engagement, internal control, and financial management.

On the topic of accountability, the draft framework asserts that "public sector entities need to demonstrate that they have delivered their stated commitments, requirements, and priorities and have used public resources effectively in doing so", and so recommends reporting publicly, at least annually, performance information and accompanying financial statements. The framework recommends the financial statements be prepared in accordance with International Public Sector Accounting Standards (IPSASs), as issued by the International Public Sector Accountancy Standards Board (IPSASB), and that those financial statements be subject to external audit. In this regard, the document draws from, and references, an earlier report from the International Monetary Fund (IMF), Fiscal Transparency, Accountability, and Risk (link to IMF website), which provides more background information and includes calls for a greater emphasis on the international reporting standards applying to the consolidated public sector.

In addition, the draft framework also recommends defining public sector outcomes in terms of sustainable economic, social and environmental benefits, and accordingly calls for public sector entities to consider the combined economic, social, and environmental impact of their policies, plans, and decisions. In this regard, it puts forward the view that it is "essential that future obligations to citizens are fully reflected in the long-term budget and that all future liabilities are completely transparent" (see also an IPSASB proposal on this topic published in 2011).

Comments on the draft framework close on 17 September 2013. Click for press release (link to IFAC website).

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