Government fails on financial planning: Why we need more accountants | AccountingWEB

Government fails on financial planning: Why we need more accountants

The Public Accounts Committee has released a crushing indictment of civil service financial incompetence in its 43rd report of session. Robert Tollast outlines some of its findings.

The publication of this week’s Public Accounts Committee (PAC) report, 'Managing financial resources to deliver better public services', confirms what many fear about the financial skill of those in government.


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Public Sector measures of Performance should be same or similar

PhillipIRosslee | | Permalink

I can see a strong argument to overhaul Accounting Standards so that the same standards and conventions are used to record and measure performance in both the Public sector and the Private sector. This will in the long term encourage more accountability and understanding by those responsible. Also the Public sector should be encouraged to measure value and benefit created on a similar basis to that employed in the Private sector. This will encourage better management of limited resources. It is all too easy for our Political masters when finances are short to tap the taxpayer (After all Politicians only have to face electorate every 4 or 5 years, not annually at every AGM as the Board do for our large plc's) for more cash or borrow. I am all for our politicians being elected for shorter periods so they are encouraged to manage the taxpayers resources more responsibly.

But what qualification?

Anonymous | | Permalink

Speaking as an ICAEW member working in the public sector, I find that even qualified accountants amongst my colleagues are out of touch with the world. As has been mentioned below, the SORPs issued by CIPFA have as much relationship with UKGAAP as my dog has with a budgie.

Something as basic as understanding the difference between depreciation and repaying borrowing used to fund an asset seems too challenging for some.

Plus, it seems impossible to pick up a piece of legislation to do with finance and apply it to the organisation's activities without a written guidance from CIPFA. Reading the legislation - nah, we don't do that.

So let's not get carried away with the idea that just getting letters after the name improves financial understanding.

The Questionabale Competence of our Political Masters

PhillipIRosslee | | Permalink

No wonder our political masters are incapable of making any sensible financial decisions or understand why we have budgets to manage the economy and spending by the state. All spin and no substance seems to be the order of the day in managing financial affairs of the state.

Public Sector Account

indiajack | | Permalink

I was surprised to find that the public sector considered embedded derivatives to be an accounting construct without any legal enforcability and as such not to be treated in the manner of other derivatives.

This is reflected in the SORP by CIPFA.

It is certainly out of step with commercil reality, especially if the public sector wishes to engage in PPP initiatives. The commercial companies in the venture will be reporting the embedded derivtives as required by FRS 25, 26 and 29 but the public sector will be ignoring this and give a different view.