Successful PFM reforms ‘need government backing’

18 Mar 19

For the implementation of accrual-based accounting standards and public financial management reforms to be successful long term they must have political backing, public finance experts have said.

If reforms are carried out without the “ownership” of the national government they are unlikely to be sustainable, Jens Kromann Kristensen, the head of the Public Expenditure and Financial Accountability secretariat told PF International.  These reforms often includes the implementation of international public sector accounting standards.

Kristensen, whose organisation produces a tool to assess PFM performance, told PF International: “I think some PFM reforms are undertaken without paying due attention to ownership on the government’s side.

“Those reforms will not have a long life if they are primarily sustained by development partners.”

Speaking at an event organised by the International Public Sector Accounting Standards Board, the World Bank and the IMF in Washington DC last week, Biodun Adeyemo, acting director of the Programming, Budgeting, Finance and Accounting Directorate at the African Union, also said: “There must be a very strong political will to successfully implement IPSAS.”

“If there is a strong political will, the implementation of accrual and IPSAS will succeed.”

The PEFA tool, which is backed by a number of development partners, including the World Bank, IMF, European Commission and UK Aid, does not factor in political and external matters.

But Kromann Kristensen told PF International the secretariat recently put out a consultation draft on the guidance on how to use PEFA assessment reports for PFM reforms.

“There is no point in wasting time on designing and implementing reform that key stakeholders are not interested in and are willing to actively or passively block.

“The key is to design and identity reforms that are helpful to achievement of the objectives of key stakeholders while maintaining technical standards of professionalism.”

The final guidance is expected to be published by the end of the year.

David Watkins, an independent public finance consultant and technical adviser to the IPSASB, said the implementation of international standards should be part of more than an “accounting reform”.

“It has to be seen as part of a reform of PFM [which is wider-scale].”

He added that it is important to understand the “context of which you are working”.

Referring to his work in Zimbabwe, where he helped train accounting professionals in the public sector, he stressed it was important get the backing of politicians and heads of states within the country.

“It was very important that the reforms were done in Zimbabwe, by Zimbabwe, for Zimbabwe. It was not done by David Watkins, who was telling them what they should be doing, based on what the UK had done.”

 

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