By Nick Mann | 18 June 2013
A set of principles to ensure public sector bodies are run in the public interest were published for consultation yesterday by the International Federation of Accountants and CIPFA.
Good governance in the public sector aims to improve services and accountability by establishing a benchmark for good governance in the public sector.
Fayez Choudhury, IFAC chief executive, said: ‘The function of good governance in public sector entities is to ensure that they act in the public interest at all times. This obligation forms the basis for this principles-based framework and requires a strong commitment to integrity, ethical values, and the rule of law as well as openness and comprehensive stakeholder engagement.’
CIPFA chief executive Steve Freer added that the sovereign debt crisis had underlined the major role the public sector played in society, with public expenditure forming a significant part of gross domestic product and public sector entities playing a major role in the employment and capital markets.
‘The impact and the nature of their outputs, as well as their financing through taxation, puts a premium on strong, effective governance,’ he noted.
The consultation document sets out seven principles for good governance along with guidance on how these could be implemented. The principles include a strong commitment to integrity, ethical values and the rule of law, being open and providing comprehensive stakeholder engagement.
Good governance should also involve defining outcomes in terms of sustainable economic, social and environmental benefits, and determining the interventions that can optimise the achievement of intended results.
The principles also recommend developing the ‘capacity of the entity’ – including the capability of its leadership and the individuals within it, as well as managing risks and performance through robust internal control and strong public financial management.
Transparency and reporting are also vital, the document said.
IFAC and CIPFA stressed that the framework was not intended to replace national and sectoral public sector governance codes but should serve as a reference document for code setters when they are updating and reviewing their own codes.
The draft is open for consultation until September 16.
