Hold your government to account, IFAC chief tells CIPFA seminar

7 Jul 15

Fayez Choudhury has told delegates at today’s CIPFA International Seminar that accountants have a moral duty to ensure their governments are properly scrutinised.

Choudhury, the chief executive of the International Federation of Accountants, argued that sound public sector financial management is vital to the economic, social and political health of every country. “It matters to all of us,” he said. “It affects us all and is a moral not a technical issue.”

Accountants are uniquely placed to become advocates for taxpayers, Choudhury added, urging professional accounting bodies around the globe to “build themselves up as consultants to government”.

Choudhury noted that the UK remains unique in having a professional accounting institute that is dedicated to the public sector. “The world has a lot to learn from CIPFA,” he said.

Professional accountants should champion financial information that is consistent, high quality and above all useful, Choudhury argued, adding that the adoption of international accounting standards can facilitate all three requirements. “At a nuts and bolts level, sound financial management drives performance,” he said.

Choudhury cited IMF research indicating that countries with higher levels of fiscal transparency tend to have lower debts and enjoy more favourable borrowing costs. “It really does matter what type of financial information you have,” he noted.

Accrual reporting is the benchmark for providing the kind of trustworthy information needed, he argued, adding that the notion is “beginning to take hold” even where financial management today remains weak. “In five years’ time, large numbers of countries in Africa and South America will be well on the way to accrual reporting,” he noted. While Africa currently leads the charge, the number of countries in Asia, Latin America and the Caribbean adopting accrual reporting is set to double by the end of the decade, he highlighted.

Full adoption of International Public Sector Accounting Standards may take longer, Choudhury admitted, noting that accrual accounting provides an important milestone on “the full journey” to IPSAS, which he described as a “generational challenge” to complete. “It takes a lot of work and is very complex,” he acknowledged. “People should have realistic expectations about how long it will take.”