Accountants 'must push for transparent public accounts'

18 Mar 11
Efforts to increase accuracy and transparency in public accounts depend on sustained lobbying by the accountancy profession to overcome politicians’ fears, the CIPFA international conference heard.

By Mark Smulian

18 March 2011

Efforts to increase accuracy and transparency in public accounts depend on sustained lobbying by the accountancy profession to overcome politicians’ fears, the CIPFA international conference heard.

Ian Ball, chief executive officer of the International Federation of Accountants, said that most politicians welcomed transparency in public finances ‘about as much as they do a period on the opposition benches’.

He explained: ‘Politicians think transparency will put them at risk, so we should not be surprised if they reject it.

‘We must keep up outside pressure because we cannot expect governments to do this of their own volition.

‘Professional accountancy bodies have the expertise to press for transparency, indeed it is our responsibility to do so.’

Ball argued that it would be impossible to establish trust and accountability in public finances without transparency and stability, and strongly advocated a move to accrual-based accounting.

He said this had been done 20 years ago in his native New Zealand, which had greatly improved its government’s knowledge of how public money was spent.

‘I could never understand, even early in my working life, why any government would not want to know the cost of its services and liabilities.’ Ball said the sovereign debt crisis affecting many countries had been triggered in part by ‘the Greek government’s financial fraud’ and said the crisis showed that governments needed ‘high quality financial information at national, state and local level’.

He added: ‘Adoption of international standards is not enough; it is the implementation that matters.’

Failures in government financial reporting could, Ball warned, ‘have drastic consequences such as the loss of democratic control over economic policy, as we have seen in Ireland and Greece, and in extreme cases loss of democracy altogether if a democratic government cannot take the measures needed so an authoritarian one steps in’.

But he predicted opposition to change from finance ministries, which Ball said would resist moves away from cash accounting because accrual accounting would be ‘beyond their area of expertise and mean they would have to write off a chunk of their human capital, which they do not want to do’.

All speakers' presentations from the CIPFA international conference can be watched again on the CIPFA website

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