Accrual accounting in the public sector is not about numbers

bzi_gro_glb_ho_2366One feels privileged to be part of paradigm shift that impacts nations and industries, and we feel this way about the accrual accounting adoption by Central Governments and Public Sector entities. In our mind it’s not really about the numbers, but rather a new perspective to enable citizens and those who represent them look after a nation’s wealth and sustainable well-being.

On the 2nd and 3rd of Nov, 2015, a MENA Public Sector Leadership Summit was held in Abu Dhabi, UAE discussing topics around better financial management, accountability and transparency in the public sector. This comes as part of the International Federation of Accountants (IFAC) campaign ‘Accountability. Now.’ calling for higher standards of public sector information around the world with the aim of playing the role of a catalyst for change.

As we listened to speakers representing global policy making, government departments and civil society organizations, we clearly saw that this a global trend. A strong notion was discussed by many of the attendees in that a prosperous nation is not one where citizens today have a good standard of living, rather a nation where citizens today enjoy this good standard of living, while building for a similar sustainable future for our children and grandchildren, In other words not depleting resources for use today at the cost of our future generations having to settle our obligations. In accounting terms it is about how assets are used and developed, while managing liabilities and how they are managed. Transparency and disclosure helps draw a realistic picture of the future financial position of the government and public sector entities.

To enable effective decision making and continue improvements to the public sector financial management, the responsibility does not solely rest with the Government, but rather involves a number of equally important stakeholders. Commonly these stakeholders include global development organizations (e.g. IMF, World Bank, OECD), standards setters (IFAC, IPSASB), national audit agencies, global consultants and professional bodies. In our opinion another key stakeholder group with a critical role to play are higher education institutions.

Higher education institutions are the platform through which future public sector leaders, government talent and well informed citizens are educated. We believe these institutions should include in their curricula the topics of accrual accounting, financial management and performance management in the context of future model governments and public sector organizations. In addition, the organizing of conference and seminars for academics and graduating students is very valuable for their respective nations. It is only with the leadership of these higher education institutions that nations can aspire to have people who can sustain and manage their nation’s financial affairs.

by: Mohammad Jallad, Audit Partner, and Faisal Darras, Consulting Director at Deloitte  Middle East

The views and opinions expressed herein do not represent nor reflect those of Deloitte. Deloitte shall endeavor, as reasonably as possible, to screen such information which is obtained, to the best of Deloitte’s knowledge, from reliable source. As such, Deloitte cannot guarantee the accuracy of the information featured nor the validity of the opinions and/or analysis and interpretation expressed herein. Opinions, conclusions and other information in this interview/article which have not been delivered by way of the business of Deloitte are neither given nor endorsed by it.

This article contains general information only, and neither DTME, DTME affiliates nor any of Deloitte Touche Tohmatsu Limited member firms are, by means of this article, rendering any accounting, business, financial, investment, legal, tax, or other professional advice or services of any nature whatsoever. Information included in the article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your finances or your business. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. None of Deloitte Touche Tohmatsu Limited, its member firms, or its respective affiliates shall be responsible for any loss or damages whatsoever sustained by any person who relies on this publication.

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