IFAC and CIPFA release important new framework for good governance in the public sector
The International Federation of Accountants (IFAC) and the Chartered Institute of Public Finance and Accountancy (CIPFA) have together developed the International Framework: Good Governance in the Public Sector, to encourage more effective public sector governance.
Over the past few years, governance in public entities has become a pressing issue gaining greater exposure as a result of the financial and sovereign debt crises and a constant stream of governance failures, including nepotism, inefficiency, corruption, and poor financial management.
In response, the framework encourages better governed and managed public sector entities by improving how they set and achieve their intended outcomes. Enhanced stakeholder engagement, robust scrutiny and oversight of those charged with primary responsibility for determining an entity’s strategic direction, operations, and accountability leads to more effective interventions and better outcomes for the public at large.
Speaking on the framework, chair of CIPFA International Ian Ball said: “Public sector governance must focus explicitly on sustainable economic, social, and environmental outcomes, and this publication is unprecedented in highlighting the central role that outcomes and the public interest should play in the processes and structures of public sector governance.
“Our focus on sustainability is also especially important as public sector entities, from local councils to national governments, must consider the long term impact of their current decisions, especially in safeguarding the interests of future generations.”
Increased focus on the critical role that good governance plays in the public sector has been an all-too-recent development. Growing awareness of the substantial role of poor public sector governance in the sovereign debt crisis and other public sector failures has made the appropriate application of governance standards and arrangements more pressing than ever.
On the launch of the framework, IFAC CEO Fayez Choudhury said: “Good governance in the public sector requires an eye to the future, transparency, and accountability—principles that IFAC has consistently promoted, in particular with respect to the effects they have on the capacity to attract capital, global financial stability, and long-term sustainability.”
“While adopting the International Public Sector Accounting Standards (IPSASs) is a critical step, improvement of other governance arrangements is essential if governments worldwide are to be successful in the sustainable development of our economies and societies.”
Good Governance in the Public Sector establishes good practice principles for the fundamental aspects of public sector governance. The Framework also facilitates the review and update of national governance codes for the public sector and, where specific principles and guidance do not already exist, stimulates improvement.
The ideas and insights outlined in the framework, which includes a foreword from Mervyn King, chairman of the International Integrated Reporting Council and author of the King Report on Governance for South Africa, were developed using a wide-ranging literature review and in consultation with an International Reference Group. The framework is useful for all those specifically involved with governance, including governing body members, senior managers, and internal and external auditors. Furthermore, this framework provides the public with a resource to challenge substandard governance practices in public sector entities.
