Introduction
Public financial management is a system by which the financial resources are managed economically, efficiently and effectively ensuring transparency and accountability. The Parliament delegates the authority to the Government and the public sector manages the affairs through the public servants. It is the public servants who are ultimately responsible for managing public finance and discharge accountability. Financial management involves managing finance in an orderly and efficient manner through proper planning, budgeting, accounting and reporting under effective internal control environment to secure adequate return on investment (benefits to the people).
Public sector in Sri Lanka is very large diverse and complex. It plays a dominant role in the national economy, contributing 50 to 60 percent of the national income. Provision of essential services such as education, health, water, electricity and other welfare services to the general public are directly handled by the public sector. Public Sector entities include ministries, departments, provincial councils, local authorities, statutory boards, state owned enterprisesand so on. While the demand for public expenditure has been on the increase, the available resources arelimited becoming more difficult to make both ends to meet. In the circumstances the role of the public sector plays a crucial role in managing public resources and to deliver public services.
Need for strengthening Public Financial Management
Public financial management is a key ingredient for economic development.However thefinancial management in the public sector has been very weak. Particularly the emerging economies and developing economies suffer due to lack of professionalism. Very few finance professionals work in the public sector. Many countries arestill adopting cash based accounting although the studies reveal how the accrual system of accounting leads to better management of financial performance and position. Some countries are in transition from cash based accounting to accrual based accounting. Consolidated accrual based balance sheet in the public sector are very rare. Progressive countries are moving away fromtraditional input control conformity and compliance, to performance management focusing on results, outputs and outcome. IT development, emerging requirements in internal controls and audit and risk management practices are some of the major challenges faced by the accountants and auditors in the public sector. Reform minded countries like New Zealandhas shown to the entire world how financial management reforms can boost economic development.
Further the COVID-19, the global pandemic has made dramatic impact on our economy. The challenges faced by the economy is unbearable. Increasing demand has been put on the Government finance functions due to drastic measures taken by the Government by way of various relief measures. In addition, the revenues are dropping, loans are maturing for repayment, tourism and export industry are very badly affected, rupee is depreciating gradually and managing public finance has become a major challenge for the government.The public sector needs high professionalism to handle this situation.
Need for the hour is to maximize the utilization of national resources so that its benefits will have trickle down effects at grassroots level to meet the expectations of the people. As a premier national accountancy body we have a prime responsibility to work closely with the government to overcome the current situation. There is an urgent need to revamp the Government financial management system by simplifying the cumbersome procedures, bringing in the international best practices to meet the current need for accelerated development of the economy. Introduction of Public Finance Act and the revision of Financial Regulations have been a long felt need to streamline the financial management practices.
CA Sri Lanka’s Initiatives to cater public sector needs
World over the Professional Accountancy Organizations (PAOs) had been catering the needs of the private sector until recently. Although International Federation of Accountants (IFAC), Confederation of Asian and Pacific Accountants (CAPA) are committed to protect public interest encouraging the PAOs to extend their activities into the public sector focusing on high quality financial management only very few PAOs have been able get involved with the public sector. The Chartered Institute of Public Finance and Accountancy (CIPFA),London, the only international professional accountancy body globally dedicated to public financial management has joined hands with several accountancy bodies in promoting professionalism in public financial management.We are proud to say that CA Sri Lanka, the premier national accountancy body has taken the lead in joining hands with CIPFA London to professionalize the public sector financial management personnel in Sri Lanka under an MOU signed with them. In addition, it has set an example by creating a model for the other PAOs to follow by establishing a Public Sector Wing (APFASL).
Establishment of the Public Sector Wing (APFASL)
APFASL, the Association of Public Finance Accountants was established as a Public Sector Wing of CA Sri Lanka in 2012 with a vision to lead excellence in Public Financial Management. All of its members are public servants serving in Government Ministries, Departments, Provincial Councils, Local authorities, Statutory Boards and State Owned Enterprises.
APFASL is managed by a board of management consisting of 15 members appointed by the Council of CA Sri Lanka including seven ex-officio members namely the President and Vice President of CA Sri Lanka, Auditor General, Director General of State Accounts, Director General of Public Finance, Director General of Public Enterprises, Commissioner General of Inland Revenue and eight independent members.
The main objectives of the APFASL are as follows:
i. Launching a professional qualification for the public sector
ii. Introducing public sector Accounting standards and improving financial reporting
iii. Capacity building through seminars, workshops, conferences, training programs throughout the island
iv. Provide a platform for public finance accountants to develop their leadership and skills.
v. Conduct CPD programmes to its members.
vi. Professionalize and strengthen Public Financial Management practices in the country.
APFASL has three levels membership as follows:
i. Associate Public Finance Accountants (APFA) - Accountants, Auditors and Inland Revenue Officers from public service who meet the eligibility requirements in terms of the Articles of Constitution are admitted as associate members.
ii. Fellow Public Finance Accountant (FPFA) – Associate members having 10 years of unblemished records are elevated as fellow members
iii. Chartered Public Finance Accountants (CPFA) – This qualification is offered to our members on merit basis as well as on examination basis. Initially this qualification was offered on merit basis to senior public servants possessing master’s degree infinance related subjects with 10 years’ executive experience andothers follow the examination route.
APFASL’s initiatives in strengthening Public Financial Management
CA Sri Lanka has taken several initiatives through the APFASL to strengthen public financial management practices in the country. Some of them are as follows:
* Launched a new professional qualification, Chartered Public Finance Accountancy (CPFA) for the public sector in collaboration with the Chartered Institute of Public Finance Accountancy (CIPFA) London. This qualification was introduced by CA Sri Lanka as a core qualification to the public sector to enhance the knowledge, skills and status of the Public officers.CPFA members are recognized for membership from CIPFA, London as a dual qualification under the MOU signed with them.
* Introduced Sri Lanka Public Sector Accounting Standards (SLPSAS) based on International Public Sector Accounting Standards (IPSAS), and conducting awareness programs to facilitate implementation of these standards to improve financial reporting. So far 20 standards have been formulated, adopted and published in three volumes jointly with the Ministry of Finance.
* Holding Best Annual report and accounts competition annually and awarding the winners.
* Conducting series of capacity development programs by way of seminars, workshops and conferences.
* Publishing a Bi-annual Newsletter containing articles and news relating to public financial management
APFASL has also introduced a new system of accounting and reporting supported by a simplified uniform accounting standard based on SLPSAS for the Local Authorities at the request of the Ministry of Provincial councils and Local Authorities.
Currently the Association is in the process of Launching a Master’s Degree in Public Financial Management for which a comprehensive proposal has been submitted to the Ministry of Higher Education for approval.
It is with pride and privilege APFASL has celebrated its 4th Best Annual Reports and Accounts Awards ceremony for the public sector institutions and the awarding of Certificate of Membership from CIPFA London at the Bandaranaike Memorial International Conference Hall on February 22.
This was initiated with the intention of bringing excellence in financial reporting in the public sector which has resulted in substantial improvement in the quality of annual reports and accounts. While congratulating the winners of the Best Annual Report and Accounts Competition and the awardees of the Membership Certificates from CIPFA London at this ceremony, we encourage wider participation to make full benefits from the services rendered by the association.
This write up has been published to mark the 4th Best Annual Reports and Accounts Awards ceremony for the public sector institutions and the awarding of Certificates of Membership from CIPFA London to our CPFA members held on February 22 at the Bandaranaike Memorial International Conference Hall.
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