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While reading through the news a few days ago, I came across an illuminating article in Public Finance International and I knew I had to share it with you.
This article quotes Chartered Institute of Public Financial Accountants (CIPFA) President John Matheson as saying that while poor public financial management leads to “waste, encourages corruption and reduces the ability to collect taxes and fund public services,” good public financial management “improve[s] capability and accountability systems … High and exacting accountancy standards – through accrual based accounting – are at the heart of this.”
The entire article is worth a read but I wanted to highlight that particular section to talk about how it relates to the work you do every day. As we’ve discussed before, corruption costs an estimated 2.6 trillion USD worldwide; it can take a variety of different forms including bribery, embezzling and uncollected taxes. It can seem like an insurmountable obstacle, but what articles like this show is that public financial stewards like yourself can and are making a difference, one transparent, sustainable practice at a time.
For some of you, this might come as a surprise. Who would have thought something as seemingly basic as accrual based accounting would have such a tremendous impact mitigating corruption? But the truth is accrual based accounting is a critical piece in the fight against corruption. It helps nations collect taxes and prevent waste. It opens up clear audit trails and requires comprehensive record-keeping which aid in creating accountability and transparency.
We take these standards for granted in developed nations, but they are crucial in helping developing nations establish sustainable and transparent financial systems. Accrual based accounting has a tremendous, positive long-term impact on a country’s fiscal health and ultimately its citizens’ wellbeing.
Over the past few years ACFO has built a strong relationship with CIPFA and articles like this remind us how proud we are to be part of a community with a voice for global change. No matter where corruption occurs it affects all of us, so together with CIPFA and other partners we are advocating for the adoption of global standards to combat corruption and strengthen institutions.
Sometimes we get so busy with our work we can overlook how some of our most fundamental practices contribute to good public financial management. From time to time we need to be reminded of our important contributions and skill sets, and that, without our work, Canadians would not have the standard of living we do.
So as we wind down for the current year and ready ourselves to tackle the next one, I encourage you to take a moment and reflect with pride on the importance of the work you do.
Milt Isaacs, CPA, CMA, CPFA
President and Chair of the Board of Directors
Association of Canadian Financial Officers