Global crisis a wake-up call to fix accounting flaws

Dhaka (The Daily Star/ANN) - The global economic crisis can work as a wake-up call for public sector entities around the world for introducing better accounting, auditing and financial management, an expert said yesterday.

"Failure to implement public sector financial management could lead to a crisis, as seen during the recent economic crisis," said Brian Blood, chief executive of Confederation of Asian and Pacific Accountants (CAPA).

Blood spoke at a technical session of a daylong event styled "Strengthening Bangladesh Public Sector Accounting & Auditing-Global Reforms and the Way Forward", at Sonargaon Hotel in Dhaka, Bangladesh.

The Institute of Chartered Accountants of Bangladesh (ICAB) and CAPA jointly organised the daylong international conference.

Many governments around the world do not know what their capital is because of their archaic budgetary and accounting practices, which do not record and report assets and liabilities other than cash, Blood said.

"They do not know what their balance sheets look like. Is it acceptable for any government entity?" he asked. "Only accrual-based system can achieve more results and transparency needed for any decision making."

For Bangladesh, stakes in transition to the accrual system from the cash system seem to be very high, Blood said. "The journey will not be easy, but with the strong will from the government it can be done," he said.

Jennifer K Thomson, manager of financial management at the World Bank, said countries should consider moving to a more sophisticated accounting system to use donor funds effectively and efficiently.

"Global aid flows will be around US$500 billion in the next three years, which means a lot of money will be around. It is very important to make best of it," she said.

"So, there is a huge need for high quality accounting and auditing in the public sector, as most of donor money passes through government entities. We need a good balance-sheet that will help the decision making process," Thomson said.

The high quality financial reporting is a signal to the outside world about a country's economy and how a country is operating, she said. "It will also help attract foreign direct investment."

The World Bank official said it is absolutely critical for setting up the environment for transparency, which underpins the foundation for financial stability and growth.

Thomson urged the government, private sector and professional bodies to form partnership, share knowledge and move toward implementing best practices of accounting and auditing.

Ahmed Ataul Haqeem, comptroller and auditor general of Bangladesh, admitted that the accrual system is a superior system. "But we will have to introduce it on a pilot basis and we will retain the existing cash-based system. Our cash-based system, however, is in line with international standards."

"Once we get desired results from the experiment, we will be able to switch over to the accrual accounting and auditing system."

Geoff Applebee, chairman of public sector financial management of CAPA, said the government should have a clear vision before changing financial management in the public sector for the better.

COPYRIGHT: ASIA NEWS NETWORK

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • US renews travel warning to Mindanao
    US renews travel warning to Mindanao

    The US State Department renewed its warning about the risks of travel to the Philippines, in particular to the Sulu archipelago, certain regions and cities of Mindanao and the southern Sulu Sea area. In an update on Wednesday of a travel warning it issued Nov. 20, 2014, the State Department said US citizens should continue to defer non-essential travel to the Sulu archipelago due to the high threat of kidnapping of international travelers and violence linked to insurgency and terrorism there. …

  • Phl gains support for APEC Action Agenda
    Phl gains support for APEC Action Agenda

    The Philippine initiative to put the interests of micro, small and medium enterprises (MSMEs) front and center in global and regional trade has made significant progress following the conclusion on Thursday of the 2nd APEC Senior Officials’ Meeting (SOM2) and Related Meetings in Boracay, Aklan. Called “The Boracay Action Agenda to Globalize MSMEs,” the Philippine proposal calls for a host of specific, concrete and practical interventions that APEC economies can implement to provide MSMEs wider …

  • Phl to join Bangkok meet on Rohingya crisis next week
    Phl to join Bangkok meet on Rohingya crisis next week

    The Philippines will join a 15-nation meeting in Bangkok, Thailand next week to address the migration crisis involving thousands of Rohingyas who escaped persecution in Myanmar and Bangladesh. Justice Secretary Leila de Lima bared this yesterday after meeting with United Nations High Commission for Refugees (UNHCR) representative to the Philippines Bernard Kerblat. In an interview, De Lima said the Philippine government has been invited to the meeting. …

  • Magnitude 4.2 quake jolts Sorsogon
    Magnitude 4.2 quake jolts Sorsogon

    LEGAZPI CITY—A magnitude 4.2 earthquake hit Prieto Diaz town in Sorsogon before dawn yesterday, the Philippine Institute of Volcanology and Seismology (Phivolcs) said. …

  • Drought-resistant rice breeds bared
    Drought-resistant rice breeds bared

    SCIENCE CITY OF MUÑOZ, Nueva Ecija – Amid the searing heat, the Philippine Rice Research Institute central experiment station here has identified nine rice breeds which have been proven to be drought-resistant and produce high yields in temperatures as high as 38°C based on a recent study. Thelma Padolina, lead researcher of the study titled “Screening of rice-induced mutants for heat and drought tolerance,” identified the breeding lines as the Ballatinaw lines, PSB Rc72H and Azucena lines. …

  • Phl, US assert rights, ignore China warning
    Phl, US assert rights, ignore China warning

    The United States military will continue air and sea patrols in international waters even after the Chinese navy repeatedly warned a US surveillance plane to leave the airspace over artificial islands China is creating in the disputed South China Sea. The Philippine government also declared it would continue activities in the region, calling on China to respect freedom of navigation and aviation. “Our position on the importance of letting freedom of navigation, freedom of aviation and …

  • MM shutdown eyed for quake drill; 6 schools warned
    MM shutdown eyed for quake drill; 6 schools warned

    Electricity and mobile phone services would be cut throughout Metro Manila, and all private and government offices and businesses, including shopping malls, would be closed. That would be the situation on July 16 between 3 and 8 p.m. to simulate the scenario of a 7.2 magnitude earthquake. The Philippine Institute of Volcanology and Seismology (Phivolcs) has warned that an earthquake of that magnitude could occur and kill at least 33,500 people and injure at least 113,600 others following a …

  • Subaru XV now priced among sedans
    Subaru XV now priced among sedans

    Motor Image Philipinas (MIP), the authorized distributor of Subaru in the country, has positioned its brand new crossover SUV, the Subaru XV, well within the sedan segment’s price range. This move, according to MIP, was made to give the public an opportunity to experience the brand’s unique automotive technologies by lowering its price. Buyers of […] The post Subaru XV now priced among sedans appeared first on Carmudi Philippines. …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options