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.

  • Super typhoon weakens after entering Philippines

    MANILA, Philippines (AP) — A super typhoon blamed for the deaths of at least four people on islands in the western Pacific Ocean has weakened after entering Philippine waters and is expected to further lose strength as it approaches the country's northeastern coast. …

  • Micronesians appeal for help after devastating typhoon
    Micronesians appeal for help after devastating typhoon

    Residents in storm wrecked areas of Micronesia appealed for help Thursday as a clean-up began on the worst affected islands after Super Typhoon Maysak swept through the region on its way towards the Philippines. "We can do with all the help we can get," Courtney Stinnett at the Truk Stop Hotel dive shop on the main island of Weno in Chuuk state told AFP. A state of emergency has been declared in Chuuk, the largest region in the Federated States of Micronesia (FSM) where five people were …

  • From Space, Typhoon Maysak's Eye Looks Like a Black Hole (Photo)
    From Space, Typhoon Maysak's Eye Looks Like a Black Hole (Photo)

    It seemed like a black hole from a Sci-Fi movie," NASA astronaut Terry Virts wrote on Twitter. Virts and his fellow astronauts have been posting pictures of the typhoon, which is expected to hit the Philippines this weekend if it doesn't change course. "Commands respect even from space," wrote Samantha Cristoforetti, an Italian astronaut with the European Space Agency who launched into space with Virts in November. As of 11 a.m. EdT today (1500 GMT), the super typhoon was 223 miles (359 km) …

  • Muslim group calls for universal peace
    Muslim group calls for universal peace

    As predominantly Catholic Philippines and the rest of the Christian world observe the Holy Week, peace advocates like the Young Muslim Professionals Network (YMPN) are appealing to Filipinos of various creeds and persuasion to embrace the universal message of kindness, love and peace. The group issued the call as peace negotiations between the government and the Moro Islamic Liberation Front teeter due to the Mamasapano incident where members of the rebel group killed 44 police commandos on a …

  • Ex-WB exec pushes BBL passage
    Ex-WB exec pushes BBL passage

    A former World Bank official has warned of dire consequences for the Philippines if the proposed Bangsamoro Basic Law (BBL) is not passed into law. Nigel Roberts, former director on conflict, security and development, said that more conflict could occur without the BBL. “It takes about 15 years to get back to pre-conflict GDP growth rates, and 20 years for trade to recover,” Roberts said in his blog at the World Bank website. The World Bank estimated that economic losses amounted to $10 …

  • Despite typhoon, summer is here
    Despite typhoon, summer is here

    Super Typhoon Chedeng roared toward Luzon as the weather bureau announced the official start of summer in the country yesterday. The Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) announced yesterday the official start of the dry or summer season in the country due to the termination of the cold northeast monsoon. “The general public is advised to take precautionary measures to minimize heat stress and take note of the need in optimizing the daily use of …

  • Noy told: Just answer the questions
    Noy told: Just answer the questions

    Just answer the 20 questions. The Makabayan bloc of seven party-list representatives made this appeal to President Aquino yesterday after his spokesman claimed the Chief Executive has already answered most of the questions posed by the militant lawmakers regarding the Mamasapano incident. For instance, he said the President has not yet explained why he allowed then suspended Philippine National Police chief Director General Alan Purisima to take the lead in Oplan Exodus or the mission to …

  • DFA: Malaysia paying rent for Sabah
    DFA: Malaysia paying rent for Sabah

    Malaysia does not acknowledge the Philippine claim over Sabah but the Department of Foreign Affairs (DFA) maintained yesterday that the Malaysian government is paying rent for Sabah, indicating it rightfully belongs to the Philippines. The Malay Mail Online reported that Malaysian Foreign Minister Datuk Seri Anifah Aman said Malaysia has not and does not acknowledge the Philippine claim over Sabah when asked by media about the reported offer of the Philippine government to downgrade its Sabah …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options