Global leaders in public finance call for change in governments’ financial practices
3 January 2012 - Writing in the January issue of Public Money & Management, David Walker, Chief Executive of the Comeback America Initiative and former US comptroller general, and Ian Ball, Chief Executive Officer of the International Federation of Accountants (IFAC), join others in calling on governments around the world to address their public financial management as a matter of urgency.
The publication is particularly timely given current economic conditions which have highlighted the importance of effective financial management. The arguments made here back up an initiative recently launched in Fixing the Foundations, an international prospectus where CIPFA argues for urgent and coordinated global action to improve public financial management to help avoid future financial crises.
Outlining some of the consequences of poor public financial management, including the loss of political control, painful economic adjustments and social unrest, IFAC's Ian Ball calls for improved global accountancy standards.
The piece highlights some of the obstacles to successful reform, including a lack of political will. Mr Ball concludes by calling on the accountancy profession, investors, financial institutions and securities regulators to speak out:
“If the sovereign debt crisis does not stir us as an international profession to speak out on this issue, we will have missed an opportunity, we will have failed to live up to our public interest obligations, and we will have let down the future generations who will have to pick up the tab.”
David Walker's essay explores US public finances, suggesting that the greatest threat to the USgovernment's future is its own fiscal irresponsibility. He points to the trillions of dollars in off-balance sheet obligations and the failure of the deficit reduction 'supercommitee' to reach agreement on any deficit reduction recommendations. He concludes:
“Countries need to engage in a range of transformational reforms and citizens need to help ensure that policy-makers act in a timely and responsible manner before a crisis is at the doorstep.”