Thursday Nov 28, 2024
Thursday Nov 28, 2024
Tuesday, 24 February 2015 00:02 - - {{hitsCtrl.values.hits}}
Waltpitagama outlined the objective of financial reporting for a public sector entity by saying that it was to provide information for accountability purposes. Hence the information provided in the financial reports should aid the public in understanding and assessing the performance and financial health of the public sector entity. It should present information that is useful in evaluating an entity’s financial performance during the accounting period and its financial condition at the end of the accounting period. Therefore these financial statements are a fundamental component of the financial reporting of a public sector entity.
She added that broadly, public sector entities are expected to be accountable for the extent to which the entity performed in accordance with its financial plan in terms of governance; performance, including financial and non-financial performance, stewardship, and sustainability. She also said that citizens should be more demanding towards greater accountability of their governments.
She further explained, “Reporting that has an accountability objective can be contrasted with reporting that focuses on valuation for decision-making by investors and creditors. A public sector focus of financial reporting on accountability may have implications for, the qualitative characteristics of the information to be reported. It should help deploy limited resources efficiently, assess the deliverability of the government services, avoid corruption/fraud, support the budget preparation process, evaluate efficient sectors/organisations and adopt/ revise policy decisions.”
Waltpitagama also went on to say, “Public sector financial reports must place a great emphasis on the understandability of the information reported in them. Preparers of financial reports should assume that users have a reasonable understanding of economic activities and accounting, together with a willingness to study the information with reasonable diligence. Therefore setting up systems and controls that provide, correct, accurate, timely information is important. Adoption of accrual based accounting such as the provision of exact revenue/expenditure, asset and liabilities of the government is a must. It should also provide inputs to the budgetary process conduct timely audits and address the issues in the audit reports and rectify them before the next financial year.”
She further commented, “Finance professionals must be assigned to key accounting, managerial positions and juniors must be trained under them. Punishments must be meted out to those who misconduct. It is also important to utilise information in the budgetary process of decision making and also review the reporting by the parliament.”
She concluded by saying, “It is time to recognise the value of professionals and attract them to public service in order to establish a healthy public sector. Employing professionals to Auditor General’s Department and changing the attitudes of the existing auditing staff ‘to think out of the box’ and establishing an internal audit department in each ministry headed by a qualified accountant should be measures that are undertaken to achieve these objectives. This will ensure that all government processes be transparent and that financial reporting be based on accrual accounting.”
