Urgent, coordinated global action needed to improve how governments manage finances if future crises

The global financial and sovereign debt crises have highlighted the weaknesses in how governments manage their finances – and urgent global action is needed to make radical improvements if future disasters are to be averted.

The warning comes from the Chartered Institute of Public Finance and Accountancy (CIPFA), which on Wednesday called for concerted and co-ordinated action by all organisations involved in how governments manage and account for public money.

In its new prospectus - Fixing the Foundations - CIPFA argues that weak public financial management is regrettably commonplace in countries at all stages of development.

As a result, governments currently grappling with sovereign debt issues, emergency budgets, fiscal stimulation measures, and austerity programmes are often making decisions of strategic long-term significance based on incomplete, inaccurate and/or out-of-date financial information.

The Institute stresses the importance of high quality accounting, auditing and financial management practices. They impact on the availability of public services, economic performance including market confidence, trust in government and quality of life.

CIPFA is calling for a co-ordinated and concerted global effort as the only way to address these issues at the scale and pace required to avert further financial failures in years to come.

The Institute is inviting governments, international agencies, accountancy bodies and firms, academic institutions, charitable foundations, banks and all other organisations with a stake in public finance to work together on a range of programmes to tackle the issue.

Launching the prospectus at a meeting of the International Federation of Accountants (IFAC) in Berlin, CIPFA Chief Executive Steve Freer said: “The time has come for all governments to wake up and confront their financial management shortcomings. We need a concerted global effort to deliver a step-change improvement. The public interest demands nothing less”.

CIPFA’s prospectus, Fixing the Foundations – achieving a global step-change in financial management in governments, is available at www.cipfa.org.uk/prospectus. It was officially launched on Wednesday at a Council meeting of the International Federation of Accountants (IFAC) in Berlin.

CIPFA, the Chartered Institute of Public Finance and Accountancy, is the leading professional body for people in public finance. The Institute was formed in 1885 and is the world’s only professional accountancy body to specialise in public services. It is one of the six chartered accountancy bodies headquartered in the United Kingdom and Ireland.

CIPFA stands up for sound public financial management and good governance. The Institute already work with donors, partner governments, accountancy bodies and the public sector around the world to advance public finance through training and qualifications, thought-leadership, events, knowledge-sharing and improvement services.