the results of corruption in the public sector effect …...the results of corruption in the public...
TRANSCRIPT
Ladies and gentlemen, thank you for inviting me to speak today and to chair
this panel discussion.
As you have just heard my name is Anthony Harbinson and my career has
seen me working in the public sector for many years leading to my current
role as Director of Safer Communities for the Northern Ireland Department
of Justice. As well as being a former President of the ACCA I also happen to
lead the AML Taskforce for the CCAB, the umbrella body for the main UK
professional Accountancy bodies.
In all of these capacities I have been able to develop particular insights on
the subject corruption, criminal financing and money laundering which I hope
we can explore today in our panel discussion. The question and answer
element of this discussion will be a key aspect of this session and therefore
it is essential that you, the audience, fully participate and make this a highly
interactive and indeed challenging and robust discussion.
Corruption is a topic which I regard as not only important for the
accountancy profession to examine but one about which we all need to
remain vigilant, especially those of us who operate within the Public Sector.
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The results of corruption in the public sector effect everyone in society as
well as sovereign nations and the global financial markets. No matter were
it occurs its resonance can be felt around the world, it is a truly global
problem.
Given this event is one which focuses on the Public Services I can’t stress
enough the importance effective public financial management.
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And so, here is the agenda I want to work through with you today.
I will start by introducing the subject and looking at some of the key aspects
that we may wish to consider in this session.
I will then explore some of the ways in which we may be able to limit the
level of corruption before turning to what I see as the specific role of the
accountant in trying to limit corruption in public services.
Then the session will really start when I introduce the rest of the panel
members and after a few words from each on their views we will get the
debate going!
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Governments spending on public services accounts for more than one-third
of GDP in most countries around the world.
Globally, the public sector is rapidly changing and the demands on public
services are growing, together with the tax bill and governments are
wrestling with a number of complex challenges including austerity measures
and demands for improved public services.
At the same time they are facing the challenges of aging populations, rising
healthcare costs, reform of welfare support, provision of quality education,
the environment and climate change, defence costs, protection of natural
resources, terrorism, crime and infrastructure costs – and so every penny
counts and any loss of resources is acutely felt!
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So there can be no doubt that given the complex challenges faced by
governments, policy makers and business in delivering good public services,
corruption is more than just a minor problem or an irritant, it damages and
indeed takes lives!
Aside from the ethical dimension and that could be a whole other discussion
point – we have to ask the question “can we afford not to tackle corruption?”
And of course we have to address the moral dimension too – tackling and
stopping corruption is simply the right thing to do.
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But let us be clear, corruption is not just a issue for the developing world, it
effects us all, and it always has!
The quotes on the left hand side of the slide demonstrate this, but I wanted
to share the imagine on the right hand side with you which highlights the
most recent research published by Transparency International in their
Corruption Perceptions Index 2016.
Firstly I should say that no country gets close to a perfect score in the
Corruption Perceptions Index 2016.
Over two-thirds of the 176 countries and territories in this year's index fall
below the midpoint of the scale of 0 (highly corrupt) to 100 (very clean). The
global average score is a only 43, which Transparency International claim
indicates that there is endemic corruption in a country's public sector. Top-
scoring countries (yellow on the map) are far outnumbered by orange and
red countries where citizens face the tangible impact of corruption on a daily
basis.
Whilst you might not be able to see the detail clearly, what you will see from
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the heat map is that generally countries, such as those in Scandinavia and
Canada, that have a reputation of tackling corruption head-on appear as
light yellow. This indicates that these nations tolerance for corruption is very
low. It is an example of what can be achieved with continuous vigilance and
a commitment to high standards.
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Taking a little more detailed look at the heat map you will see that those
countries with a much higher tolerance for corruption and less developed
systems of prevention and detection are dark red. Unfortunately, most
developing countries, including those in Africa, are more red than yellow!
But this is not true in all cases. Not long before stepping down as UK Prime
Minister David Cameron led a trade delegation to Singapore where he
delivered a powerful speech called “Tackling Corruption.”
On this trade mission to Singapore Mr Cameron said:
“It is the commitment to tackling corruption that helped to give people
confidence to invest in this incredible country. And it is no coincidence that
Singapore’s climb to the top end of the global indices for anti-corruption and
for ease of doing business have gone hand-in-hand with its great global
economic success”.
I mention the example of Singapore in order to highlight just how crucial it is
for the outside world to have the confidence that a particular country regards
transparency as important. And I think there is a strong correlation between
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the perception of corruption in a certain country and whether potential
investors will wish to engage with trade and investment.
And within the same speech, the former Prime Minster put it rightly by
saying: “Corruption is one of the greatest enemies of progress in our time”.
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What we have seen over recent years are issues to do with corruption rise
to the top of the news agenda. It has greatly affected the Public Sector as
well as big business and small business alike, within the Private Sector.
And those of us with a passion for sport will know that it has also infected
the world of football and tennis and athletics, affecting bodies such as FIFA
and the Olympic Committee.
What Cameron said in Singapore was that corruption robs those who require
the most help and assistance. And so it is essential Leaders within the
Public Sector – whether politicians or officials – need to tackle the issues
head on.
What we know from news reports about recent scandals is that public sector
corruption can effect everything – from a family’s ability to feed and clothe
their children, to the credibility and reputation of governments, and big
business and the personalities that run it.
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Corruption in Public Services undermines trust in the integrity of our
governments and our delivery systems, health, education, justice and
infrastructure causing long-term detriment to our society and the people who
depend on them most. So how do we set about limiting the levels of
corruptions with public services?
Well we need to begin by ensuring that there are high levels of vigilance on
the part of those working in the public sector and this needs to be
maintained consistently when it comes to preventing corruption. We need
to always be one step ahead of the dishonest public officials, politicians and
organised criminals who are constantly looking for weaknesses and
loopholes in our systems.
So the first step in significantly reducing prevalance and the threat of
corruption starts with you:
Individually we must obey the law and encourage those around us to do the
same.
There is no shortage of strong anti-corruption legislation in most countries
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but what there is is a failure of observance and enforcement!
So we all need to take personal responsibility and demonstrate that in not
just our words but also in our actions and our deeds! We need to follow the
rules and regulations that are in place to prevent corruption and to report
any breaches of those rules.
There are some basic does and don’t that we should promote:
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These are some basic rules that will help develop a culture or trust,
openness and transparent but we need to do more than simply rely on the
honesty, ethics and the integrity of individuals.
We need to develop a more holistic approach.
The World Bank has developed and promoted six strategies to help prevent
corruption.
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These are:
1. Paying civil servants well
2. Creating transparency and openness in government spending
3. Cutting red tape
4. Replacing regressive and distorting subsidies with targeted cash
transfers
5. Establishing international conventions
6. Deploying smart technology
In additional to following such strategies the ACCA believes that developing
excellent financial infrastructures is as essential to the development of
economies every bit as much as is enhanced physical infrastructure, such
as improved roads and railways, cables for communications and secure
pipelines for water, electricity and oil.
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Such financial infrastructures will limit the scope the for corruption to
flourish. The finance profession has an important role to play in ensuring
that economies thrive and that includes protecting society’s assets be they
financial, physical or human.
So what is the role of the accountant?
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Well as accountants we are seen as:
The gatekeepers of financial probity
The champions of ethical business conduct
And key contributors in influencing the future development of national regimes and practices that recognise and embrace international standards.
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So as accountants we need to ensure that we optimise our resources and
we can do this through:
Co-ordination, communication and collaboration. There is a perception
among law enforcement that there is a lack of information sharing among
key players and stakeholders. More needs to be done to reinforce the value
of reporting and monitoring activities to professionals, the general public and
other stakeholders including the development of appropriate procurement
and contract management procedures. Better publicity about what services
we provide, what they cost and how we fund them is needed to demonstrate
the openness and transparency that is need to prevent corrupt practices.
Measuring effectiveness is important. There needs to be more effective
measurement of success and the demonstration of value for money. The
development strong financial management and reporting will help
demonstrate value for money and enable the assessment the effectiveness.
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Developing a consistent approach. Varied interpretations of regulations by
accountants and auditors within the public sector can lead to different
policies, procedures and training. We need to see clearer and more
frequent guidance from professional bodies and regulators that set clear
expectations and provide clarification of guidance and where possible to
help harmonise and streamline the approach in the future.
And finally, professionalism matters. To uphold the highest professional
standards required to tackle corruption and its effects we must demonstrate
that we follow the ethical standards expected of us as professional
accountants and crucial that we work in the public interest!
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I am sure that as professional accountants you will agree that we are
fortunate – and indeed honoured – to be a in profession that plays an
important role in guiding the future stability of economies and nations around
the world.
Our role as accountants are important to deliver what ACCA calls public
value – that means acting in the public interest, promoting ethical Public
Services and Business and helping grow Economies.
So what does public value actually mean?
Well ACCA believes that accountants play a critical role in an economy through:
• protecting the public interest as advocates of good corporate governance
and consistent global standards;
• promoting and developing knowledge, skills and competence through
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education, certification and CPD programmes ;
• through adoption and implementation of international Professional and
ethical standards they set the bar for behaviour and practice of
accountancy professionals, enhancing public trust ; AND
• assisting with sound public policy guidance and advice on accountancy
related topics by acting as a centre of knowledge and expertise.
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It is my heartfelt belief that accountancy professionals, people like you and
me, can tackle corruption and we can do this because our radar is always
tuned into risk and due diligence. And as a former President of the ACCA I
can tell you that the ACCA believes that excellent public sector financial
management is a vital tool in reducing corruption and the harm that it causes
to society and that this is essential to the development of economies.
There is a saying that there are only two things are certain in life – one is
death and the other is taxes- well I believe that there is a third – corruption.
As I have already said corruption exits in all countries and in all economies –
we will never eliminate it completely- the best we can ever hope for is to
ensure that we reduce it to its lowest possible level - and in doing so we will
benefit society as a whole.
The money we prevent from being diverted to criminals, including corrupt
politicians and officials, will enable the better use of the resources we have
to provide improved infrastructure, healthcare, education and employment
opportunities for our children and families – and to ensure we establish and
promote just and lawful societies that protects all our citizens.
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The finance professional working in the Public Sector, and indeed the
Private Sector, has an important role to play in ensuring that the services
we deliver and the economies we support, thrive and that corruption and
corrupt practices are not tolerated.
It therefore becomes part of the finance professional’s role to untangle and
simplify funding and resourcing plans so that stakeholders can clearly
understanding the issues as finance and money are so often at the heart of
business strategy, innovation and growth.
And so, the role of finance talent management is crucial in ensuring the we
are able to get the best from the right people.
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That means we need to grow financial expertise and capacity and retain
skills within the public sector.
Without financial expertise, it is difficult for countries to develop the effective
public financial management that will support growth and reduce corruption.
An absence or lack of accountants also makes it difficult for governments to
implement effective financial reporting based on accounting standards, as
only technically trained staff can understand and apply the standards and
without these standards the opportunity for corrupt practices to flourish is
greater.
To manage risk, and to manage opportunity, individuals need professional
training and development. It’s a simple thing to say, but this is a massive
policy area we need to address it globally.
To be an excellent leaders and managers, my experience tells me that
individuals need a magical mix of natural aptitude and talent, great
interpersonal skills, coupled with training, development and loads of
commitment.
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Ladies and gentlemen, if we are to serious reduce the levels of corruption
that I highlighted in the Transparency International Corruption Index then we
can no longer continue with: ‘business as usual’ in the public sector.
Business ‘as unusual’ is increasingly the norm, were our work, whether in
the public sector or private sector, in a large or small organisation, is prey to
instability and risk. But it is also a place where there is opportunity and
where innovation can flourish.
I have little doubt that most of us here have a shared belief in the value of
excellent public sector financial management. And I hope that we can all
agree, accountability and transparency are crucial to public sector finances.
But how is this achieved? It is achieved through building financial capacity
and expertise in the public sector. And these are needed to ensure
openness and trust in public sector finances. It is public sector finance
professionals – the likes of us here today – that play the important role of
custodians of the reputation of this essential sector.
As many of you are well aware, the public sector has felt the full effects of
the global economic crisis – and continues to do so even as the private
sector shows sign of recovery.
Ensuring that the public sector can continue to deliver within tight budgets
makes it increasingly important to ensure that corruption is eliminated and
resources are wisely used so need to have more fully qualified accountants
working in the sector, as well as ensuring that more non accountants have
an enhanced financial awareness to support them in their decision making
and use of precious resources. Simply put, there is a critical need to build
financial capacity and expertise in the public sector.
This capacity and expertise is needed to ensure openness, trust and
accountability in public sector finances. We should never forget the crucial
role we play as custodians of the reputation of this essential sector.
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And that ladies and gentlemen, concludes my presentation. I hope you have
found it a helpful introduction to the panel discuss and and speaking of
introductions now let me introduce you to the other members of the
discussion panel!
The Panel
Chair: Anthony Harbinson, FCCA and former ACCA President
Panellists:
Vickson Ncube, chief executive, Pan African Federation of Accountants
(PAFA)
Stephen Emasu Public Financial Management Expert, and Chair, ACCA
Public Sector Global Forum
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