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atseacliff

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Conversation with the CIPFA International Team
« on: May 22, 2011, 21:18:45 GMT »
For our third conversation on the Board, it is a big pleasure for us to welcome the Team from the CIPFA International. They are Alan Edwards, Director, and Assistant Directors Peter Boulding, Gordon Ferrier and Tony Redmond. 

The Chartered Institute of Public Finance and Accountancy (CIPFA) is the only professional accountancy body and member of the International Federation of Accountants (IFAC) that specialises in the public sector. Their Team are involved in a wide range of international projects around the World. 
If you are a registered member of the Board, you have the possibility to pose a question to the CIPFA International Team by making a post (REPLY button) to this topic. The time allotted for questions is Monday 23rd May to Wednesday Ist June 2011. After this period the interview will be closed and remain in the archive for future reference.


Gentlemen; welcome on the Board. Let me kick off the conversation by asking

Question 1 Some Board Members might not be familiar with CIPFA.  Please give us a bit of background to the organization and why a not-for-profit organization gets involved in international activities? 

Question 2 How can become a member of CIPFA; and what are the benefits of being a member?

Napodano

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Re: Conversation with the CIPFA International Team
« Reply #1 on: May 23, 2011, 04:53:34 GMT »
Hi, Team; it is an honor for the Board to have you with us.

I like to pass on to you two questions often heard from local officials in seminars organized in transition countries.

Question 3: ‘ We are working in the Financial Management  Unit of the ministry, we are few staff and overworked. What is wrong with asking our colleagues from internal audit to help us in our routine work for financial control? Can’t they validate our work ex-ante so that  it can be adjusted in real time? They are well paid and  received a lot of training, so why not?’

Question 4: ‘We are working in the Financial Management Unit of the ministry,  we are few staff and overwhelmed by the audit inspections from our  internal audit unit, the  external audit agency and the Tax Inspectorate as well. They seem to ask all the same questions but in different formats? Now Government is about to create a Council for the  promotion of the internal audit function, which could have among its responsibilities that of revising  audit reports. Isn’t all the above an overlap of functions and too much too soon for a transition country?’
« Last Edit: May 24, 2011, 08:32:57 GMT by Napodano »

peterboulding

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Re: Conversation with the CIPFA International Team
« Reply #2 on: May 23, 2011, 11:47:17 GMT »
Answer to question 1:

CIPFA, The Chartered Institute of Public Finance and Accountancy, is one of the six UK and Irish Accountancy bodies and the only one that specialises in the public services, indeed it is unique in this. We have a membership of some 14,000 who have qualified or are qualifying through a three part examination system: all members are required to undertake continuous professional development. We have members working in the UK (central and local government, internal and external audit, mostly) in European institutions (the Commission, Court of Audit, Anti-Fraud Office, NATO and elesewhere) in UN institutions and many others. Many members work in international consultancy and have worked across the globe. The CIPFA secretariat is based in London with a small international directorate (six staff headed by Alan Edwards). Currently one of the assistant directors, Tony Redmond, in based in South Africa where he co-ordinates our work in the region. We see professionalisation as the key to sustainable PFM capacity development (this was very much the theme of our recent International Conference in March - see our website www.cipfa.org.uk for full details and webcasts of each presentation). CIPFA is active in the EU, south eastern Europe and Africa (notably Nigeria, Lesotho and South Africa with other countries in prospect).

In the UK CIPFA's Policy and Technical directorate is recognised as a centre of excellence by Her Majesty's Treasury and provides accounting and internal audit standards for local government, as well as advice on the transition to accrual accounting, and support to the devlepoement of CIPFA's Financial Management Model - an assessment tool for organisations on their progress with PFM best practice. Our Education and Membership department has a specialist education and training centre that provides professional international and UK training. We aso offer a rich diversity of benchmarking, statistical and a portfolio of short course training.

Why do we get involved with international work? We see this stategically. CIPFA's Strategic purpose is set as folows: "Working to promote high standards and deliver excellence in governance and financial management throughout the public services." Our vision for CIPFA is expressed as: "To be acknowledged globally as the leading institute for public financial managment." You may say this is easy to achieve as CIPFA is the only global institute, but it is the acknowledgement we are working hard to get to. We recognise that globalisation has created an inter-connected world where high public sector standards of governance and fiduciary responsibility are ingreat demand. CIPFA has been in existence of over 125 years now and has built up a substantial portfolio of materials which can resonate in other juristidictions, and not just the English speaking world. We look to find optimal ways to share this experience across the world. CIPFA was a founder member of the International Federation of Accountants and its staff and officials hold a number of key positions on or advising committees there; giving us an important platform for influence. We see a particular need to promote professionalisation as an important plank of sustainable PFM reform because of the legacy effects created by a cadre of professionally qualified accountants and auditors whose skills are sustained by strong professional bodies offering demanding examinations and follow on support through continuous professional development and other services. In our opinion much short course training falls very short of the mark.

Answer to question 2:

How to become a CIPFA member. There are in essence two main routes to obtain CIPFA professional PFM qualifications: the CIPFA qualification for UK graduates (three levels leading to full membership) and our international PFM qualifications. Both routes require the passing of examination papers that test professional competence at various levels. The international route currently consists of a Certificate course (financial and management accounting papers and a local module covering the PFM environment in that country) the a Diploma course covering managing finance, managing organisations, audit and assurance and public sector financial reporting. Our international qualifcations board is reviewing the International Certificate and Diploma with a view to encouraging even greater access and progression.

The benefits of membership, holding a specifically designed PFM qualification by an individual, are numerous.
They include:
*acquisition of a valued and broad range of skills - finance, leadership, business, strategy, communication, negotiation, influence and management, etc;
*attractiveness to a broad range of employers - the global public sector is diverse;
*standing and status - upholding public trust and integrity;
*satisfaction - in improving the communities where you work; and
*variety and challenges - this is especially true in the international sphere where the diversity is immense.


Organisational benefits include keeping staff up-to-date, the maintence of professional discipline through a code of ethics, colaborative working to imporve PFM and the acquisition of access to sources of information and expertise.
« Last Edit: May 23, 2011, 15:35:21 GMT by Napodano »

petagny

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Re: Conversation with the CIPFA International Team
« Reply #3 on: May 24, 2011, 07:04:03 GMT »
Question 5: I read with interest the consultation paper on CIPFA's 'Whole system approach to PFM' back in 2009, but unfortunately I rather lost track of where things went afterwards. Please could you give some background on how this initiative has developed and how it now fits in with CIPFA's ongoing international work?
« Last Edit: May 24, 2011, 07:51:35 GMT by Napodano »

AlanEdwards

Re: Conversation with the CIPFA International Team
« Reply #4 on: May 24, 2011, 12:28:26 GMT »
Answer to question 5

The Whole System Approach and the other thought pieces that we have prepared for DFID have formed the basis of all our international PFM work. Effectively that was the rationale for our International PFM conference that we held in March. This was a major success with over 200 delegates from over 40 countries. You can view the videos of the presentations on our website www.cipfa.org.uk/international. As for the actual documents that we have produced we have pulled them all together in a single website on professionalisation that went live last week!

For a good summary of our approach to professionalisation and how that sits with a whole system approach you can see my presentation at the CAPA public sector conference last week in Seoul. This was a great event attended by accounting bodies and PFM practitioners from all over asia pacific region. The need for professional development to sit alongside the move to international standards was well understood. Catch my talk and all our thinking on professionalisation at www.cipfa.org.uk/ppfm


Alan Edwards, CIPFA International Director
« Last Edit: May 24, 2011, 12:57:05 GMT by Napodano »

atseacliff

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Re: Conversation with the CIPFA International Team
« Reply #5 on: May 24, 2011, 13:15:33 GMT »
Question 6

Alan

Regarding your response to Question 5 - thanks very much for the link to your professionalism website and to last weeks presentation. I can readily see the link between the systems approach and the development of PFM staff. 

In Eastern Europe and Central Asia there is a very fragmented approach towards professional training and no tradition of public sector accounting institutions.  Often the Government relies on short courses run by international experts and technical updates by MOF staff.  In this environment can you suggest how Government's might develop a stronger cadre of budget and finance professionals?  Should the Government be encouraged to develop professional accounting bodies or perhaps work with private sector oriented organizations, and if so how?   What advice can you suggest on creating  and institutionalising  sustainable professional finance associations. 


 

gordonfcipfa

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Re: Conversation with the CIPFA International Team
« Reply #6 on: May 24, 2011, 14:54:37 GMT »
Hi,
My first post on this Board, and delighted to see such interest in CIPFA's work.

Response to Q6

My experience of professionalising PFM (and I'm writing this from Abuja, where we are working with the Federal government to do just that at the moment) is that leadership is key to making progress. And that means someone (usually the Acc Gen, but the Aud Gen can also play a key role) needs to decide that s/he wants to see some progress. The nature of that progress can vary. Here in Nigeria we are starting on two fronts: working with the Federal Treasury Academy to help them "modernise" their governance, working practices, structures, systems and people; and with the Institute of Chartered Accountants of Nigeria (ICAN) to develop a joint qualification in PFM that FTA can train for. The initiative benefitted greatly from the leadership shown by the then Acc Gen, Ibrahim Dankwambo. Unfortunately he has just managed to get himself elected Governor of Gombe State, and so we are having to start to build a new relationship with the interim Acc Gen. But that shows the importance of leadership and of building relationships. I ought also to say that we have the support of the World Bank - Winston Cole has been terrific in "encouraging" local stakeholders to take ownership of the initiative.

On one of your other points (before I shut up and let others have their say) we prefer to work with an existing Professional Accountancy Body if there is one. There simply aren't the resources around to finance the creation of a new body, and it's always easier to work with something that exists, even if it has no experience at all of meeting the rather different needs of the public sector, than try to create a new body. And it also helps the PAO to develop its capacity and to see the wide range of services that it could provide to a whole new market.

That's enough from me for the moment. Keep posting those questions!

Gordon
« Last Edit: May 24, 2011, 14:57:59 GMT by gordonfcipfa »

gordonfcipfa

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Re: Conversation with the CIPFA International Team
« Reply #7 on: May 24, 2011, 15:09:59 GMT »
Another point in relation to Q5

One of the motivating forces in our thinking on the whole system approach (and I speak as someone who was involved with this thinking from the start) was to try to encourage people (particularly donors and those designing reform programmes) to think about the "whole system". We thought there were too many examples of single initiatives e.g. "let's train all the auditors in audit techniques" without considering what impact this might have on other parts of the system. What's the point of spending money on training staff of the SAI to report on how bad the accounts are, when you are doing nothing to train the accountants to produce better accounts in the first place? We also wanted to investigate the linkages between components of the system - what really happens when e.g. IFAC issues a new accounting standard? There is a general presumption that doing that is a good thing, but there is increasingly more and more work showing that producing technically "better" standards may not be the best way forward. And the number of countries who report themselves as "implementing" (note present tense) or "planning to implement" international standards is actually way more than the number who are really working actively towards that. Why is that? Is it in part because, as Matt Andrews pointed out in his isomorphism paper, that countries feel under pressure to appear to be conforming to the extermally set norms, but in practice they are rather embarassed to admit that they don't really know what to do?

We were trying to stimulate thinking in a new way, across a whole range of topics related to PFM reform. It's encouraging to see the interest there has been in the work, but we (the community) still have a lot to do.

Gordon

John Short

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Re: Conversation with the CIPFA International Team
« Reply #8 on: May 24, 2011, 20:44:25 GMT »
Question 7

I have been familiar with the good work of CIPFA as far back as the 1970s in relation to local authority spending in the UK and also in your training and certification of public sector accountants around the world, in Africa in particular. My question relates to the concept of "whole system approach".

Would I be correct in deducing that this relates to the training (formal and hands-on) and certification relating to downstream PFM activities (accounts, internal and external auditing) as well as the institutional arrangements, but less so in the upstream elements of PFM (planning and budget formulation) and the terms "whole system" reflects the approach to assistance in developing these downstream elements of PFM rather than the PFM system as a whole that the PEFA structure describes?

One of the issues I see in many "developing and emerging" economies is that donors often focus more on the downstream and less so the upstream (though not excluding it completely) and that fiduciary risk is more attuned to accounts and audits rather than the credibility of the budget in terms of allocating resources to deliver policies that are planned to deliver services. Indicators PI-11 but particularly PI-12 are generally the poorest performers in terms of PEFA scores which I think reflects this situation. There is danger of Rubbish-in Rubbish-out in IT parlance, albeit the rubbish may well be very well accounted for and audited!
« Last Edit: May 25, 2011, 02:56:24 GMT by Napodano »

peterboulding

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Re: Conversation with the CIPFA International Team
« Reply #9 on: May 25, 2011, 08:24:22 GMT »
Reply to question 7
Thanks for this John - if you look at the process architecture in the WSA equal weight is given to the upstream areas of planning and budget preparation. We show in diagramatic form the key components of PFM within the budget cycle. Both parts of the cycle are clearly vital and it was one of the guiding principles of the WSA that participants should be aware of the whole of PFM (inlcuding learning and growing - preferrably profesisonally).

My experience of Russia is the reverse of your experience: there there was considerable emphasis placed (by the EU in a succession of projects) on the upstream and almost nothing on budget execution! The consequences for accounting and reporting there were pretty horrendous, but that's another story...  CIPFA's interest traditionally (we are accountants after all, not economists) is much more in public service delivery rather than the macro-economic side of PFM and out definition of PFM pretty much reflects this.

Our fundamental point is that we (the enitire PFM community, but donors and governments in particular)  need to take a holistic view of PFM reform and not just focus on the easy or convenient bits that come to hand in any particular country. This leads towards the sequencing debate (platforms etc) which is being reviewed by the OECD DAC TAsk Force (another new publication coming out soon I believe?). CIPFA has also been leading the produciton of a practical guide to PFM capacity development (with the EC for the Task Force) which is about to hit the streets - watch this space... There is also something coming from the same stable on PEFA (but others are better qualified to assist there).

atseacliff

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Re: Conversation with the CIPFA International Team
« Reply #10 on: May 25, 2011, 09:43:23 GMT »
Comment on Question 6 - Question 8

Gordon (and your CIPFA colleagues) - many thanks for that. 

It is nice to hear a positive story regarding leadership and the supportive role of the donors.  In one Eastern European country I'm working in at present the Government is comfortable engaging on the technicalities of the system (developing GFMIS, writing new IA and accounting regulations) but dialogue on a broader approach to the professional development of PFM professionals is extremely difficult.  While the Government, with the support of the donors might be able to put a credible technocratic PFM project capacity building tends to be (at best) very fragmented. A longer term (holistic) and more professional approach to professional development has been pushed into touch as a problem for a broader civil service/public administration reforms (an excuse for doing nothing).  We have also tried to secure enagagement between the Government and the local accounting association without success.  The country (and most ex-Communist countries) lack a tradition of involving NGOs in the affairs of Government.

I wonder if, given my rather long winded scene setting, whether the WSA could be used as a analytical framework for a dialogue with Government and donors on this issue; and if so how?  WSA isn't a toolkit as such unless I misunderstand the nature of the beast - is there any intention to develop a toolkit which would enable WSA principles to be applied in practice?   

gordonfcipfa

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Re: Conversation with the CIPFA International Team
« Reply #11 on: May 26, 2011, 06:52:56 GMT »
In response to atseacliff's comments on Q6-Q8

The link between the WSA and the professionalisation of PFM comes through the Learning & Growing component. The idea of a toolkit is a great one: I say that in part because CIPFA has started to develop such a toolkit! We have a number of analytical devices and approaches that we have been field testing over the last three years. (And our thanks are due to another donor, DFID, whose financial support has helped us to do that). We're getting close to the point where we will be able to post these to our professionalisation micro-site, although some have appeared there already in a sumary form. As examples of what we are doing:

  • We have developed a "readiness assessment" methodology. That consists of a comprehensive questionnaire examining all aspects of the institutional and systems framework that influences or directly affects the approach that should be taken to professionalisation
  • We have a framework for designing a strategy for professionalisation, based on the results of the questionnaire and other information gathered during the analytical phase. That framework provides guidance on the shades of emphasis that ought to be paid to adressing particular components of the strategy, depending on the country circumstances.
  • We are currently finalising a guide to determining the most appropriate governance and organisational structure for the local PAO. We've said elsewhere that we prefer to work with what already exsts, even if that means significant capacity development, because that provides better and more sustainable long term solution.
  • We offer a template for making the business case for professionalisation. That's a Word document with some background material on what professionalisation is and what the generic benefits ought to be. It also has some likely risks identified, with space for the country to insert how they intend to manage those risks.
  • We have produced a guide to developing an appropriate business model to support professionalisation in the country or region. The basic argument is that, whereas donors and government themselves may provide investment funding initially, they will not do so without limit of time (nor should they). So at some point it becomes necessary to work out how the local institutions involved (the PAO and the local education and training providers in particular) are to generate the revenues that they will need to ensure that they can survive within whatever financial environment government expects of them. (We acknowledge that, in some cases, government may choose to subsidise professional training, so that may be part of the financial equation). The business model provides a structured framework for the locals to determine a number of key variables e.g. precisely what products and services they will offer to the local market, beyond the education and training of students.

All of these are "Professionalisation 1.0" and we expect them to evolve over time as our experience grows. Watch the micro-site for news of their formal publication.

Gordon

petagny

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Re: Conversation with the CIPFA International Team
« Reply #12 on: May 26, 2011, 07:39:56 GMT »
On the Response to Question 7

I agree with Peter Boulding that in the past too much effort may have been put into 'upstream' initiatives at the expense of 'downstream', but I wonder if the pendulum is now swinging too far the other way. A PFM system that doesn't have reasonable upstream processes, including workable interfaces with the political process, risks being an empty shell. I don’t believe this is something that can be tagged on once the ‘engine room’ is finished.

I see that the architecture for the WSA includes strategy and planning functions and reference to the MTEF, which is important. But I also see some less convincing features, such as 'Political economy: priorities' being outside the 'PFM space' and a conscious decision to exclude national economic management and fiscal policy from the scope of the WSA.

Priority setting is an interactive/iterative process involving the political level, policy analysts and PFM technicians and cannot really be divorced from consideration of the resource envelope (revenue forecasts surely fall within the scope of PFM?). Similarly, the fiscal policy stance is a product of interaction between the political and technical levels. Is it really possible to say that these vital parts of public financial management lay outside the scope of a 'whole system approach'?

More specifically, I'm not sure how an MTEF would be expected to work without strong linkages to national economic management and fiscal policy, and with 'political economy: priorities' being taken as an external given. In my view, the MTEF is not simply a technician’s tool, but a tool for making the interface between political and technical/administrative processes.

The boundary between PFM and the policy-making/planning process is certainly ill-defined and different people have different views (this came up in the Fireside Chat with Gord Evans). All the same, I thought I’d throw these ideas into the ring in the interests of a lively discussion.

I probably also need to read the CIPFA documentation more thoroughly – I admit to having only scanned the most recent material on the WSA!
« Last Edit: May 26, 2011, 15:18:15 GMT by petagny »

peterboulding

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Re: Conversation with the CIPFA International Team
« Reply #13 on: May 26, 2011, 11:23:51 GMT »
Responses to Questions three and four

I say responses because these interesting questions have no clear right or wrong answers, we can shade in some good practice but each issue has to be taken in context and these vary gloabally...

response to Question 3

Oh so much here... Who is not understaffed and overworked? But I'll overlook that and consider the impications from both good internal audit practice and also pragmatic management practice, positions:
- there would be a clear compromise of internal audit independence should they be involved in operations (they would not then be able to provide an opinion on their own work);
- ex-ante or pre-audit is generally a waste of time and effort dating from, among other places, old Soviet-style inspection and punishment practices rather than progressive financial management;
- if senior management felt there was sufficient of a problem with the Financial Management Unit's activities it should include in the audit plan a systems review of the unit to understand the problem and recommend areas for improvement (this could include training and increased staff numbers if appropriate);
- do I detect a local inbalance here between the prestige of internal auditors and accountants? I have seen it in South Eastern Europe, where accountancy is equated with book-keeping and internal audit has much higher status: this could be another Soviet remnant effect? At CIPFA we offer professional courses that make no such false distinctions and recognise the complete range of skills required for both auditors (internal and external ) and accountants. It looks as though the professional organisation in the country involved here shoudl be strengthened to bring things into a proper balance...
- pragmatically there just maybe a case for using Internal Audit resources for such work if it was considered by management (and who is that? - hopefully spread further than Mayors and Ministers?) to be a real emergency demanding the short term deployment of Internal Audit to get out of a crisis - I doubt if this routine work would count.

Response to Question Four

Audit and inspection overlap is not just a problem for transition countries, it has happened in the UK where there has been a thinning of the inspection culture (some see the demise of the Audit Commissin as part of that) and resulted in some reductions in indicators. It needs regulators across the board to take a long hard look at the cost-benefit of their audit and inspection regimes, some joined up action and participants being prepared to share results and collaborate to minimise transaction costs for their auditees. Not easy. The donors have tried to harmonise across the globe but stll struggle to do it (See OECD materials on the Accra Agenda for Action for instance). This also makes a good case for sequencing reforms and developing the platform approach, for instance.

So the answer is for governments to take sane approaches to such matters, something we all live more in hope than expectation of...
« Last Edit: May 26, 2011, 11:44:32 GMT by Napodano »

atseacliff

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Re: Conversation with the CIPFA International Team
« Reply #14 on: May 26, 2011, 13:52:33 GMT »
Question 9

Thanks to Gordon in highlighting the development of various tools to complement the WSA. Do you see any overlaps between the development of these new tools and other existing assessment tools - particularly the PEFA PMF?


 

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