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Author Topic: Conversation with the CIPFA International Team  (Read 15064 times)

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peterboulding

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Re: Conversation with the CIPFA International Team
« Reply #15 on: May 26, 2011, 15:22:50 GMT »
Response to Question Nine

You raise the interesting matter of overlap or otherwise between PEFA indicators and the Whole System Approach. I see this much more as complementarity: PEFA indicators measure progress in achievement of good public financial management. The indicators naturally can only measure the measurable and there are some aspects of the whole PFM universe that fall outside that, such as several aspects of learning and growing. In the process architecture we have tried to describe the constituents of that universe as we see them now. As we have said before it is currenlty a description of the whole system not a toolkit for reform programme design and implementation, but that is something we hope to develop in association with PEFA and the donor communities.

CIPFA is an enthusiastic supporter of PEFA as this recent news item on international training demonstrates:

CIPFA’s Education and Training Centre goes to Mozambique

CIPFA’s Education and Training Centre (CETC) has further developed its experience in international public financial management.  Chris Lees, Course Director, CETC Midlands has spent five weeks in Africa as part of a team conducting Mozambique’s third PEFA assessment.  PEFA stands for public expenditure financial accountability, and is an assessment of a government’s systems of financial management.  The PEFA methodology has been developed since 2005 and has global coverage, with many countries now on repeat assessments or extending the PEFA assessments to sector level (eg health and education), or to sub-national level (regional or local government).  The PEFA methodology consists of scoring Governments in 28 indicators, most with more than one dimension.  There are also 3 indicators with which to score donor agencies, which many countries, such as Mozambique rely upon to support development.   

CETC has conducted PEFA training in India, Armenia, Tanzania, Frankfurt, London and Brussels in the past and Chris’s experience in conducting an actual assessment will add a new dimension to the training offering.

The assessment itself consists of a lot of information and evidence gathering with which to score the indicators.  This involves interviews with a number of government staff, politicians, donor agencies (such as the European Union, and the Norwegian and Canadian aid agencies) and representatives of civil society.  Evidence is also gathered from government reports and other information, including reports from other bodies, for example the CPAR (Country Procurement Assessment Report).  Once this evidence is gathered the country is scored and the PEFA report drafted, consulted upon, re-written and then finally submitted.  PEFA reports when finalised are sent to the PEFA Secretariat in Washington where they are reviewed and placed on its web-site (www.pefa.org) where it can be accessed by interested parties.


We have also recently included a PEFA session at our International Conference with presentations from Frans Ronsholt (Head of PEFA), Andy Mackie (Independent PFM Consultant) and Stephen Sharples (DFID Head of PFM) see http://www.cipfa.org.uk/pfmconference/ for videos of this and all the other sessions. An article arising from this session will appear in Public Money and Management early next year (PMM is an independent review of policy, management and finance in the public services. Articles are reviewed by academics and practitioners to ensure quality and practical impact. PMM is owned and managed by CIPFA, which wishes it to be regarded as a neutral forum for debate and dissemination of knowledge.)

CIPFA are also hosting a PEFA workshop on 15-17 June 2011 in London. This workshop is designed for Government officials and representatives of donor agencies, who are likely to have an involvement in supporting the PEFA assessments, and will provide oversight of and examples in the PEFA methodologies. Spaces are limited, but further details are available at http://www.cipfa.org.uk/cetc/qualifications/workshop.cfm There are special rates for early booking and we are seeking donor sponsorship for attendees unable to meet the full cost of the workshop.



Martin Johnson

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Re: Conversation with the CIPFA International Team
« Reply #16 on: May 27, 2011, 09:41:13 GMT »
Question 10

Leaving aside for the moment the search for a great WSA unifying theory of PFM that will bring together the general relativity of policy makers and spending with the quantum mechanics of MTEFs, performance budgeting, accounting and auditing standards and the like,

what I would be interested in is CIPFA's take on internal audit and internal control. In particular, in those (many) environments where internal control is mistaken for and confused with internal audit what are the key factors in CIPFA's experience that have successfully generated a better understanding of the difference and that have resulted in a meaningful movement towards establishing a modern internal audit function? There is many a PEFA PI-21 score waiting on this one.
« Last Edit: May 27, 2011, 09:52:21 GMT by Napodano »

petagny

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Re: Conversation with the CIPFA International Team
« Reply #17 on: May 27, 2011, 12:08:19 GMT »
Addendum to Question 10
Might we be expecting too much of many of the countries in which we work as far as internal audit is concerned? It's a comparatively new (post-Enron?) phenomenon in the more advanced countries isn't it? For example, I'm working with a public sector organisation from an older EU Member State where internal audit has only recently been established.

harnett

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Re: Conversation with the CIPFA International Team
« Reply #18 on: May 29, 2011, 14:56:13 GMT »
Question 11

The financial rewards to accountants are well known to be generally higher in the private than the public sector - this situation is even more apparent in the countries we work in overseas, and often results in a lack of quality amongst public sector accountants, given the lack of qualified accountants in poorer countries.  Obviously CIPFA can address this to some extent with training courses but in some cases this training merely provides course recipients with greater leverage to work in the private sector.  Does CIPFA have any view on this unwanted impact of its training?  Does it recommend any preventative measures - such as the "top-ups" that we have seen for public sector salaries?  Or are these issues beyond its remit?
« Last Edit: May 29, 2011, 15:58:26 GMT by Napodano »

gordonfcipfa

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Re: Conversation with the CIPFA International Team
« Reply #19 on: May 31, 2011, 09:58:20 GMT »
Replying to Q9 for the moment, and with apologies for any delay but I've just returned from Abuja and yesterday was a holiday here in the UK

Overlap with other tools? Potentially yes, and something that we try to be very conscious of, and therefore avoid. I don't think we can completely achieve that, but in any event a number of the tools work in slightly different PFM spaces. The PEFA indicator set, for example, excellent as it is and very much worthy of support from stakeholders, doesn't cover the same width of PFM topics as does CIPFA's WSA, for example. We started doing a comparison between the two a few months ago, to try to map out where, specifically, the differences lie. Although we haven't taken that much beyond the initial mapping stage, I was surprised to find the number of areas that WSA covered that weren't directly addressed by PEFA. These included a number of aspects of leadership, which is interesting I think given the points I made in another post about the importance of leadership in professionalising PFM.

None of this is to say "WSA good, PEFA bad". Far from it. PEFA is an excellent set of indicators that gives a very good snapshot of the state of PFM in a country at a point in time. WSA comes at the problem from a different perspective, perhaps more of a New Public Management angle, particularly where it comes to the role of PFM and public finance professionals in leading change and innovation. For all sorts of good reasons PEFA doesn't really address that particular perspective.

So, potential for overlap, yes but I think so long as we are aware of that potential we can avoid any downside aspects to that. But really looking at the same issue from a number of different perspectives isn't such a bad idea, and it can help to find solutions to problems and issues that may have gone unnoticed.

Gordon

gordonfcipfa

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Re: Conversation with the CIPFA International Team
« Reply #20 on: May 31, 2011, 10:18:05 GMT »
Picking up some points from Q11

We've had the full range of views on the "unwanted impact" of providing PFM staff with qualifications that equip them to work in the private sector. On the one hand government says that it doesn't really mind because the talent remains in the economy as a whole and therefore there isn't any real loss. By way of contrast, it's frustrating for government to put time and effort into training people only to have them walk away and take more highly paid jobs in the private sector. Some countries try to stem the flow by requiring students to sign documents "committing" them to remaining in government for a period of time after qualification.

FWIW my own (probably mostly personal) thoughts on this and the issue of salary top ups are:
  • The "indentured" approach may be illegal (it almost certainly would be in the UK, for example, where EU law and directives tend to frown on restraints to trade like this. In any event it only defers the problem if there is one, and so can only be a temporary solution
  • I think it's important to ensure that governments pay salaries and other benefits and rewards that are sufficiently attractive to retain staff. That isn't the case in most of the countries I'm familiar with at the moment. I can appreciate the difficulties: however unless government is prepared to reward people who work hard to achieve professional qualifications then they ought not to be surprised if they walk away
  • We recently produced a "recognition study" for government in Lesotho. That identified a very clear need to do something about recognition and reward. Government's response was to want a very long period of years (I can't remember how many off the top of my head but think 10+) to implement the recommendations. That isn't going to do anything to retain staff. It's back to leadership again.
  • Salary top ups are a fact of life, it seems to me. Donors aren't crazy about them but they often simply have to be paid to get decent people into senior positions. Personally I think it would be good VFM to use these to get really inspirational leaders into Acc Gen and Aud Gen posts. They could really make a difference. Unfortunately that doesn't always happen.
  • This may be regarded as naive, but I think we need more managers and leaders properly trained to emphasise the non-financial rewards that come from working in government. The challenges of reforming PFM to help achieve MDGs and improve the economic circumstances of the country more generally are enormous. That's where the real satisfaction comes from. But I appreciate that people do need to eat first of all.
  • The problem isn't confined to developing or transition economy countries, although it is most acute there. My own daughter did her CPFA in local government in Scotland. Since then she has worked for Procter & Gamble, SAB Miller and is now head of investor relations with the Weir Group, a FTSE-100 engineering company. Good people will seek fame and fortune in whatever aspect of life is attractive to them, and there isn't anything that could or should be done about that. Again I appreciate this scenario is several steps removed from the problem that is being described by harnett.

Now if you will excuse me I'll get off my hobby horse!

Gordon

peterboulding

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Re: Conversation with the CIPFA International Team
« Reply #21 on: May 31, 2011, 15:02:11 GMT »
Response to Question 10 and its addendum

Firstly, to be formal, here are two definitions form our Role of the Head of Internal Audit document http://www.cipfa.org.uk/roleoftheHIA/download/Role_of_the_HIA.pdf:

Internal audit
An assurance function that provides an independent and objective opinion to the organisation on the control environment, by evaluating its effectiveness in achieving the organisation’s objectives. It objectively examines, evaluates and reports on the adequacy of the control environment as a contribution to the proper, economic, efficient and effective use of resources.

Control environment
Comprises the systems of governance, risk management and internal control. The key elements include: establishing and monitoring the achievement of the organisation’s objectives;
the facilitation of policy and decision-making ensuring compliance with established policies, procedures, laws and regulations – including how risk management is embedded;
ensuring the economical, effective and efficient use of resources and for securing continuous improvement; the financial management of the organisation and the reporting of financial management; and, the performance management of the organisation and the reporting of performance management.

NB these definitions came about before our recent moves to collaborate with the IIA, but are broadly in the same territory.

What they do point to is a developed view of Internal Audit and Internal Control (IA and IC from now on) that clearly differentiated between internal control (as a management environment) and internal audit (that provides assurance on how well that environemnt is being maintained). This viewpoint is present in the PIFC agenda (Robert de Koning for the EC) that has been widely promulagated as part of the EU accession process (though it appears less visible once that process is completed, discuss).

A key factor in my opinion is the recognition that IC is a management function and for it to operate successully and to be properly monitored by an independent IA unit requires a pretty well-developed management infrastructure the like of which is unlikely to exist in many transition or developing countries. Such a structure would have levels of delegation of trust and responsibility as well as idividual managers (financial and otherwise) with devolved scope to make decisions and to manage effectively. In many of the places we are talking about this freedom simply does not exist or is restricted to mayors and ministers who exert what they consider as internal control with unyielding vigour. Internal control can become the new vocaulary for authoritarian inspection regimes whose main ambition is to punish the guilty rather than bring about improvements to systems.  By the way, it may not always a great idea for inspectors to be recruited to the audit ranks (but sometomes it cannot be avoided). I am grateful to Noel Helpworth for reminding me of all these basics recently in relation to South East Europe.

In designing reform programmes (and evaluating progress) it is necessary consider where the country has started from and move forward accordingly (whether using platforms or not). It is a good idea to evauate the management and public administration context and progress before setting up more demanding structures (like IA) that have little chance of survival without a favourable management environment. DFID have been through phases of fixation with Political Economy but in the case of IC and IA some understanding of the political context is justified. A notable Auditor General from Southern Europe has been vocal in his emphasis on the need for Parliaments to be considered in reform programmes - this would certainly help in informing these key stakeholders about the destinctions between IC and IA and the outcomes to expected from them.

So to get back to the question(s) in hand - we need to get closer to the broad public administration and public management agendas (recognising that PFM reforms may have to tread water to let these others catch up) to make a case for IC and then IA as being more appropriate to the second or third platforms (or phases); with only scene setting of the basics taking place initially. This is all very locally contextual and there have been examples where IA has developed more effectively than others (e.g. Slovenia). IA is a relatively new phenomenon and it has resonated well in the western (particulary Anglo-Saxon) world but it might not suit every circumstance or be the panecea for every form of management. For example, in the UK, audit committees are the norm for public sector bodies but they have found much less traction elsewhere.

I would conclude by pointing out that the IC/IA area is far richer than one might expect at first sight and coping with it in the field requires an appreciation of cultural and political context in addition to good PFM skills. I wonder if contributors to this Board have any really good examples of the successful implementation of IC environments with commensurate quality of IA review and opinion?

harnett

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Re: Conversation with the CIPFA International Team
« Reply #22 on: May 31, 2011, 15:20:13 GMT »
Thanks a lot for your reply Gordon.  You're obviously struggling with similar issues to us economists, though I imagine even more acute in the accountancy world.  I was wondering if there had been any innovative moves to "contract out" services to the private sector, given the paucity of talent in some countries.
« Last Edit: June 01, 2011, 02:51:22 GMT by Napodano »

John Short

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Re: Conversation with the CIPFA International Team
« Reply #23 on: May 31, 2011, 16:25:51 GMT »
Replying to Q9 by Gordon

I wonder if we are addressing the same thing but with the introduction of additional "soft" management skill features.  PEFA looks at PFM systems, processes and procedures in many of the indicators (such as PIs- 11-15) and the consequence in others (PIs-1- 4) and provides a benchmark score for indicators and dimensions.  The introduction of management issues - leadership, diary management, meeting management etc. will undoubtedly improve PFM, but are not uniquely related to Public Finance.
« Last Edit: June 01, 2011, 02:51:43 GMT by Napodano »

tonyrcipfa

Re: Conversation with the CIPFA International Team
« Reply #24 on: May 31, 2011, 20:31:42 GMT »
Further comment on Q6

This is my first input to the conversation - travel, meetings and problems with internet access last week all got in the way.

Gordon sets out very clearly the principles we follow in professionalisation.  I just want to add something about the practicalities.

It remains the objective that we work with local institutes wherever possible - we see our role as being to strengthen and develop those institutes (and not to compete with them) so that they can effectively support the public sector as well as fulfilling their traditional role within the private sector.  However, the local institutes have to be willing to make this transition and we need to be ready to find an alternative approach in the event that they are not prepared to do so.

I would hesitate to say that we yet have a strategy in place for such an eventuality but we are gradually feeling our way towards one based on the experience we are gaining from working with a number of governments.  At the moment there are two strands to this, one which we are already pursuing and one which we may need to pursue should it be necessary.  The first is to take a 'bottom-up' approach to developing professionals in PFM.  Peter referred to CIPFA's International Certificate and Diploma qualifications in one of his answers and this now forms a central part of CIPFA's offer on professionalisation.  These qualifications are aimed at, for want of a better phrase, rank and file staff members in PFM in the accounting, budgeting and audit fields but those who demonstrate understanding and competence by succeeding at both of the qualifications can clearly be considered as potential achievers of a full professional qualification.  So we are working hard to construct a professional superstructure above the Diploma level which has both common material and standards with the CIPFA's own professional qualification but which is tailored wherever possible to local needs.  As part of this we are also developing a fast-track route for unqualified senior staff to enable them to achieve professional status as quickly and efficiently as possible so that they can form a nucleus of the PFM professional body.

The second strand may need us to look at regional provision of PFM professional qualifications.  If incumbent professional bodies in individual countries really are unwilling to support the professional needs of the public sector, or there is no incumbent body at all, we may have to consider working with regional accountancy and audit associations (such as ESAAG, FAAGWA and AFROSAI) to create regional provision for the public sector in order to arrive at the critical mass of members required to support a fully functioning professional body.  The paper Gordon refers to as currently in draft floats some ideas on how this might happen.  As yet this is a theoretical model but donors seem keen to explore the idea and we would certainly not rule it out.  We are already in discussion with two regional associations about creating a professionalisation implementation 'platform' to deal with country-by-country readiness assessments and capacity development initiatives, and this may provide a basis from which to proceed should it be necessary.

Tony

Napodano

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Re: Conversation with the CIPFA International Team
« Reply #25 on: June 01, 2011, 16:44:15 GMT »
PFMBoarders,
time is over to pose questions.


atseacliff (on his way to Washington) asked me to lock the conversation. I take the opportunity to thank the CIPFA Team for having been with us. Please come back again to share your knowledge.

atseacliff will make a final post this weekend to attach a transcript of the conversation with an orderly  sequence of questions and answers.
'til the next conversation, stay knowledgeable!

atseacliff

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Re: Conversation with the CIPFA International Team
« Reply #26 on: June 01, 2011, 21:16:58 GMT »
Just to add a sincere note of thanks for the engagement of the CIPFA International Team over the last 10 days.  You have provided fellow Boarders with a rich narrative on CIPFA, its international work, the WSA and a variety of other PFM issues. 

Best regards to you all.

 

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