Almost half of public finance officials worldwide believe their
organisations lack adequate financial management capabilities,
according to a recent study by Deloitte.
More than 200 government organisations from 28 countries who
responded to the survey identified four particular areas where
financial management often fails to serve the larger government
enterprise.
Sixty-nine percent cited a lack of up-to-date information as
either a moderate or significant barrier to improving the
organisation’s performance. Poor information on costs was a concern
to 63 percent of respondents, who said programme managers do not
understand the total cost of their services.
An incomplete understanding of the relationship between
investments and outcomes affected more than half of those
surveyed.
Inadequate risk management was also a concern – only 27 percent
of those surveyed described their organisation’s capabilities in
that area as having moved beyond a basic level. More than half
reported their organisation’s ability to audit its own financial
accounts fell at or below an accepted baseline for the finance
field industry benchmark. According to Deloitte, this deficiency
increases the risks of error and fraud, and can mask the financial
health of an organisation.
However, Caroline Mawhood, president of the UK-based Chartered
Institute of Public Finance and Accountancy (CIPFA), told The
Accountant the UK public sector is “further up the ladder”
than the global average reported in the Deloitte study.
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By GlobalDataCIPFA conducted a similar study in the UK earlier this year, in
which 50 percent of respondents said financial management in the
public sector had improved significantly and a further 40 percent
said it had improved a little in recent years.
The Deloitte study also revealed that government finance
officials must overcome a number of significant, but attainable,
hurdles to reach a maturity level that would justify their place at
the executive-decision making table.
The study’s author, Deloitte public sector global research
director William Eggers, said there was a surprising degree of
consensus across countries on how government finance needs to be
improved, but also significant gaps between that vision and current
reality.
“For guidance they can look to trailblazing public sector
finance organisations,” Eggers said. “These organisations have
acquired a whole new set of strategic capabilities, helping
government agencies determine both what they should do and how they
should do it.”
