The sovereign debt crisis, as well as a constant stream of other common workplace and political issues, including nepotism, inefficiency, political opportunism, corruption, and poor financial management, remind us every day of the importance of good governance in the public sector.
To provide assistance to public sector entities around the world seeking to improve or establish their governance arrangements, IFAC and the Chartered Institute of Public Finance and Accountancy (CIPFA) issued a draft International Framework, Good Governance in the Public Sector (the Framework), for public consultation in June of last year. The proposed Framework encourages better service delivery and improved accountability by establishing a benchmark for good governance in the public sector.
When released in final form in July, the Framework will serve as a reference document for those who develop and set national governance codes for the public sector when updating and reviewing their own codes. Where codes and guidance do not exist, the Framework provides a shared understanding of what constitutes good governance in the public sector and a powerful stimulus for positive action.
The Consultation Draft was developed after a review of governance literature and with input from representatives of international organizations, including the Organisation for Economic Co-operation and Development (OECD), International Monetary Fund (IMF), International Organization of Supreme Audit Institutions (INTOSAI), and the UN Conference on Trade and Development (UNCTAD). The consultation received 30 official responses from a variety of organizations across the world.
The responses were largely supportive and included some very positive comments:
- “The Framework and its… principles are comprehensive, well thought through and thoroughly elaborated; the examples and evaluation questions are well selected.”
- “The document does an excellent job benchmarking good governance practices.”
- “We congratulate the drafters for this important initiative.”
- “The Framework… will greatly contribute towards improved governance and management practices in public sectors around the world.”
Many of the respondents provided detailed comments in response to the questions posed. In addition, there were numerous helpful suggestions and recommended wording changes in all areas but particularly in relation to the principles and sub-principles. Many suggestions for additional examples and evaluation questions were also made.
The development team subsequently performed a detailed analysis of the comments and revised the Framework as needed to reflect feedback. We then conducted additional consultations on proposed changes and are currently in the final stages of finalizing the Framework.
We are excited to report the Framework is scheduled for release on July 2, in conjunction with CIPFA’s 2014 Annual Conference in London. The conference will also include a workshop on why good governance is so important in the public sector, led by the Chair of the IFAC Profession Accountants in Business Committee, Charles Tilley, and including IFAC CEO Fayez Choudhury, CIPFA Policy and Technical Director Ian Carruthers, and Centre for Public Scrutiny Executive Director Jessica Crowe.
The Framework starts by identifying what good governance in the public sector looks like. After a foreword by Mervyn King, Chairman of the International Integrated Reporting Council and the King Report on Governance for South Africa, the Framework offers a definition of good governance in the public sector and a series of good practice principles. Because the next challenge, of course, is the proper application of the principles in the Framework, which is so often where the problems lie, the Framework also includes:
- application guidance;
- implementation tips;
- questions to consider; and
- recommendations for additional information.
The Framework also explores the merits and the pitfalls of governance assessment and how guidance can help practitioners and their organizations address the serious challenges that frequently arise in practice.
The principles that make up the heart of the Framework are illustrated below.
The Framework and supplementary material are useful for all those specifically associated with governance—governing body members, senior managers, and those involved in scrutinizing the effectiveness of governance, including internal and external auditors. It also provides a resource for the public to challenge substandard governance in public sector entities.
So please check back to the Governance section of the Gateway after July 2—the Framework will be posted on the IFAC and CIPFA websites but will also be included on the Gateway.