Demand for public sector transparency grows
The demand for transparency and accountability in the public sector continues to grow with an increasingly informed public. Furthermore, with the everincreasing innovations and technological developments, changing demographic profiles, and economic uncertainties, the public sector will be forced to explore new trends in corporate governance, risk and compliance.
The adoption of the International Public Sector Accounting Standards (IPSAS) by Government in 2012 ushered in a new era in public sector finance management in Zimbabwe, increasing demand for transparency and accountability. However, five years on, there is still no significant improvement in the management of public funds, as perennially reported by the Auditor General. The Auditor General’s Report for the financial year ending December 2016, like all the reports of recent previous years, highlights a general governance crisis in the administration of public funds. Despite the fulfilment of over 30 percent of the Auditor General’s recommendations, key governance requirements are yet to be fulfilled, with poor maintenance of accounting records, weak internal controls, unsupported expenditure, tax avoidance, and violations of legal, policy and regulatory framework continuing to drive public fund leakages in many public sector organisations.
Innotec, a socio-economic research and development organisation, in partnership with the Office of the President and Cabinet and the Minister of Finance and Economic Development Patrick Chinamasa, hosted the second edition of the Public Sector Audit Conference and Financial Management Awards in Harare recently. Running under the theme, “Emerging Trends in Public Sector Audit — Cornerstone of Socioeconomic Transformation”, the conference brought together principal thought leaders to provide insightful guidance, share views and expertise on corporate governance, risk and compliance, and re-ernergise delegates with perspectives to enable them to raise the bar in their respective organisations and meet statutory requirements.
Since the adoption of IPSAS, the National Code of Corporate Governance, and other measures expected to enhance public sector governance, many organisations are still facing challenges in implementing these systems effectively.
As expected, the conference generated robust debate on the challenges faced by public sector organisations, including local authorities, state enterprises and parastatals, health institutions and higher and tertiary education institutions among others, in an effort to establish an environment conducive to the growth of these public sector organisations and the creation of sustainable Zimbabwe.
The meeting also discussed the increasingly important role of audit in enhancing governance, risk and compliance, including key elements needed to maximise the value that public sector audit activity provides to all levels of the public sector.
The Public Sector Financial Management Awards dinner climaxed the day’s event, with organisations from five sub-sectors, namely state enterprises socio-economic development for and parastatals, and higher and tertiary education institutions receiving public recognition and appreciation for their efforts in financial prudence and ingenuity in the face of adverse economic conditions and sustained negative publicity.
A high profile line-up of speakers included Cde Chinamasa who was the guest of honour at the awards dinner, the Deputy Chief Secretary in the Office of the President and Cabinet, Dr Ray Ndhlukula who was guest of honour at the conference, Mr Daniel Muchemwa, the country’s Accountant General, Vice Chairperson of the University of Zimbabwe Council, Dr Albert Nduna and Elles Makunyadze, Director of Chartered Accountants’ Academy, among others.
The conference reviewed the Auditor General’s report in an effort to draw lessons for an effective and efficient public sector. Every year the Supreme Audit Institution points out instances where funds have not been used economically, effectively and efficiently to the detriment of social services delivery to the general public. Poor public sector financial management continue to be pointed out as the key factor that impacts severely on development processes in Zimbabwe.
It is important for the relevant authorities to accelerate measures to act on the Auditor General’s continued reports of financial mis-statements, errors, possible fraud and general poor financial management for the country to realise significant economic growth and development. It is important for all arms of Government, particularly institutions like state enterprises and parastatals, local authorities, higher and tertiary learning institutions as well as the public health sector, as these are key to the socio-economic development of the nation.
As Dr Ndhlukula pointed out in his presentation, state enterprises and parastatals have the capacity to contribute up to 40 percent of the country’s GDP, yet they are contributing just around 10 percent. According to the Organisation for Economic Co-operation and Development (OECD), many Southern African economies have placed state enterprises and parastatals at the centre of their national development strategies with a growing trend to rely on SEPs to remedy market failures and remove direct obstacles to development.
Some go beyond this and aspire to a “developmental” state model in which state enterprises and parastatals drive competitiveness, job creation and industrial development, and there is a growing consensus that if governed properly, state enterprises and parastatals can support national development.
The world’s strongest economies grew on the backdrop of strong public sector institutions, chiefly state enterprises and parastatals. There is therefore need for strong efforts to increase the efficiency, competitiveness and commercial viability of state enterprises and parastatals.
While Government has made significant efforts to address governance issues through the adoption of IPSAS and the launch of the National Code of Corporate Governance, among other interventions, implementation remains the biggest challenge.
Mr Muchemwa has set a seemingly achievable deadline of 2022 for the full adoption and implementation of IPSAS. Five years might seem like a very long time, but there is a real danger of failing to meet this deadline.
A lot of attention seems to be focused on the benefits of IPSAS and not much known studies or research have been done on implementation, yet those benefits can only accrue if IPSAS are implemented. Delay, setback or failure to implement IPSAS will be a great disservice to the nation as Zimbabwe cannot operate in isolation to the world which is fast fully adopting and implementing IPSAS. The conference also reviewed the role of audit committees, local councillors and the Parliamentary Public Accounts Committee in enhancing accountability in the public sector.
The Public Accounts Committee (PAC) occupies a vantage position at the apex of legislature’s scrutiny and oversight over the use of public sector resources, so does audit committees in local authorities and other public sector organisations.
The effectiveness of the PAC and audit committees is dependent not only upon features of the committees themselves, but also on the political, economic, social and cultural contexts in which they operate. The chairperson of the PAC Honourable Paurina Mpariwa in her presentation at the inaugural Public Sector Audit Conference and Financial Management Awards in 2016 ruled out partisan considerations in the operations of her committee.
But is it the same with audit committees in local authorities, state enterprises and parastatals and other public sector institutions?
This session examined the work of the PAC and audit committees in enhancing financial probity and efficiency within the distinctive circumstances of Zimbabwe’s public sector, with particular focus on challenges, pressures and constraints to these committees’ effectiveness.
In his keynote address at the Financial Management Awards ceremony Cde Chinamasa decried the “unfavourable” performance of most public sector institutions, citing poor corporate governance practices, inefficient allocation of limited financial resources, poor financial management that has culminated in huge debts that these institutions would want Treasury to inherit, lack of transparency in many areas, and poor service delivery.
Cde Chinamasa, however, expressed his happiness with some institutions that were responding to Government’s call for strategies to promote the sustainability of the public sector institutions.
It is these institutions that received Government’s recognition and were rewarded with various financial management awards. Agribank came out tops in the state enterprises and parastatals category. Zimbabwe Open University was named the best in the higher education institutions category, and Westgate Industrial Training Centre in Bulawayo was best among tertiary education institutions.
The Public Sector Financial Awards were described by the Minister of State for Harare Provincial Affairs Cde Miriam Chikukwa as “one of the best innovations of our time.” The awards seek to accord public recognition and appreciation for the efforts of public sector institutions in financial prudence and ingenuity in the face of adverse economic conditions and sustained negative publicity.
The event, now in its second year, is fast becoming the paramount gathering for public sector finance practitioners. Innotec, a socio-economic research and development organisation, hosts the event in partnership with the Office of the President and Cabinet and the Ministry of Finance and Economic Development.