Achieving Accountability and Trust in Public Financial Management, By Innocent Okwuosa

0

It is…recommended that federal and state governments, including their Ministries, Departments, and Agencies (MDAs), embrace accountability based on both PEFA and the ICAN Accountability Index. States should strive to implement accrual-based IPSASs and employ chartered accountants to help ensure proper implementation.

At a recent Annual Conference of Accountants hosted by the Institute of Chartered Accountants of Nigeria (ICAN) in November 2021, guest speaker Mr. Adesina from the African Development Bank (AfDB) correctly grasped the notion of “trust when he stated that:

Leadership is an investiture of trust… Trust is a powerful, evocative and multifaceted word. At the level of federal, state and local governance, trust involves trust and faith in the government, and trust in the government, by the people. It is the assurance that what leaders and government officials promise, they will certainly deliver. When leaders back down or fail to deliver on their promises and legitimate expectations, trust is broken.

It is through accountability that leaders can demonstrate to citizens and business partners that they deliver what they promise and therefore can be trusted. Citizens and business partners trust any government that holds itself accountable.

The concept of accountability is therefore concerned with how leaders demonstrate that they have kept their promises and the legitimate expectations of citizens. In layman’s language, Joannides (2012) tells us that accountability can be understood as a requirement to be accountable for oneself and one’s activities.

Accountability helps public financial management (PFM) and engenders confidence in it. The central role of good PFM for global development was recognized. In line with widespread international agreement on the importance of PFM, the Public Expenditure and Financial Accountability (PEFA) program was launched in 2001 by seven international development partners.

Lack of accountability and transparency in public financial management has held back growth and development in all sectors of Nigeria’s economy. Multilateral agencies consider accountability and transparency as criteria for dealing with the government. To address this issue, the Institute of Chartered Accountants of Nigeria (ICAN) has introduced the ICAN Accountability Index (AI).

Since 2001, PEFA has become the most widely recognized standard for PFM assessments. PEFA 2016 is the most recent framework and has seven pillars, which are: (a) budget reliability, (b) transparency of public finances, (c) asset and liability management, (d) budget strategy and policy-based budgeting, (e) predictability and control of budget execution, (f) accounting and reporting, and (g) external review and audit. The seven pillars have 31 indicators used in scoring and assessments.

Nigeria’s poor performance in PFM is evidenced by the assessment carried out in 2019 for the financial years 2015, 206 and 2017, by the World Bank using the 2016 PEFA framework. The country scored a D for 22 out of 31 indicators assessed, five indicators obtained a C and four a B, with no indicator obtaining an A.

Lack of accountability and transparency in public financial management has held back growth and development in all sectors of Nigeria’s economy. Multilateral agencies consider accountability and transparency as criteria for dealing with the government. To address this issue, the Institute of Chartered Accountants of Nigeria (ICAN) has introduced the ICAN Accountability Index (AI).

The ICAN AI mirrors the PEFA but is tailored to fit the local environment and as such has five pillars which are: (a) Fiscal strategy and policy-based budgeting, (b) Credibility (c) Asset and Debt Management, (d) Control of Budget Execution, Accounting and Reporting, and (e) External Audit and Legislative Review.

In a meeting between the World Bank Representative in Nigeria and the Institute of Chartered Accountants of Nigeria on the ICAN Accountability Index in 2021, it was made clear that the World Bank would support states in Nigeria that achieve a high score in accountability and transparency of public finances.

The rating for the 2017 and 2018 fiscal years was quite comprehensive and Kaduna State came first for both years. States that were at the bottom of the index can attribute their performance to the failure to provide the data/information required by the evaluators. However, multilateral agencies that partner with states… will see the non-provision of data/information as a lack of accountability in public finance management.

Prior to the start of the ICAN AI, in 2018 for the 2017 financial year, the International Federation of Accountants (IFAC) and the World Bank, through the Department for International Development (DfID), approved the ICAN AI and IFAC partially provided the initial funds. for its execution. Awareness was created among relevant public sector stakeholders including meeting with the then Honorable Minister of Finance, the Federation Accounts Allocation Committee (FAAC) and the States Accountants General. In addition, the President of the Institute has formally written to all 36 state governors informing them of the start of the assessment.

The rating for the 2017 and 2018 fiscal years was quite comprehensive and Kaduna State came first for both years. States that were at the bottom of the index can attribute their performance to the failure to provide the data/information required by the evaluators. However, multilateral agencies that partner with states, such as the World Bank, International Monetary Fund and AfDB, will see the non-provision of data/information as a lack of accountability in public finance management. If such information was there, why was it not provided, especially since most of this information should be on state websites. It should be noted that Kaduna’s good performance is that it has implemented the International Public Sector Accounting Standard (IPSAS) based on accrual accounting and is about the only state to have it conscientiously done.

Many in the accounting field in Nigeria knew that Kaduna State, through its accountability and transparency initiatives, has demonstrated to international trading partners and multilateral funding organizations that it can be trusted. Kaduna State has also performed very well under the World Bank’s State Financial Transparency, Accountability and Sustainability (SFTAS) initiative, in which one of the indicators related to disbursements is the responsibility. Due to the accountability indicator, the Kaduna State government tops the states in Nigeria, raising billions of naira from the World Bank.

By leveraging ICAN’s IAN, a state governor can demonstrate to citizens and business partners that they have done what they promised and are therefore trustworthy.

It is therefore recommended that federal and state governments, including their Ministries, Departments, and Agencies (MDAs), embrace accountability based on both PEFA and the ICAN Accountability Index. States should strive to implement accrual-based IPSASs and employ chartered accountants to help ensure proper implementation.

Innocent Okwuosa is a Visiting Associate Professor of Accountancy at Caleb University, Imota, Lagos and First Assistant Vice President of the Institute of Chartered Accountants of Nigeria. He consults Entop Consulting Ltd.

ADVERTISING CITIZEN-FM


Support the integrity and credibility journalism of PREMIUM TIMES

Good journalism costs a lot of money. Yet only good journalism can guarantee the possibility of a good society, an accountable democracy and a transparent government.

For free and continued access to the best investigative journalism in the country, we ask that you consider providing modest support to this noble endeavour.

By contributing to PREMIUM TIMES, you help sustain relevant journalism and keep it free and accessible to everyone.

To give


ANNOUNCEMENT TEXT: Why Women Cheat: What Every Nigerian Man Should Know







Announcement of the PT Mag campaign

Share.

Comments are closed.