Visions on the future of the accountancy profession usually do not provide a special place for the public sector. We believe that an additional focus on the public sector fits with our commitment to the public interest. Professional accountants and public sector entities are natural partners in protecting the public interest.
Worldwide, accountants are involved in stakeholder dialogues on the future of our beautiful and important profession. In the Netherlands, the Royal Netherlands Institute of Chartered Accountants(NBA) has recently initiated a discussion and published a vision document on the desired development of the profession for public consultation (in Dutch).
In line with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants, the NBA strongly emphasizes the profession’s responsibility to act in the public interest. That is clear and right. However, as a consequence, we would have expected more specific attention for the public sector in the vision document. In the Netherlands, municipalities, provinces, water and dike boards, housing corporations, education, health and safety, and social security entities all obtain and use tens of billions of euros of public money, which needs to be properly dealt with and accounted for. By nature, these entities pursue the public interest. That is their “raison d’être.”
In their public orientation—in serving society as a whole—public organizations and accountants share an important mission. Other entities also involve the public interest in their considerations. But only for public entities is it their core business. Therefore, serving such public entities, in their rich diversity, should be in the genes of professional accountants, in all their capacities. Fortunately, the public sector also happens to be a dynamic and professionally attractive domain, where a lot of work needs to be done.
Professional accountants must, of course, deliver top quality in whatever capacity they operate. This begins with a thorough understanding of the “business” of the public sector, which is typically fundamentally different from that of the private sector. The primary processes consist of developing and providing public services where public value rather than profit is the core concept. The political decision making, budgetting and spending character are fundamentally different too. The budget is at least as important as the financial statements, and both documents are discussed in political environments. And the regularity criterion plays a key role. A deep understanding the specific nature of public entities is also necessary to be able to "tell-what-you-see" in a way that makes sense.
In addition, professional accountants, in any capacity, should be ready and willing to raise their voice when public entities are not sufficiently in control. In the public sector, the critical importance of finance, control, and accountability is not always recognized. Some public sector entities have substandard financial functions; in others the available audit fees are too low. That can and should be improved.
Professional accountants should engage with all stakeholders to set a reasonable standard for the quality and quantity of staff in the financial function within a modern and future-proof public sector entity. Only from that starting point, covering all lines of defense, is it possible to have a meaningful dialogue on an effective and efficient financial management, audit approach, and an appropriate audit fee.
In addition, the voice of the accountancy profession is welcome and suitable when it comes to continuing the necessary improvements in the public sector, for example on financial and non-financial budgeting and reporting and on the administrative burden caused by laws and regulations.
Last but not least, it is important to determine in consultation with stakeholders around the public domain, which additional kinds of assurance can be developed in the coming years. The rich variety of public responsibilities and public accountability in times of digitalization and transparency provides the accountancy profession with promising innovation perspectives on topics like culture and behavior, systems, and information.
By delivering their best performance in the public sector, professional accountants serve the public interest in two ways. From their professionally-critical influence on public governance, management of public resources, and public accountability, they contribute to the quality of public organization's actions toward citizens. And from their bridge function between providers and users of information, they add reliability and credibility to public information.
For the sake of well-being of citizens all over the world, we passionately call upon professional accountants to explicitly express and demonstrate their allegiance to the public sector. In the public interest!