UK case study

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The core objective of Public Financial Management (PFM) is to improve citizens' lives through better management of public money. PFM affects how funding is used to address national and local priorities. It also affects the availability of resources for investment and the cost-effectiveness of public services.  The general public are likely to have greater trust in public sector organisations where there is strong financial stewardship; accountability; and transparency in the use of public funds.

Examples from around the world

First wave of case studies

The core objective of Public Financial Management (PFM) is to improve citizens' lives through better management of public money. PFM affects how funding is used to address national and local priorities. It also affects the availability of resources for investment and the cost-effectiveness of public services.  The general public are likely to have greater trust in public sector organisations where there is strong financial stewardship; accountability; and transparency in the use of public funds.

Effective public financial management also underpins good decision-making.  To ensure the best resource allocations we need accurate financial information. The financial crisis of the late 2000s underlined the importance of excellent systems of financial reporting for all governments. It also demonstrated the need for effective regulation, high quality governance and strong institutions. Governments must ensure they maintain fiscal sustainability and can properly manage fiscal risk.

Good practices in PFM

To respond to this need, ACCA and IFAC are producing a series of video case studies showcasing good practices in PFM. Here we highlight the real stories and positive impacts of implementing strong PFM. Our aim is for this to be a catalyst for change, demonstrating the immediate impact reform can have on citizens. This will encourage more governments to implement better PFM.

The global case studies of how PFM reform has been achieved will assist professional accountants in supporting the adoption of good financial management practice. They can inspire by demonstrating the benefits of PFM reform, and illustrate how challenges can be overcome.

Examples from around the world

The state government of New South Wales in Australia has introduced an asset and liability committee to take a total balance sheet perspective, improving the management of liabilities and selling assets to the private sector. This has enabled the state to unlock AUS$33bn for new infrastructure construction. 

Tanzania has introduced IPSAS (International Public Sector Accounting Standards) to portray a true and fair view of the government's financial position. This has led to better management of public money and improved public sector outcomes, with more medicines and equipment in hospitals and more children attending schools. 

Watch the case studies from Australia and Tanzania

 

Canada's Mississauga city has designed a targeted financial reform to deal with the impact of more frequent acute storms, resulting from climate change. Through the introduction of a 'hard surface tax', those who contribute to the local flooding challenges pay for the solution.

 

ACCA lead, Alex Metcalfe

  • Australia

    The state government of New South Wales in Australia has introduced an asset and liability committee to take a total balance sheet perspective, improving the management of liabilities and selling assets to the private sector. This has enabled the state to unlock AUS$33bn for new infrastructure construction.

  • Tanzania

    Tanzania has introduced IPSAS (International Public Sector Accounting Standards) to portray a true and fair view of the government's financial position. This has led to better management of public money and improved public sector outcomes, with more medicines and equipment in hospitals and more children attending schools.

  • Canada

    Canada's Mississauga city has designed a targeted financial reform to deal with the impact of more frequent acute storms, resulting from climate change. Through the introduction of a 'hard surface tax', those who contribute to the local flooding challenges pay for the solution.

    Second wave of case studies
  • Pakistan

    The government of Pakistan has implemented a new flagship project that has improved their entire PFM structure. It was implemented through the technical assistance of the World Bank and included the introduction of financial auditing manual and a new accounting model.

  • New South Wales: Generations Fund

    New South Wales has introduced new initiative - a debt retirement and communities dividend fund called Generations Fund. It's a world-leading fund that’s sharing the benefits of its returns by funding community projects.

Third wave of case studies

  • United Kingdom

    HM Treasury share the success of their PFM initiatives: Whole of Government Accounts (WGA) and the Balance Sheet Review (BSR). WGA is a single consolidate set of IFRS compliant financial statements for the entire public sector. It provides a single authoritative picture of assets, liabilities, income and expenditure and is the foundation of the BSR. Through better balance sheet management, they see where to reduce the costs of their assets and liabilities and thereby reduce the overall risk. The main outcome is transparency – a way for citizens and taxpayers to see where their money is being spent.

  • Malaysia

    Malaysia has been in the spotlight for its corporate governance issues in the past decade. High profile incidents such as the 1MDB saga and cases of alleged mismanagement in the public sector have not helped in fostering trust among Malaysians. The new government has pledged to create a better environment for transparency and accountability.

 

Effective public financial management underpins good decision-making. To ensure the best resource allocations we need accurate financial information. The financial crisis of the late 2000s underlined the importance of excellent systems of financial reporting for all governments. It also demonstrated the need for effective regulation, high quality governance and strong institutions. Governments must ensure they maintain fiscal sustainability and can properly manage fiscal risk.

Good practices in PFM

To respond to this need, ACCA and IFAC are producing a series of video case studies showcasing good practices in PFM. Here we highlight the real stories and positive impacts of implementing strong PFM. Our aim is for this to be a catalyst for change, demonstrating the immediate impact reform can have on citizens. This will encourage more governments to implement better PFM.

The global case studies of how PFM reform has been achieved will assist professional accountants in supporting the adoption of good financial management practice. They can inspire by demonstrating the benefits of PFM reform, and illustrate how challenges can be overcome.

ACCA lead author, Alex Metcalfe

Further reading