Good Governance in the Public Sector

| Confidential and Proprietary Information
Contribution of the Contraloría General
de la República (CGR) to Good
Governance in the Public Sector
January 2015, Santiago, Chile
Vincent Tophoff
Senior Technical Manager, IFAC
Good Governance in the
Public Sector

International Federation of Accountants
• Global organization of the accountancy profession
• Supports professional accountants in following areas:
– Governance and ethics
– Risk management and internal control (RM/IC)
– Sustainability and corporate responsibility
– Financial and performance management
– Business reporting & public sector accounting standards (IPSASs)
– Auditing & assurance
• All areas of critical importance to professional accountants
(and for CGRs & public sector entities too…)

Supreme Audit Institutions and INTOSAI
• “A whole-of-government approach to restoring public trust
and fostering good governance is needed, and
• Supreme Audit Institutions such as CGR are uniquely
placed to support this process.” *
• And IFAC would be happy to continue supporting INTOSAI
and CGR in this process!
* Quote from: Partners for Good Governance: Mapping the Role of Supreme
Audit Institutions (OECD, 2014)

International Reference Group
Good Governance in the Public Sector
• Yoseph Asmelash United National Conference on Trade & Development (UNCTAD)
• Ian Ball Formerly IFAC
• Andreas Bergmann International Public Sector Accounting Standards Board (IPSASB)
• Jón Blöndal Organisation for Economic Co-operation & Development (OECD)
• Carlo Cottarelli International Monetary Fund (IMF)
• Robert Dacey US Government Accountability Office (GAO)
• Steve Freer Formerly CIPFA
• Gert Jönsson International Organization of Supreme Audit Institutions (INTOSAI)
• Mervyn King King Committee on Corporate Governance
• Ian McPhee Australian National Audit Office
• Maurice McTigue George Mason University (USA)
• Roger Tabor Professional Accountants in Business Committee, IFAC

Good Governance in the Public Sector:
An International Framework

• What are the main challenges for good governance in
public sector organizations?
– Sovereign debt crisis
– Shortage of funding / rationalization
– Short-termism
– Internationalization, technology, complexity
– Corruption
Analyzing the Environment

• What can a governance framework accomplish?
– Establish a benchmark for good governance
– Serve as a reference point for those developing or reviewing national
codes
– Help public sector organizations continually improve governance
systems
– Where no code/guidance exists, provide:
• A shared understanding of what constitutes good governance
• A powerful stimulus for positive action
Analyzing the Environment

Framework:
• Foreword by Mervyn King, Chair, IIRC, and King Report, South Africa
• Definitions
• Principles-based to maximize relevance, applicability
• Sub-principles and supporting guidance to provide explanation
Supplement:
• Examples
– Provide practical experience and aid understanding
• Evaluation questions to consider
• Further reading
Framework Layout

The fundamental
function of good
governance in the public
sector is to ensure that
entities achieve their
intended outcomes while
acting in the public
interest at all times.
Good Governance in Public Sector
• Good governance tied
to:
– Achieving intended
outcomes
– Acting in the public interest
at all times

Achieving the Intended Outcomes While
Acting in the Public Interest at all Times

Acting in the public interest requires:
Behaving with integrity, demonstrating
strong commitment to ethical
values, and respecting the rule of law
Principle A

Acting in the public interest requires:
Ensuring openness and comprehensive
stakeholder engagement
Principle B

Achieving good governance in the public sector requires:
Defining outcomes in terms of
sustainable economic, social, and
environmental benefits
Principle C

Determining the interventions necessary
to optimize the achievement
of the intended outcomes
Principle D

Developing an entity’s capacity,
including the capability of its leadership
and the individuals within it
Principle E

Managing risks and performance
through robust internal control and
strong public financial management
Principle F

Explicit Attention to Managing Risk
• “Proper risk assessment assists public sector entities in
making informed decisions about the level of risk they are
prepared to take, and implementing the necessary
controls, in pursuit of the entities’ objectives.”
• “Effective risk management better enables public sector
entities to achieve their objectives, while operating
effectively, efficiently, ethically, and legally.”
• “Governing bodies should ensure that entities have
effective risk management arrangements in place.”

Explicit Attention to Internal Control
• “Internal control supports a public sector entity in achieving
its objectives by managing its risks while complying with
rules, regulations, and organizational policies.”
• “Controls are a means to an end: the effective management
of risks enables an entity to achieve its objectives.”
• “Public sector entities should also consider the need to
remain agile, avoid over-control, and not become overly
bureaucratic.”

Implementing good practices
in transparency, reporting, and audit,
to deliver effective accountability
Principle G

Explicit Role for SAIs/CGR in Framework
• “SAIs/CGR extremely important in providing independent
and objective oversight of public entity’s governance, risk &
control processes and the stewardship of public resources.”
• “Oversight responsibility involves not only financial reporting,
but also operational processes, including accountability for
efficiency effectiveness as well as performance reporting.”
• “SAIs/CGR, through their investigations or role in setting
targets or standards, are also a means for strengthening
oversight of senior management actions.”

Expanded Role for SAIs/CGR in OECD Study
• “SAIs/CGR are part of the system of accountability in a state
by reinforcing the effectiveness of bodies responsible for
government oversight & for public financial management.”
• “SAIs/CGR are increasingly conducting useful assessments
of the performance of policies and programmes.”
• “The objective and reliable information generated by SAIs/
CGR can feed into the policy cycle and help governments
make informed, evidence-based decisions about policy
trade-offs, while keeping in mind value for money and
broader principles of good governance.”

Supplement
• Examples of the principles and guidance
• Questions for consideration
• Further reading
• Important sources of information, including:
– INTOSAI Guidance for Good Governance series
– OECD resources, including in Framework (coming...)

Looking Ahead
• Dissemination via CIPFA, IFAC, IFAC member bodies &
affiliates, professional accountants, CGR and INTOSAI?
• A Spanish translation of the Framework will be published
soon!
• Implementation support and discussion on the IFAC
Global Knowledge Gateway
– www.ifac.org/Gateway

Good Governance in the Public Sector

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