Responding to COVID-19: insight, support and guidance
Do we public sector accountants have an impossible job? When was the last time you took time out to think about what you are trying to achieve through financial reporting? Too often as professionals we either immerse ourselves in the technical or complain about the complexity of local government accounts and query how the public and other stakeholders can ever be expected to understand. The reality is that we need both the detailed complex accounting standards and to meet the needs of our stakeholders if we are ever to show the strong governance required where public money is concerned.
We live in a complex world where our assets and liabilities are not simple. Surely it is right that the public sector is open about the future liabilities it is building up. Can we simply ignore our consumption of fixed assets and rely on future investment programmes to come riding over the hill to save the day or keep our fingers crossed that markets perform and our pensions liabilities miraculously disappear? Accounting standards play a critical role in helping us quantify and expose the true financial position of the authorities for which we work and provide an important independent safeguard against manipulation of figures for political ends.
At the same time we have a clear duty to explain this information to our stakeholders. The best financial information in the world is of little use if nobody is reading it. With our technical hat on we can help by making sure we fully understand the accounting standards we apply and what they are seeking to achieve and we can ensure that we understand the underlying accounting concepts around materiality that allow us to remove excess clutter and take ownership of our own final accounts, they are not centralised accounting records but belong to each and every local authority. Perhaps our bigger duty however is to explain the meaning of these accounts to our stakeholders.
CIPFA has been working for some time with the International Integrated Reporting Council on its narrative reporting project as well as with CIPFA/LASAAC to promote simplification of the accounts. This work is about to step up a gear with the request for public sector pilots for integrated reporting and CIPFA/LASAAC about to launch a review of two of the key primary statements within the accounts. The success of these reviews will rely on an understanding and acceptance of the sound financial requirements underpinning the accounts along with a willingness to challenge unnecessary clutter in the name of transparency. Perhaps if we can balance the two we will achieve mission impossible.