Lack of transparency global challenge for public finances

Public financial management and a dearth of qualified accountants are posing challenges to developed and developing nations as they emerge from the Global Financial Crisis, the new head of the global accountants body warned Wednesday. Many countries were looking at possible future financial calamities or obstacles to growth because they lacked accountants to properly assess their assets and liabilities, said Warren Allen, who took up a two-year post as president of the International Federation of Accountants (IFAC) last month. IFAC, which represents 2.5 million professionally qualified accountants globally, mainly coordinates standards for auditing, accounting education and public sector accounting with 173 member bodies in 129 countries. Allen told Xinhua that training accountants would be an urgent requirement during his tenure. China alone needed another 300,000 qualified accountants in coming years and Indonesia had fewer than 50,000 accountants, with an average age over 50 and both countries were developing fast, he said. "IFAC has a very close relationship with the Chinese Institute of Certified Public Accountants, which is a very active organization. We give them support on the international front; we give them international standards to teach their students," Allen said in a phone interview. In the United States, accounting schools had never been so full of students and IFAC was looking at working with U.S. professional bodies to extend their capacity. Qualified accountants with a grasp of languages could be sure of work just about anywhere in the world, said Allen, a retired partner of global accounting firm Ernst and Young in New Zealand. Developed nations were also calling out for professional accountants to get their public accounts in order. The Global Financial Crisis had highlighted poor public management in countries such as Greece and Spain. "Many of them do not know what their assets or liabilities are they do not have balance sheets," said Allen. "Spain and other nations in Europe have generous pension arrangements and future governments and taxpayers have to know what these liabilities are," he said. "Even a major country like the United States doesn't have a totally proper system of accounting as they do not record their pension liabilities." The ultimate public interest priority for the IFAC was to make sure proper systems of accountability and transparency were in place in both developed and developing nations. "Until you get a system that records where expenditure is going, that records assets and liabilities, any sort of aid money or taxpayer money, it is open to corruption and fraud," said Allen. "People are not held accountable because you don't have proper record keeping." The first New Zealander to hold the IFAC presidency and a past president of the New Zealand Institute of Chartered Accountants, Allen, 61, said New Zealand had a high reputation for management of its public finances. Allen said confidence in the accounting profession had probably been at a high since the Global Financial Crisis. "Looking at the way out, the accounting profession is absolutely key to the solution."