11

The Future of Financial The Future of Financial Management in the Public Management in the Public

ServiceService

Rocky J. Dwyer, PhD, CMARocky J. Dwyer, PhD, CMA

22

AgendaAgenda

Governance – why is it important;Governance – why is it important;

Passive Compliance vis-à-vis Passive Compliance vis-à-vis

Great Governance; andGreat Governance; and

Practical Considerations. Practical Considerations.

33

Great GovernanceGreat Governance

HonestyHonesty CompetenceCompetence CommitmentCommitment CourageCourage

Oversight

Laws & Regulations

Business Practices & Ethics

Information& Transparency

Risk

Monitoring

Foundation & Dynamics of a Great Governance Process

Communication

44

Great GovernanceGreat Governance

Great governance is a matter of Great governance is a matter of balance. However, an increase in balance. However, an increase in citizens’ & stakeholders’ satisfaction citizens’ & stakeholders’ satisfaction helps to justify its costs.helps to justify its costs.

Great governance is a concept Great governance is a concept applicable to the public and applicable to the public and corporate world alike.corporate world alike.

Great Governance is based on Great Governance is based on principles rather than rules.principles rather than rules.

55

Passive Compliance vsPassive Compliance vsGreat GovernanceGreat Governance

Great Governance Great Governance requires more than just a focus onrequires more than just a focus onPassive Compliance with laws andPassive Compliance with laws and

regulationsregulations Work culture based on sound Work culture based on sound

business practices & ethics.business practices & ethics. Strong emphasis on results Strong emphasis on results

management.management. Risk management is “top of mind”.Risk management is “top of mind”. Less adherence to the “process” of Less adherence to the “process” of

risk management & monitoring and risk management & monitoring and more attention to the “doing”.more attention to the “doing”.

66

Interested PartiesInterested Parties

Public – the taxpayer;Public – the taxpayer; Stakeholders - Parliament, MPs, Stakeholders - Parliament, MPs,

OAG;OAG; Public Service Employees;Public Service Employees; Financial Markets;Financial Markets; Industry; andIndustry; and Other Governments.Other Governments.

77

Why is it Important?Why is it Important?

Comply with legal and fiduciary Comply with legal and fiduciary requirements, and a continued requirements, and a continued movement to increase Accountability movement to increase Accountability to the public and stakeholders.to the public and stakeholders.

Other reasons:Other reasons: Attract and Retain Great People;Attract and Retain Great People; Fiscal Soundness & Public Trust;Fiscal Soundness & Public Trust; Earn Stakeholder Support; andEarn Stakeholder Support; and Competitive Advantages.Competitive Advantages.

88

What is Transparency?What is Transparency?

Transparency means providing Transparency means providing all interested parties with as all interested parties with as much relevant information as much relevant information as possible without compromising possible without compromising competitive advantages.competitive advantages.

99

What is Transparency of What is Transparency of InformationInformation

There are the qualitative attributes that define There are the qualitative attributes that define “transparency” in the financial field: “transparency” in the financial field:

Understandable: It is clear and uses language clear to Understandable: It is clear and uses language clear to the target audience.the target audience.

Relevant: it means something to the target audience.Relevant: it means something to the target audience. Reliable:Reliable:

Consistent;Consistent; Substantive / Specific and not merely generic;Substantive / Specific and not merely generic; Neutral, not biased / fair;Neutral, not biased / fair; Prudent and conservative; andPrudent and conservative; and Complete.Complete.

Comparable: between time periods and among similar Comparable: between time periods and among similar

entities.entities.

1010

ChallengesChallenges

Change and uncertainty are Change and uncertainty are constants;constants;

Increased public demand for Increased public demand for greater transparency;greater transparency;

Better educated and discerning Better educated and discerning citizens;citizens;

Globalization and technological Globalization and technological advances; andadvances; and

Operating efficiency.Operating efficiency.

1111

What is Risk ?What is Risk ?

Risk = Degree of Uncertainty as to the potential for gain as well as exposure to loss.

• Risk includes all events that impact performance either positively or negatively.

• Risk should be viewed as essential to the health of the organization.

• To eliminate or minimize all risks would result into weak or ineffective results.

• Risk Must be continuously managed to exploit opportunities and achieve objectives.

1212

Practical ConsiderationsPractical Considerations

Every organization’s journey is different.Every organization’s journey is different. You must build off “your” current state in all areas of You must build off “your” current state in all areas of

management.management. Focus on great execution of tasks and not just Focus on great execution of tasks and not just

following the “process”.following the “process”. Find real champions to advance the cause.Find real champions to advance the cause. Set realistic goals.Set realistic goals.

Secure the foundation;Secure the foundation; Integrate into core management practices;Integrate into core management practices; Achieve transparency within the institution;Achieve transparency within the institution; Utilize continuous improvement mindsets & practices;Utilize continuous improvement mindsets & practices; Everyone knows their role and are held accountable;Everyone knows their role and are held accountable; Stay forward looking / anticipate events sooner;Stay forward looking / anticipate events sooner; Measure results; andMeasure results; and Give constant feedback. – praise in public and Give constant feedback. – praise in public and

criticize in private.criticize in private.

1313

A Common Framework will A Common Framework will Facilitate UsageFacilitate Usage

Need a common language.Need a common language. Need criteria against which to Need criteria against which to

benchmark.benchmark. Familiarity of concepts is usefulFamiliarity of concepts is useful Application guidance is critical. Application guidance is critical.

piece. piece. Issuance of framework is only Issuance of framework is only

the beginning.the beginning.

1414