Enhancing Productivity, Efficiency and Governance in the Public Sector

Transcription

1 THE ANNUAL PUBLIC SECTOR ACCOUNTANTS CONFERENCE Enhancing Productivity, Efficiency and Governance in the Public Sector Travelers Beach Hotel and Club - Mombasa 15 th 17 th November, 2017 Uphold. Public. Interest

2 Session Objectives At the end of the session, participants should have an appreciation of; Concepts of productivity, efficiency and governance in the Public Sector Legal framework relating to productivity, efficiency and governance in the Public Sector Role of Accountants in engendering productivity, efficiency and governance in the Public Sector Practices promoting Productivity, Efficiency and Governance

3 Food for thought The question we ask today is not whether our government is too big or too small, but whether it works ( ). Where the answer is yes, we intend to move forward. Where the answer is no, programs will end. And those of us who manage the public's dollars will be held to account to spend wisely, reform bad habits, and do our business in the light of day because only then can we restore the vital trust between a people and their government. (Barack Obama inaugural speech, 20 January 2009)

4 Introduction and Motivation Public expenditure ratios have steadily increased in Kenya since the According to observers and critics, it exceeds the levels required for the efficient provision of essential public services. The need to improve competitiveness, concerns about fiscal sustainability and growing demands by taxpayers to get more value for public money as well as the need to reconsider the scope for state intervention in the economy has prompted efforts to increase the focus of budgets on more growth-enhancing activities and gear the tax mix and the allocation of resources within the public sector towards better efficiency and effectiveness.

5 Introduction and Motivation Are public services satisfactory considering the amount of resources allocated to its activities? Providing more public services with less public spending is an ongoing challenge for Kenya

6 Introduction and Motivation Public finance development, notably the growth in the size of the government, have increasingly been in the focus of policy debates. The existing fiscal framework in the country has increased the awareness of the relevance of fiscal sound behaviour. Assessing fiscal policy developments require taking into account the quality of public finances, especially the efficiency and effectiveness of public spending. Upholding the principles of accountability, transparency, integrity and equity are essential in the public sector.

7 Introduction and Motivation Accountancy is seen as an enabler of growth that reduces the cost of capital and underpins trust Today s economy and business environment are more dynamic than ever before. Globalization, development in regulatory framework and an informed citizenry, requires a robust process in the Public Sector that enhances economic growth. How have the accountancy professionals ensured credibility and transparency in the economy?

8 Legal and Institutional Framework The Constitution of Kenya, 2010 o Art 10. (1) The national values and principles of governance o Chapter 4, 6, 12 & 13 The Public Service (Values and Principles) Act, 2015 Sec. 6 - Efficient, effective and economic use of resources. Sec. 8 - Transparency and provision to the public of timely, accurate information Public Finance Management Act, 2012 and regulations Public Procurement and Asset Disposal Act, 2015 and regulations Public Audit Act, 2015 Mwongozo code of governance for state corporations Is this enabling enough?

9 Enhancing productivity, efficiency and governance in the Public Sector

10 Productivity, Efficiency and Governance Productivity - allocative efficiency, value for money, effectiveness, Productivity - relationship between the outputs generated from a system and the inputs that are used to create those outputs Getting more for the same, or the same for less Improving services while money is tight Productivity is not about spending more or a top-down approach, but being more responsive to clients, supporting staff and harnessing the power of ICT

11 Productivity, Efficiency and Governance Efficiency - Measures the resources expected to be consumed to the resources actually consumed. It focuses on the input side of the system. (To what degree did the system utilize the right things.) Effectiveness - Measures what the system sets out to accomplish (objective) with what was actually accomplished; plan vs. actual Hence, effectiveness is an output measure. (Is the output right - right quality, right quantity, on time, etc.)

12 Productivity, Efficiency and Governance Governance - the process and structure used to direct and manage public sector organization affairs towards enhancing prosperity, and corporate accounting with the ultimate objective of realizing shareholders long-term value 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 is tied to: - Achieving intended outcomes - Acting in the public interest at all times

13 Productivity, Efficiency and Governance?

14 Reasons for enhancing productivity Accountancy activities must be configured appropriately to enable public sector entities to fulfill their duty to be accountable and transparent to the public while achieving their objectives effectively, efficiently, economically, and ethically.

15 Reasons for enhancing productivity Productivity in the public sector usually equates to three inter-related drivers. Reduction in the cost base Pursuit of cost reductions in response to a constrained financial environment. Public sector modernisation Attempts to restructure the public service as a result of machinery of government changes. Service delivery improvement Improvement in outcomes for citizens by increasing efficiency and effectiveness of service delivery.

16 Performance and efficiency Main questions: Are public services satisfactory considering the amount of resources allocated to its activity? Could one have better results using the same resources? Could we have the same results with lower expenses? Can we measure cross-country/county efficiency and determine benchmark countries/counties? Can we explain measured inefficiency? systemic component, environmental or non-discretionary component.

17 Performance and efficiency Measuring performance and efficiency Public sector performance can be measured via output/outcome indicators: Health, education, infrastructure, income distribution => need for good indicators Public sector efficiency relates outcomes to the resources used/inputs: => need for homogenous and matching data (heterogeneity is a limit) Key issues: 1. methods and (homogeneous and right ) data to assess performance and efficiency. 2. Performance contracting Has it worked?

18 Engendering Trust in Public Sector Audit is one of the means that is used to elaborate financial control of public entities the An effective public sector audit activity strengthens governance by materially increasing citizens ability to hold their public sector entity accountable. The audit activity must be empowered to act with integrity and produce reliable services, although the specific means by which auditors achieve these goals vary.

19 Engendering Trust in Public Sector Accountants perform an important function in governance aspects that are crucial for promoting credibility, equity, and appropriate behavior of public sector officials, while reducing the risk of public corruption. The public sector accountant s role supports the governance responsibilities of oversight, insight, and foresight

20 Opportunities for action Resolving the public sector productivity challenge relies on three focus areas: Prioritisation Developing a collective approach for improving productivity to accommodate the diversity of responsibilities, functions and activities within the public sector Measurement Creating public sector measures for determining productivity that can be adopted as a proxy to the shareholder return indicator that is prevalent in the private sector Alignment Translating plans and strategies for reform, and therefore improving productivity, through an implementation plan that actually delivers on desired outcomes

21 Conclusion Productivity, efficiency and governance in the public sector requires professionals with a profile that is adequate to the specifics and intrinsic characteristics of this sector, therefore, professionals of exceptional quality.

22 Thank you Discussion Questions?