Ladies and gentlemen, thank you for inviting me to speak today and to chair this panel discussion.

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Imogen Owens
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1 Ladies and gentlemen, thank you for inviting me to speak today and to chair this panel discussion. As you have just heard my name is Anthony Harbinson and my career has seen me working in the public sector for many years leading to my current role as Director of Safer Communities for the Northern Ireland Department of Justice. As well as being a former President of the ACCA I also happen to lead the AML Taskforce for the CCAB, the umbrella body for the main UK professional Accountancy bodies. In all of these capacities I have been able to develop particular insights on the subject corruption, criminal financing and money laundering which I hope we can explore today in our panel discussion. The question and answer element of this discussion will be a key aspect of this session and therefore it is essential that you, the audience, fully participate and make this a highly interactive and indeed challenging and robust discussion. Corruption is a topic which I regard as not only important for the accountancy profession to examine but one about which we all need to remain vigilant, especially those of us who operate within the Public Sector. 1

2 The results of corruption in the public sector effect everyone in society as well as sovereign nations and the global financial markets. No matter were it occurs its resonance can be felt around the world, it is a truly global problem. Given this event is one which focuses on the Public Services I can t stress enough the importance effective public financial management. 1

3 And so, here is the agenda I want to work through with you today. I will start by introducing the subject and looking at some of the key aspects that we may wish to consider in this session. I will then explore some of the ways in which we may be able to limit the level of corruption before turning to what I see as the specific role of the accountant in trying to limit corruption in public services. Then the session will really start when I introduce the rest of the panel members and after a few words from each on their views we will get the debate going! 2

4 Governments spending on public services accounts for more than one-third of GDP in most countries around the world. Globally, the public sector is rapidly changing and the demands on public services are growing, together with the tax bill and governments are wrestling with a number of complex challenges including austerity measures and demands for improved public services. At the same time they are facing the challenges of aging populations, rising healthcare costs, reform of welfare support, provision of quality education, the environment and climate change, defence costs, protection of natural resources, terrorism, crime and infrastructure costs and so every penny counts and any loss of resources is acutely felt! 3

So there can be no doubt that given the complex challenges faced by governments, policy makers and business in delivering good public services, corruption is more than just a minor problem or an

5 So there can be no doubt that given the complex challenges faced by governments, policy makers and business in delivering good public services, corruption is more than just a minor problem or an irritant, it damages and indeed takes lives! Aside from the ethical dimension and that could be a whole other discussion point we have to ask the question can we afford not to tackle corruption? And of course we have to address the moral dimension too tackling and stopping corruption is simply the right thing to do. 4

6 But let us be clear, corruption is not just a issue for the developing world, it effects us all, and it always has! The quotes on the left hand side of the slide demonstrate this, but I wanted to share the imagine on the right hand side with you which highlights the most recent research published by Transparency International in their Corruption Perceptions Index Firstly I should say that no country gets close to a perfect score in the Corruption Perceptions Index Over two-thirds of the 176 countries and territories in this year's index fall below the midpoint of the scale of 0 (highly corrupt) to 100 (very clean). The global average score is a only 43, which Transparency International claim indicates that there is endemic corruption in a country's public sector. Topscoring countries (yellow on the map) are far outnumbered by orange and red countries where citizens face the tangible impact of corruption on a daily basis. Whilst you might not be able to see the detail clearly, what you will see from 5

7 the heat map is that generally countries, such as those in Scandinavia and Canada, that have a reputation of tackling corruption head-on appear as light yellow. This indicates that these nations tolerance for corruption is very low. It is an example of what can be achieved with continuous vigilance and a commitment to high standards. 5

Taking a little more detailed look at the heat map you will see that those countries with a much higher tolerance for corruption and less developed systems of prevention and detection are dark red.

8 Taking a little more detailed look at the heat map you will see that those countries with a much higher tolerance for corruption and less developed systems of prevention and detection are dark red. Unfortunately, most developing countries, including those in Africa, are more red than yellow! But this is not true in all cases. Not long before stepping down as UK Prime Minister David Cameron led a trade delegation to Singapore where he delivered a powerful speech called Tackling Corruption. On this trade mission to Singapore Mr Cameron said: It is the commitment to tackling corruption that helped to give people confidence to invest in this incredible country. And it is no coincidence that Singapore s climb to the top end of the global indices for anti-corruption and for ease of doing business have gone hand-in-hand with its great global economic success. I mention the example of Singapore in order to highlight just how crucial it is for the outside world to have the confidence that a particular country regards transparency as important. And I think there is a strong correlation between 6

9 the perception of corruption in a certain country and whether potential investors will wish to engage with trade and investment. And within the same speech, the former Prime Minster put it rightly by saying: Corruption is one of the greatest enemies of progress in our time. 6

10 What we have seen over recent years are issues to do with corruption rise to the top of the news agenda. It has greatly affected the Public Sector as well as big business and small business alike, within the Private Sector. And those of us with a passion for sport will know that it has also infected the world of football and tennis and athletics, affecting bodies such as FIFA and the Olympic Committee. What Cameron said in Singapore was that corruption robs those who require the most help and assistance. And so it is essential Leaders within the Public Sector whether politicians or officials need to tackle the issues head on. What we know from news reports about recent scandals is that public sector corruption can effect everything from a family s ability to feed and clothe their children, to the credibility and reputation of governments, and big business and the personalities that run it. 7

Corruption in Public Services undermines trust in the integrity of our governments and our delivery systems, health, education, justice and infrastructure causing long-term detriment to our society

11 Corruption in Public Services undermines trust in the integrity of our governments and our delivery systems, health, education, justice and infrastructure causing long-term detriment to our society and the people who depend on them most. So how do we set about limiting the levels of corruptions with public services? Well we need to begin by ensuring that there are high levels of vigilance on the part of those working in the public sector and this needs to be maintained consistently when it comes to preventing corruption. We need to always be one step ahead of the dishonest public officials, politicians and organised criminals who are constantly looking for weaknesses and loopholes in our systems. So the first step in significantly reducing prevalance and the threat of corruption starts with you: Individually we must obey the law and encourage those around us to do the same. There is no shortage of strong anti-corruption legislation in most countries 8

12 but what there is is a failure of observance and enforcement! So we all need to take personal responsibility and demonstrate that in not just our words but also in our actions and our deeds! We need to follow the rules and regulations that are in place to prevent corruption and to report any breaches of those rules. There are some basic does and don t that we should promote: 8

13 These are some basic rules that will help develop a culture or trust, openness and transparent but we need to do more than simply rely on the honesty, ethics and the integrity of individuals. We need to develop a more holistic approach. The World Bank has developed and promoted six strategies to help prevent corruption. 9

14 These are: 1. Paying civil servants well 2. Creating transparency and openness in government spending 3. Cutting red tape 4. Replacing regressive and distorting subsidies with targeted cash transfers 5. Establishing international conventions 6. Deploying smart technology In additional to following such strategies the ACCA believes that developing excellent financial infrastructures is as essential to the development of economies every bit as much as is enhanced physical infrastructure, such as improved roads and railways, cables for communications and secure pipelines for water, electricity and oil. 10

15 Such financial infrastructures will limit the scope the for corruption to flourish. The finance profession has an important role to play in ensuring that economies thrive and that includes protecting society s assets be they financial, physical or human. So what is the role of the accountant? 10

16 Well as accountants we are seen as: The gatekeepers of financial probity The champions of ethical business conduct And key contributors in influencing the future development of national regimes and practices that recognise and embrace international standards. 11

17 So as accountants we need to ensure that we optimise our resources and we can do this through: Co-ordination, communication and collaboration. There is a perception among law enforcement that there is a lack of information sharing among key players and stakeholders. More needs to be done to reinforce the value of reporting and monitoring activities to professionals, the general public and other stakeholders including the development of appropriate procurement and contract management procedures. Better publicity about what services we provide, what they cost and how we fund them is needed to demonstrate the openness and transparency that is need to prevent corrupt practices. Measuring effectiveness is important. There needs to be more effective measurement of success and the demonstration of value for money. The development strong financial management and reporting will help demonstrate value for money and enable the assessment the effectiveness. 12

18 Developing a consistent approach. Varied interpretations of regulations by accountants and auditors within the public sector can lead to different policies, procedures and training. We need to see clearer and more frequent guidance from professional bodies and regulators that set clear expectations and provide clarification of guidance and where possible to help harmonise and streamline the approach in the future. And finally, professionalism matters. To uphold the highest professional standards required to tackle corruption and its effects we must demonstrate that we follow the ethical standards expected of us as professional accountants and crucial that we work in the public interest! 12

I am sure that as professional accountants you will agree that we are fortunate and indeed honoured to be a in profession that plays an important role in guiding the future stability of economies and

19 I am sure that as professional accountants you will agree that we are fortunate and indeed honoured to be a in profession that plays an important role in guiding the future stability of economies and nations around the world. Our role as accountants are important to deliver what ACCA calls public value that means acting in the public interest, promoting ethical Public Services and Business and helping grow Economies. So what does public value actually mean? Well ACCA believes that accountants play a critical role in an economy through: protecting the public interest as advocates of good corporate governance and consistent global standards; promoting and developing knowledge, skills and competence through 13

20 education, certification and CPD programmes ; through adoption and implementation of international Professional and ethical standards they set the bar for behaviour and practice of accountancy professionals, enhancing public trust ; AND assisting with sound public policy guidance and advice on accountancy related topics by acting as a centre of knowledge and expertise. 13

It is my heartfelt belief that accountancy professionals, people like you and me, can tackle corruption and we can do this because our radar is always tuned into risk and due diligence.

21 It is my heartfelt belief that accountancy professionals, people like you and me, can tackle corruption and we can do this because our radar is always tuned into risk and due diligence. And as a former President of the ACCA I can tell you that the ACCA believes that excellent public sector financial management is a vital tool in reducing corruption and the harm that it causes to society and that this is essential to the development of economies. There is a saying that there are only two things are certain in life one is death and the other is taxes- well I believe that there is a third corruption. As I have already said corruption exits in all countries and in all economies we will never eliminate it completely- the best we can ever hope for is to ensure that we reduce it to its lowest possible level - and in doing so we will benefit society as a whole. The money we prevent from being diverted to criminals, including corrupt politicians and officials, will enable the better use of the resources we have to provide improved infrastructure, healthcare, education and employment opportunities for our children and families and to ensure we establish and promote just and lawful societies that protects all our citizens. 14

22 The finance professional working in the Public Sector, and indeed the Private Sector, has an important role to play in ensuring that the services we deliver and the economies we support, thrive and that corruption and corrupt practices are not tolerated. It therefore becomes part of the finance professional s role to untangle and simplify funding and resourcing plans so that stakeholders can clearly understanding the issues as finance and money are so often at the heart of business strategy, innovation and growth. And so, the role of finance talent management is crucial in ensuring the we are able to get the best from the right people. 14

23 That means we need to grow financial expertise and capacity and retain skills within the public sector. Without financial expertise, it is difficult for countries to develop the effective public financial management that will support growth and reduce corruption. An absence or lack of accountants also makes it difficult for governments to implement effective financial reporting based on accounting standards, as only technically trained staff can understand and apply the standards and without these standards the opportunity for corrupt practices to flourish is greater. To manage risk, and to manage opportunity, individuals need professional training and development. It s a simple thing to say, but this is a massive policy area we need to address it globally. To be an excellent leaders and managers, my experience tells me that individuals need a magical mix of natural aptitude and talent, great interpersonal skills, coupled with training, development and loads of commitment. 15

24 Ladies and gentlemen, if we are to serious reduce the levels of corruption that I highlighted in the Transparency International Corruption Index then we can no longer continue with: business as usual in the public sector. Business as unusual is increasingly the norm, were our work, whether in the public sector or private sector, in a large or small organisation, is prey to instability and risk. But it is also a place where there is opportunity and where innovation can flourish. I have little doubt that most of us here have a shared belief in the value of excellent public sector financial management. And I hope that we can all agree, accountability and transparency are crucial to public sector finances. But how is this achieved? It is achieved through building financial capacity and expertise in the public sector. And these are needed to ensure openness and trust in public sector finances. It is public sector finance professionals the likes of us here today that play the important role of custodians of the reputation of this essential sector. As many of you are well aware, the public sector has felt the full effects of the global economic crisis and continues to do so even as the private sector shows sign of recovery. Ensuring that the public sector can continue to deliver within tight budgets makes it increasingly important to ensure that corruption is eliminated and resources are wisely used so need to have more fully qualified accountants working in the sector, as well as ensuring that more non accountants have an enhanced financial awareness to support them in their decision making and use of precious resources. Simply put, there is a critical need to build financial capacity and expertise in the public sector. This capacity and expertise is needed to ensure openness, trust and accountability in public sector finances. We should never forget the crucial role we play as custodians of the reputation of this essential sector. 15

25 And that ladies and gentlemen, concludes my presentation. I hope you have found it a helpful introduction to the panel discuss and and speaking of introductions now let me introduce you to the other members of the discussion panel! The Panel Chair: Anthony Harbinson, FCCA and former ACCA President Panellists: Vickson Ncube, chief executive, Pan African Federation of Accountants (PAFA) Stephen Emasu Public Financial Management Expert, and Chair, ACCA Public Sector Global Forum 16

February 2017 THE ACCOUNTANCY PROFESSION PLAYING A POSITIVE ROLE IN TACKLING CORRUPTION

February 2017 THE ACCOUNTANCY PROFESSION PLAYING A POSITIVE ROLE IN TACKLING CORRUPTION Exposure Drafts, Consultation Papers, and other IFAC publications are published by, and copyright of, IFAC. IFAC