1 The Future of Financial Management in the Public Service Rocky J. Dwyer, PhD, CMA

2 Agenda Governance – why is it important; Governance – why is it important; Passive Compliance vis-à-vis Passive Compliance vis-à-vis Great Governance; and Practical Considerations. Practical Considerations.

3 Great Governance Honesty Honesty Competence Competence Commitment Commitment Courage Courage Oversight Laws & Regulations Business Practices & Ethics Information & Transparency Risk Monitoring Foundation & Dynamics of a Great Governance Process Communication

4 Great Governance Great governance is a matter of balance. However, an increase in citizens’ & stakeholders’ satisfaction helps to justify its costs. Great governance is a matter of balance. However, an increase in citizens’ & stakeholders’ satisfaction helps to justify its costs. Great governance is a concept applicable to the public and corporate world alike. Great governance is a concept applicable to the public and corporate world alike. Great Governance is based on principles rather than rules. Great Governance is based on principles rather than rules.

5 Passive Compliance vs Great Governance Great Governance requires more than just a focus on Passive Compliance with laws and regulations Work culture based on sound business practices & ethics. Work culture based on sound business practices & ethics. Strong emphasis on results management. Strong emphasis on results management. Risk management is “top of mind”. Risk management is “top of mind”. Less adherence to the “process” of risk management & monitoring and more attention to the “doing”. Less adherence to the “process” of risk management & monitoring and more attention to the “doing”.

6 Interested Parties Public – the taxpayer; Public – the taxpayer; Stakeholders - Parliament, MPs, OAG; Stakeholders - Parliament, MPs, OAG; Public Service Employees; Public Service Employees; Financial Markets; Financial Markets; Industry; and Industry; and Other Governments. Other Governments.

7 Why is it Important? Comply with legal and fiduciary requirements, and a continued movement to increase Accountability to the public and stakeholders. Other reasons: Attract and Retain Great People; Attract and Retain Great People; Fiscal Soundness & Public Trust; Fiscal Soundness & Public Trust; Earn Stakeholder Support; and Earn Stakeholder Support; and Competitive Advantages. Competitive Advantages.

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

9 What is Transparency of Information There are the qualitative attributes that define “transparency” in the financial field: Understandable: It is clear and uses language clear to the target audience. Understandable: It is clear and uses language clear to 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; and Prudent and conservative; and Complete. Complete. Comparable: between time periods and among similar entities. Comparable: between time periods and among similar entities.

10 Challenges Change and uncertainty are constants; Change and uncertainty are constants; Increased public demand for greater transparency; Increased public demand for greater transparency; Better educated and discerning citizens; Better educated and discerning citizens; Globalization and technological advances; and Globalization and technological advances; and Operating efficiency. Operating efficiency.

11 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.

12 Practical Considerations Every organization’s journey is different. Every organization’s journey is different. You must build off “your” current state in all areas of management. You must build off “your” current state in all areas of management. Focus on great execution of tasks and not just following the “process”. Focus on great execution of tasks and not just 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; and Measure results; and Give constant feedback. – praise in public and criticize in private. Give constant feedback. – praise in public and criticize in private.

13 A Common Framework will Facilitate Usage Need a common language. Need a common language. Need criteria against which to benchmark. Need criteria against which to benchmark. Familiarity of concepts is useful Familiarity of concepts is useful Application guidance is critical. piece. Application guidance is critical. piece. Issuance of framework is only the beginning. Issuance of framework is only the beginning.

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