• Tuesday, April 16, 2024
businessday logo

BusinessDay

Why finance professionals should manage public sector risks – ACCA

Why finance professionals should manage public sector risks – ACCA

Presently, both public and private sectors are facing challenges arising from a bad economy and finance professionals should be the ones taking the lead in managing the risks in those sectors, Association of Chartered Certified Accountants (ACCA) has said.

The association explained that top risks facing public sector organisations are financial challenges and an inability to meet changing demands and expectations of the public for services.

It cited a global survey of finance professionals and others working in the public sector which, it said, showed a key part of the global economy wrestling with significant risks, while not always having the tools to cope.

“The research, drawing on responses from those working in a range of roles across the public sector – finance, risk, audit and service delivery, found that, for their own organisations, they were worried about funding for public services and the ability to meet the evolving demands of delivering services, as well as finding the people with the right talent and skills,” the association said.

ACCA disclosed that in its survey, five risks were highlighted as the most significant facing respondents’ organizations and the degrees were presented in percentages. These include financial challenges, 49 26 percent; meeting changing demands and expectations for services, 35 26 percent; talent and skills deficit, 35 26 percent; poor organisational culture, 28 26 percent, and ineffective leadership, 26 percent.

Read also: ACCA, others canvass curriculum update for improved financial reporting

The association’s new guide, Calculated Risk, which is a response to the challenges facing the public sector, makes the case for finance professionals taking a leading role in the risk management process.

The guide notes that, despite the skills finance professionals possess, the survey showed that many public sector organisations are not making effective use of their capabilities in risk management, citing about 55 percent of respondents who work in the finance function saying they were regularly involved in identifying and reviewing relevant operational risks.

Read also: ACCA to shape future financial leaders with competition

‘Some public sector organisations are neglecting the valuable insight of staff working on the frontline. Identifying risk is a two-way process: organisations need to be made aware of any risks that are not already formally identified and those working in services are often in the best place to identify such risks,” Mark Johnson, ACCA senior subject manager for the public sector, said.

Johnson added that using the knowledge and expertise of staff working in each part of an organisation to build up a profile of risk is critical for a comprehensive understanding of risk.

He said that in an era where the outlook for public finances is challenging the public sector needs to move away from business as usual if it is to successfully negotiate the significant risks it faces. “The finance function is well-placed to recognise risks across the organisation and support leaders in addressing these risks,” he said.

Continuing, he said, “Ultimately, resilience in an organisation is built by developing skills and capabilities. Public sector finance professionals who understand the threats and opportunities posed by risk can help build more resilient public services.”