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Understanding the value and contribution of a professional accountant need of the hour

Understanding the value and contribution of a professional accountant need of the hour

Interview with Syed Shariq Waqar — an analyst

Profile:
Syed Shariq Waqar is a Fellow Member of the Institute of Cost and Management Accountants of Pakistan and has got 20 years of diversified professional experience, both at national and international level in medium and large scale organizations.

PAGE interviewed Syed Shariq Waqar about the need of Professional Accountants in Public Sector. The excerpts are as follows:

‘Professionalism’ is a commonly used word nowadays in every field of life whether it is intellectual work, commercial jobs, art and culture, life-saving jobs, education, sports etc. Every field demands technical knowhow and pre-job training. Public sector or government sector is where it is needed quite drastically since day-to-day advancement and more and more technological advancement in all aspects of life has not only made life easier but also made it more competitive and challenging.

Laws and rules are made for people; people are not made for rules. We are all aware of this fact that in government sector, systems are too much time consuming and cause problems to common people. These time consuming systems are an extra cost and have extra burden on government exchequer. Even after 71 years of independence, we have very less contribution of professional accountants in Pakistan. Old traditional methods such as huge paper-based transactions’ movement of undue paper work cause only delays and delays are the reason for high cost.

Nowadays it is better having ERP (Enterprise Resource Planning) system as a tool for growth. Unfortunately, ERPs are not prevalent in public sector and the major reason for this is the retaliation by old and unskilled staff and lack of youth along with experienced and qualified professional accountants. The main objectives of public sector accounting are: To determine the legitimacy of transactions and their compliance with the statues and accepted norms. Public sector disbursement should accord with the provisions of the appropriation Acts and Financial Regulations.

There is difference between private sector accounting and the government sector accounting. The main reason for this difference is the environment of the accounting system. In the government sector environment, public sector entities have different goals, as opposed to the private sector entities’ one main goal of gaining profit. Also, in government accounting, the entity has the responsibility of fiscal accountability, which is demonstration of compliance in the use of resources in a budgetary context. In the private sector, the budget is a tool in financial planning and it isn’t mandatory to comply with it. Government sector accounting refers to the field of accounting that specifically finds application in the public sector or government.

A special field of accounting exists because: (1) The objectives to which accounting reports to differ significantly from that for which generally accepted accounting practice has been developed for in the private (business) sector; (2) The usage of the results of accounting processes of government differs significantly from the use thereof in the private sector.

 

An exception exists on the above-mentioned differences in the case of public utility businesses (for example electricity services) that may be intended to produce a net income or profit, but a significant debate exists over whether there should be such an exception. Nationalization includes, amongst others, the argument that entities should be either private or public, and that the objectives of public entities should differ significantly from that of private entities. In other words, is the generation and reticulation of electricity with the objective to generate a profit in the public interest or not? And if it is the best way, shouldn’t it then be completely private instead of having access to public funds and monopolies?

Governmental accounting standards are currently being dominated by the accounting standards (internationally sometimes referred to as IFRS) originally designed for the private sector. The so-called Generally Recognized Accounting Practices (GRAP) that are being enforced in the public sector of countries such as South Africa, one of the front-runners in this regard is based on the Generally Accepted Accounting Practices originally developed for the private sector.

The above and common sense raises the question of whether this is the best solution. It is of course cheaper and it is alleged that the history of separate development of accounting practices for government has not been successful. Even at the onset of the current fiscal crisis in Europe and other parts of the world it was argued authoritatively that the sometimes inapplicable accounting practices of the private sector being used, have contributed to the origination of, and belated reaction to, the fiscal crisis.

Now for developing countries especially South Asian countries, there is a need to develop a system through which only qualified accounts professional can be hired for key accounts and finance post. Pakistan has two core institutions like Institute of Cost and Management Accounts of Pakistan (ICMAP) and Institute of Chartered Accountants of Pakistan (ICAP), which have already produced approximately 20,000 qualified professionals. We have more than 60,000 registered private and public limited companies along with giant public sector. It is need of the hour to comprehend the value of a professional accountant and the contribution made by a professional accountant vis-à-vis others.

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