‘Dysfunctional’ public sector could limit private sector growth
View(s):With the onus for a country’s growth typically put on its private sector, what is “often ignored” is the public sector, and the potential for a “dysfunctional” public sector to limit private sector growth, said Fayez Choudhury, the Chief Executive Officer of the International Federation of Accountants (IFAC).
Elaborating further, he added that “increasingly the public sector also has to create an environment where they are transparent, where they manage citizens’ finances transparently, reliably and with accountability and create a stable macro-economic environment where corporations can flourish”.
Mr. Choudhury made these comments at the recently concluded Institute of Chartered Accountants of Sri Lanka-organised Chief Financial Officer (CFO) forum which highlighted the challenging demands placed on today’s CFOs. Additionally, Mr. Choudhury also signalled that CFOs were often “really stretched because there are two competing demands. One as stewards and one as business partners. (You) are stewards because you support effective governance and compliance and control and business ethics. You are custodians of the reputation of the financial integrity of an organisation”. He also opined that the “old role of the CFO was as the number cruncher. Keep the books, make sure that the financial transactions are properly processed, do the right projections, and we are happy. But the new role puts the premium on issues such as ethical leadership and business integrity.
Many people say that the breakdown in trust is probably the single most damaging thing for a company’s long term success. I don’t know how things are for listed companies in the Sri Lankan context, but we all know in the major capital markets, it’s a major issue when there’s such a focus on quarterly earnings, the bottom line, bonus pay and incentives for the staff.
How do you balance short-term concerns and pressures with the long-term vision, success, and managed, sustainable growth? How do you balance fulfilling the stewardship responsibilities and sharing the strategic leadership with CEO and senior management? There is a balancing act there. Very often, in my experience, the CFO is actually looked at as a more reliable source than a CEO. People look to them as the stewards of the organization. People look to them for what they are projecting in terms of the financial situation of an organization. And once the CFO loses that trust with the stakeholders, that CFO becomes far less effective”.
Meanwhile, also addressing the CFO Forum, Rob Ward, the Head of Leadership and Advocacy of the Institute of Chartered Accountants of Australia, stated:
“I’ve had the great privilege of being a managing director, an auditor, a chief financial officer, managing partner. We all share a broad experience and I’d like to draw upon that and that to give you a secret to success. All organisations that succeed, every organisation that I see succeed, has a team of three people that run it. The Chair of the Board charged with governance. The second person in the partnership is the CEO. And person No.3 is ‘Another’. The CEO needs ‘Another’, and so does the Chair. Who is that ‘Another’ in your organisation? Just think about that for a second. That really is Fayez’s point, Are you ‘Another’? If you’re not, do you want to be? Stewardship is part of that role, because it’s part of what you do, transparency that brings to life the dreams of the organisation that the CEO is probably trying to bring to life. They can’t do it without one another”.(JH)