As Governments Teeter Financially - Government Auditors Can Help

Richard Chambers, CIA, CGAP, CCSA, shares his personal reflections and insights on the internal audit profession.

The global financial crisis has played out over the past two years like a “slow motion” train wreck. Following the spectacular implosions of iconic financial services organizations in 2008, dominoes have continued to fall in predictable order. As the world slid deeper into financial crisis, the plight of the world’s governments was frightening. Tax and other revenues plummeted while the demands for social and related services rose. The results have been spiraling deficits and crushing levels of debt.

As elected officials and managers of government agencies around the world struggle to identify solutions, they should not overlook one valuable resource that almost all of them have at their disposal — the legions of professional government auditors. As I have noted before, government auditors are often among the “unsung heroes” of our profession. They often toil in anonymity, and their work only tends to generate notoriety when it is critical of government operations. In reality, however, hundreds of thousands of government auditors around the world go about their work routinely identifying opportunities for enhancing government operations.

I recently spoke before the annual conference of The International Consortium on Government Financial Management on potential roles for government auditors in mitigating the impact of the financial crisis on the world’s governments. I identified five ways that I believe government auditors can add value for countries whose governments are facing extraordinary impacts:

  1. Providing assurance on the accuracy of financial reporting. As governments seek greater access to capital markets to fund burgeoning debt, the accuracy of financial reporting will become even more critical.
  2. Providing assurance that government resources are being used efficiently and effectively. So-called operational auditing is the “bread and butter” for many government audit organizations. Efficiency and effectiveness have never been more critical to governments than today.
  3. Fostering greater accountability by government officials. The vast majority of government officials are dedicated and effective public servants. However, accountability over the effective use of scarce resources is vital as taxpayers are being asked to bolster teetering government agencies.
  4. Identifying opportunities for cost reduction and containment. Governments are making difficult choices on which services to continue as revenues falter. Government auditors are uniquely positioned to offer insights and perspectives to perplexed decision makers.
  5. Fostering greater public trust when the effectiveness of governments is increasingly being questioned.

As one who spent the vast majority of my career in the public sector, I have long believed that government auditors add the most value during two opposing scenarios: (1) when government spending is expanding rapidly, and (2) when government revenues and spending are under pressure to contract. We are clearly operating in the later scenario. Thankfully, government auditors are there to help.
 

Posted on Jun 6, 2011 by Richard Chambers

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