Challenge, change and opportunity - a 40-year perspective
In my 40-year career as a Chartered Accountant I have been part of, and observed, significant shifts in the profession.
Once a byword for integrity and honesty, accountancy and the audit profession have been placed under significant professional and public scrutiny. Whilst action has been taken there continues to be a crisis of trust and reputational damage that isn’t going away.
That’s why Audit Scotland’s Audit Quality Framework, published before the recent wave of corporate failure, puts the highest levels of expectation on public sector auditors appointed by the Accounts Commission and the Auditor General, with a focus on quality.
When I began my professional CA career it was seen as standard that the public sector would shift and change practice in reaction to the private sector. Now, in the last ten years, that reality has shifted, with elements of practice in the public sector becoming standard in the private sector. The principles of public audit are: auditor independence; wider-scope audit, which reaches beyond the financial statements into judgements on governance, financial sustainability and performance, and finally public reporting of audit findings and recommendations. There is no room for complacency, but there is clear support for the strengths of this model.
With the impact of COVID-19 on the economy, devolution and new financial powers in Scotland, the role of CAs is more important than ever. A strong economy is vital to public finances, and to provide jobs and help rebalance demand across the public services on which we all depend. The role of CAs in supporting councils and national governments in finding routes to support economic recovery is critical.
Beyond this the opportunities for the accountancy profession, and for ICAS, are considerable within the context of the unprecedented shift of financial powers for Scotland. It underlines the vital role CAs across the public sector have. But there is a question of how best to engage and maximise the professional opportunities this presents.
With the impact of COVID-19 on the economy, devolution and new financial powers in Scotland, the role of CAs is more important than ever.
Across local government the role and place of CAs has shifted. It seems there are fewer financial professionals, including CAs, involved in senior roles in the public sector. Over the last several years this is mirrored by a decreasing number of Chief Executives in local government coming from a finance background. An accountancy qualification was once seen as a route into the top of the public sector profession.
Council Chief Executives now come from a range of backgrounds, not principally law and accountancy. In many ways this has broadened and enriched public sector career paths, but it has made the role of local government Chief Financial Officers (CFOs) ever more critical. Senior officers and councillors are increasingly reliant for strategic decisions on the knowledge and expertise of their CFOs. Senior financial officers are there to advise, inform and, where needed, to say no.
This has happened at a time when local government finances are not simply under pressure, but are both increasingly complex and must be more transparent.
Two words sum up the shift I’ve witnessed in the profession, particularly in local government – complexity and change.
A standout example of this in the introduction of Integration Joint Boards in Scotland, set up to lead and manage the integration of NHS healthcare and council-provided social care.
But there is much, much more. Over the last decade many public services are locked and linked together. The landscape councils and their partners are operating in gets ever more complex. There’s the impact of COVID-19 and Brexit, a lack of funding certainty, increasing demand for services because of changing demographics, a tightening balance between delivering on national priorities and managing local priorities, as well as a significant shift towards community involvement in decision making.
I have no doubt that Chartered Accountants will be central to the direction and the recovery and renewal of both the economy and our public services.
The Accounts Commission has repeatedly emphasised how vital longer-term financial planning is, supporting difficult policy choices and the delivery of services in uncertain times. This is made all the more challenging because of uncertainties around the level of Scottish Government funding in the medium-term. Layered above this, with greater devolution of financial powers, Scottish budgets are subject to much more uncertainty and volatility.
It's a complex, unsettling and uncertain mix, at a time when Scottish councils also need to save money, deliver more and make that significant change and transformation in service delivery.
These challenges bring together many of the key messages in the Accounts Commission’s reports, messages that are now even more relevant than before, including the management of financial resources and thoughtful redesign of services from a long-term perspective. It also means engaging and working with communities to share outcomes and priorities. Perhaps most important of all in driving significant change successfully will be clear coherent leadership from officers and politicians working together.
However, COVID-19 is the greatest challenge public services has seen in decades. The impact is only just beginning to be apparent but, together with the impact of Brexit, it will shape, challenge and change councils and all public services across Scotland. As the country seeks to recover from the pandemic, the Commission’s role, and therefore the role of auditors, will be more important than ever.
The challenges facing Scotland’s public services are challenges that demand the experience and determination of a multitude of professional skills. I have no doubt that Chartered Accountants will be central to the direction and the recovery and renewal of both the economy and our public services.
Graham Sharp's biography:
Graham Sharp originally trained as a Chartered Accountant with Thomson McLintock (now KPMG) in Glasgow. He currently lives in East Dunbartonshire.
He possesses a wealth of private sector experience drawn from senior positions in the financial sector. He has had several roles advising and serving on boards, mainly in the City of London where he was a main board director of the leading merchant bank, Samuel Montagu.
After building a commercial property investment company, which he co-founded, he turned to academic work, carrying out research at Oxford in corporate strategy focusing on the financial services sector. He returned to corporate finance advising companies based in Asia on expansion in Europe.
He then moved into the public sector, serving on several Commissions.
Key public sector roles
- Panel member, Competition Commission/CMA (from 2013)
- Chair, National Lottery Commission (from 2013)
- Commissioner, Gambling Commission (from 2012)
- Member, Accounts Commission for Scotland (from 2009)