Governments can only be properly held to account if they provide clear information about the performance of public services, explain decision making; and justify their conduct and decisions. This requires transparency of decision making and openness to scrutiny by the public.
The standardisation of public sector accounting practices has been part of Nepal’s reform agenda since 2009, but the big challenge was how to develop the capacity of government accountants, increase their engagement, and streamline and harmonise the implementation of new standards and policies across a country with over 4,000 public sector bodies in a sustainable way.
What we did
Dr Pawan Adhikari has been conducting theoretical and empirical research on public sector accounting and accountability in Nepal since 2001. He has analysed and compared practices in Nepal with those operating in Russia, Norway and Sri Lanka. This work showed the reforms adopted in Nepal have not always functioned as intended. He was also able to highlight the benefits of potential technical improvements. This inspired the government to engage with his research to improve the implementation of reforms.
Dr Adhikari’s research and his involvement in reform efforts, underpinned reform of Nepalese public sector accounting and accountability in three key areas:
- Development and implementation of Nepal’s first accounting manual.
Dr Adhikari was consulted throughout the development of the manual. Once piloted, the manual was mandated across 4,000 public sector bodies. This promoted consistency and enabled best practice to be identified and developed a policy of capacity building of government accountants.
- Standardisation of accounting through the implementation of Nepal Public Sector Accounting Standard (NPSAS).
Dr Adhikari’s research highlighted international trends in public sector accounting and identified national requirements and the need for an incremental approach to building the standard. This included a pilot in two ministries to enable analysis of the challenges experienced in the process and to arrange the required resources to extend the standard to the remaining ministries. All 42 central level agencies now prepare their consolidated financial statements using the forms recommended in the NPSAS.
- Capacity building to support the implementation of the manual and standard.
Dr Adhikari helped identify the barriers to change and building the competences of government accountants. The Financial Comptroller General Office used his research on scheduling to develop policies on capacity building. This was then rolled out through training programmes, facilitated jointly by the pilot companies and the Financial Comptroller General Office, covering the development of new accounting forms and systems based on the accounting manual.
What we changed
The reforms influenced by Dr Adhikari’s research have strengthened public accountability in Nepal in the following ways:
- The enforcement of the manual’s recommendations has promoted consistency in accounting practices, helping to ensure that public bodies can be held to account for the use of resources entrusted to them.
- The standardisation of accounting practices has increased international trust in public sector accounting. Nepal’s Financial Comptroller General Office reports that international investors and development partners have started using information generated by the government rather than pursuing their own accounting system, which was previously an established practice.
- Improved training and competence building has helped overcome reluctance on the part of Government accountants to embrace change.
A blog Adoption of international public sector accounting standards in emerging economies has been produced by Dr Pawan Adhikari and others.