Accountability and good governance in the public sector Günther Witthöft Retired government auditor Former Corporate Executive Manager in the Office of the Auditor-General Much has already been written and said about the need for improved accountability and good governance. This is not only true for the private sector but more importantly also for the public sector. The demands for greater accountability and good governance in the public sector are clearly reflected in legislation such as the Constitution of the Republic of South Africa, 1996 as well as the Public Finance Management Act, 1999. However, it frequently becomes apparent that these concepts and the measures needed to support the practical application thereof are not always adequately understood or fully appreciated by especially the senior management of public sector institutions. This inevitably impacts on performance issues such as service delivery and value for money, both of which are becoming increasingly crucial to government and the general public. ACCOUNTABILITY Accountability in its simplest form can be described as the requirement to give an account of how a responsibility that has been conferred or delegated to some person or institution has been carried out or fulfilled by that person or institution. It therefore quickly becomes apparent why accountability is usually a central problem for governments which are, or claim to be, democratic. The activities of a democratically elected government and all its employees must indeed follow the will of the people to whom they are ultimately responsible. Furthermore, performance soon also becomes an issue for government, particularly where major challenges have to be met with relatively limited resources. Generally, as the public becomes more educated, they tend to also become more aware, more demanding, less understanding and less willing to accept average performance from government. In these circumstances it becomes increasingly clear that sufficient attention must be paid to accountability and performance issues at every level of government. In order to appropriately protect and promote the public interest, it is also important that the means available to the people as the masters of society are indeed such that they can maintain their supremacy. While the fundamental requirements of openness and public accountability may even be embodied in the Constitution and other legislation, the forms and standards of accountability underpinning these means of access to government and its activities have not remained static. They therefore need to be regularly scrutinised and revised to ensure their relevance and effectiveness. To do so, it is always necessary to consider the following four standard questions which are central to accountability: • • • •

Which person is considered accountable? To whom is that person accountable? In terms of what standards or values is that person accountable? By what means is that person held accountable?

Depending on the answers to these questions, there are also various types of accountability that need to be considered. Besides the obvious need to differentiate between political and administrative accountability, it is also possible to distinguish among other kinds of accountability such as traditional, managerial, programme and

process accountability. Each of these types of accountability has its own peculiar focus and this consequently determines the standards in terms of which it is evaluated. Political accountability Political accountability by its very nature relates to the accountability of elected officebearers and the policies emanating from them as political role-players in a democratic society. Although this type of accountability raises many issues and is by no means less important than administrative accountability, suffice it to say that this is where ultimate accountability for all facets of government activity rests. The fact that the political leadership at the various levels of government is accountable to Parliament and the other legislative bodies, and therefore in the final analysis to the electorate, is also clearly spelt out in the Constitution. Consequently, it is of crucial importance for political leaders to constantly verify that public sector institutions that are responsible for carrying out the policies of government do so in a manner that ensures effective service delivery and proper value for money. Administrative accountability This brings us to administrative accountability where the focus is on the activities of government employees. The public nature of their employment and the goals that have been set for them to achieve, in effect prescribes the behaviour of these employees and also circumscribes their choices. While individual opinions and the approaches followed in achieving set goals may vary from one person to the next, these employees all operate within a legislative framework in terms of which they will also be evaluated and held accountable. They are certainly not a law unto themselves and must act within the bounds of their authority or face dire consequences. This is indeed the nub of the whole issue of public accountability and must be understood by each and every employee. It is the task of accounting officers and their senior management to ensure that this responsibility is properly understood, not only by themselves but also by all other employees. When considering the different types of administrative accountability, the most common kind is of course known as traditional accountability. This focuses on the regularity of financial transactions and the faithful compliance with legal requirements and administrative policies. While accountability for the discharge of a particular function is inevitably owed to a superior in the public sector institution, a political head and especially the legislature, the courts of law may also inquire into the manner in which an employee exercised his or her duties. The standards, by which the official actions of that employee are judged, will always be those of legality and regularity. In other words, did the employee act within the provisions of the law and regulations governing the relevant public sector institution, and did that employee have the authority to perform that act. Another kind of administrative accountability relates to the task of management and is therefore referred to as managerial accountability. This concerns itself with matters of performance and more specifically economy and efficiency in the use of public funds and property, as well as human and other resources. This kind of accountability indeed recognises that government employees are responsible for more than just compliance and the regularity of their actions. Its focus is on the input side and suggests the need for constant concern in order to avoid waste and unnecessary expenditure and to promote the judicious use of public resources. An ongoing comparison of costs against output is therefore necessary to ensure that set goals and the benefits to be derived from them are achieved as cost-effectively as

possible. To do so, appropriate, reliable and timely management information is absolutely essential. A third kind of administrative accountability is that of programme accountability. In view of the fact that this type of accountability is concerned with the results of government operations, it is the responsibility of each public sector institution as well as every employee in that institution to ensure that all assigned programmes are effectively achieved. Although external bodies such the legislature and its specialised committees may inquire into what these programmes accomplish in practice, it is usually the accounting officer and the senior management, as the managers of the programmes, that are required to account for what has been achieved. Various means are available to establish programme accountability and these include comprehensive or performance audits, programme evaluations, cost-benefit and productivity analyses as well as the analysis of economic and social impact of programmes. The last type of accountability that can now be considered briefly is referred to as process accountability. As its name implies, it emphasises procedures and methods of operation and therefore focuses on the manner in which inputs are converted into outputs. It is particularly relevant where goals may not be measurable directly and where it is more useful and appropriate to judge performance in terms of the process that was agreed upon by both the service provider as well as the recipients of the specified goods or services. Not only the programme administrator but also the provider of funds or the recipient of goods and services is consequently subject to scrutiny in this instance. GOOD GOVERNANCE Having considered what accountability means in practice, attention must of necessity now be directed to the subject of good governance. Although closely associated with and indeed embracing the fundamental principles of accountability and responsibility, good governance goes even wider and also hinges on the cardinal values of fairness and transparency. The need to go beyond the long established principles of accountability and responsibility arose as a result of dramatic corporate failures and the consequent loss of confidence and trust that society placed in corporations. The need to radically improve corporate governance and restore the confidence of stakeholders and society was therefore experienced mainly in the private sector. However, it is quite obvious that this need must also exist in the public sector where vast amounts of taxpayers’ funds are managed and spent. It is important to note that good governance principles were specifically developed to protect all stakeholders and society against the excessive concentration of power in the hands of management. There is moreover now general agreement worldwide that good governance is based on the four crucial values of fairness, accountability, responsibility and transparency. In the context of the public sector, fairness by its very nature implies that in making any decisions, public sector institutions must give due consideration to the interests of all their stakeholders and society. Accountability of course refers to the ability of all public sector employees to properly explain and justify their actions. Similarly, responsibility can be described as the obligation of management and all employees to take good care of the public assets at their disposal as well as of all the funds and interests of their stakeholders. Lastly, transparency relates to the ease with which an outsider can gain a reliable view of the actions and decisions of public sector institutions. This implies proper disclosure of not only financial performance but also of social and environmental performance.

A truly inclusive system of good governance only emerges when there is proper adherence to these four cardinal values by management and all employees. Good Governance Measures Having briefly considered the concepts and principles of accountability and good governance, the question now arises as to how these aspects are effectively applied in practice. This is very important as it does not really help much to have the basic systems and structures supporting these concepts and principles in place and then not adhering to the associated cardinal values in any material or significant way. It is therefore crucial that the mechanisms put in place to ensure accountability and good governance, are functioning effectively. This requires a proper appreciation and understanding of the purpose and functioning of these mechanisms by all employees. It is indeed only possible to attain good governance when management and all employees have a shared vision of the aim, strategies and values of the public sector institution in which they work as well as how their actions, attitudes and performance will be monitored and evaluated on an ongoing basis. Once again, the absolute need for systems and structures that provide appropriate, reliable and timely management information simply cannot be overemphasized. This brings us to the various measures or mechanisms that are recommended to ensure that accountability and good governance are not compromised in any way. Bearing in mind the basic reason for establishing the principles of accountability and good governance, the purpose of all measures or mechanisms must surely be to identify and manage the fundamental risks faced by any public sector institution. This is important because the risks any public sector institution faces can affect all its stakeholders, including its political leadership, its management, its employees, and above all the public it serves. It can also affect its own resources and the bodies and institutions it deals with as well as the community and environment it operates in. Although risks as such may have a negative connotation, the uncertainty they imply must be seen as providing opportunities that can have positive outcomes. To ensure good governance, the risk management process established within an institution must therefore be understood and supported by everyone, particularly in terms of its objectives and benefits. Risk Management While the risk profile of public sector institutions is generally becoming more complex through the greater use of technology and outsourcing arrangements, the possible risks can usually be categorised by their nature and source. The most important risk facing any public sector institution is the possibility of having an excessive concentration of power in the hands of management. The need to always ensure appropriate checks and balances are in place, is therefore quite obvious. Similarly, and with a view to addressing probable financial and operational risks and to avoid any conflict of interest, the need inevitably arises to establish a sound control environment as well as to clearly define lines of responsibility, accountability and reporting. Contrary to the private sector where one can do anything that the law does not prohibit, public sector institutions can really only do what the law allows them to do. This raises the possibility of legal risks which must of necessity also be addressed by the development of appropriate policies and mechanisms to reduce these risks. As information technology is generally regarded as an integral part of the strategy of most public sector institutions, the specific risks that are associated with these technological developments must also be quantified and appropriately managed.

Similarly, as most public sector institutions require a considerable workforce to deliver goods and services, another potential risk arises because of the available human resources not being optimally managed or utilised. Many risks indeed flow from people issues such as employment equity, managing diversity and HIV/AIDS and these must of necessity be properly identified and managed to ensure operational sustainability. Although by no means the only remaining category of risks, the governance of ethical risks is perhaps the most challenging of all. This is especially relevant as the four cardinal values on which good governance is based, are ethical in nature. These risks arise because of the strong possibility of unethical behaviour and the considerable damage this may cause the integrity and reputation, not only of the specific employees concerned, but also of the public sector institution itself. By virtue of the nature of the services rendered by public sector institutions, there is undoubtedly a crucial need to manage the ethical risks and to constantly demonstrate that unethical behaviour will simply not be tolerated. CONCLUSION Although the subject of accountability and good governance in the public sector has by no means been exhaustively dealt with in the foregoing, its importance to at least everyone who is employed in this environment simply cannot be ignored. The level of success achieved by any public sector institution will in the final analysis depend largely on the degree to which the relevant principles have been effectively applied in practice and to serve the public interest. In view of the impact this success, or the lack thereof, will undoubtedly have on service delivery and value for money, it should be quite apparent that accounting officers and their senior management must invest time and money in creating a proper understanding of the need to properly apply the principles of accountability and good governance at every level of the organisation and throughout all public sector institutions. This training need does not necessarily imply that an elaborate set of prescripts must be developed and checked for compliance. It does, however, always require that appropriate, reliable and timely management information is available for evaluation purposes. In essence it is really about monitoring and ensuring that what everyone does in the institution is right, both morally and in terms of the law. For accounting officers themselves as well as for their senior management, this means walking the talk and always setting the example!