HIGHLIGHTS

Professional accountants – the future:

50 drivers of
change in the
public sector
About ACCA Part of our ground-
ACCA (the Association of Chartered Certified Accountants)
breaking Professional
is the global body for professional accountants. It offers accountants – the future
business-relevant, first-choice qualifications to people of
application, ability and ambition around the world who seek series, this is the first
a rewarding career in accountancy, finance and management.
report to focus exclusively
ACCA has 188,000 members and 480,000 students in 178 on identifying the 50
countries – 64,000 currently working within the public sector.
ACCA supports all its members and students to develop drivers of change that
successful careers in accounting and business, with the skills are expected to have an
required by employers. ACCA works through a network of
100 offices and centres and more than 7,110 Approved impact on the public
Employers worldwide, who provide high standards of
employee learning and development. Through its public sector and the likely
interest remit, ACCA promotes appropriate regulation of timing of these, and
accounting and conducts relevant research to ensure
accountancy continues to grow in reputation and influence. assess how professional
Founded in 1904, ACCA has consistently held unique core
accountants will need to
values: opportunity, diversity, innovation, integrity and continue to play a pivotal
accountability. It believes that accountants bring value to
economies in all stages of development and seeks to role in the decade ahead.
develop capacity in the profession and encourage the
adoption of global standards. ACCA’s core values are aligned
to the needs of employers in all sectors and it ensures that,
through its range of qualifications, it prepares accountants
for business. ACCA seeks to open up the profession to
people of all backgrounds and remove artificial barriers,
innovating its qualifications and delivery to meet the diverse
needs of trainee professionals and their employers.

In June 2016 ACCA formed a strategic alliance with

Chartered Accountants Australia and New Zealand (CA ANZ).
The alliance represents the voice of 788,000 members and
future professional accountants around the world, who share
the commitment to uphold the highest ethical, professional
and technical standards.

More information is available at: www.accaglobal.com

© The Association of Chartered Certified Accountants

December 2016
Introduction 3

The global public sector is changing. The how these could affect public sector
The public sector is as complex public sector landscape will continually be organisations and the country they serve.
as it is diverse and it is not the reshaped by a combination of factors: Secondly, they need to provide support
same in any two countries. a growing and ageing population, the and influence financial decisions that will
What is considered to be part need for better infrastructure and ensure that public funds are deployed
continuous concerns over sustainability most cost-effectively and efficiently, not
of the public sector often varies
and consumption. There is also increasing just at present but also in the future.
from one country to another. demand for greater transparency and
accountability for public funds. These To help professional accountants and
challenges are also heightened by leaders in the public sector prepare for an
advances in technology and by economic uncertain tomorrow, ACCA undertook a
and political uncertainty. In a shifting social global study to explore which emerging
and economic environment, all these drivers of change could have the biggest
factors will have serious consequences for impact and to highlight the skills that will
public sector organisations and their be required over the period to 2026.
finance professionals.
This report is part of our ground-breaking
The public sector is as complex as it is Professional accountants – the future series
diverse and it is not the same in any two and is the first report to focus exclusively on
countries. What is considered to be part of identifying the 50 factors that will impact the
the public sector often varies from one public sector and the likely timing of these,
country to another. For example, in some and to assess how they will shape the future.
countries, such as the UK and Scandinavian
countries, healthcare is deemed to be a This study draws on a survey of ACCA’s
public sector function, while in some others global forum for its public sector, ACCA
it is a hybrid between the public and members, and members of other
private sectors. professional accountancy bodies working in
the public sector. This was complemented
For professional accountants working in with a series of roundtable events held
the public sector there is a twofold across 12 countries from the US in the west
challenge. First, they need to understand through to China in the east and high-level
the key forces shaping the future and interviews with key public sector figures.
Drivers of change 4

There are many drivers influencing change. balances and governance frameworks.
Governments have a crucial Some of these changes are caused by the Shocks to these will have a profound
role in seeking to understand increasing and ageing population, which impact on government, affecting its ability
what will drive change and will generate a need for better both to manage the effects in the wider
assessing the potential impact infrastructure and enhanced public environment and to provide public
services. Other drivers are linked to the services. This was ranked 7th in the top
that global changes will have
availability of public services and the 50 drivers of change.
in a local context. opportunity, created by advances in
technology, to transform public services to Given the interconnectedness of economic
be more citizen-focused. Collectively, they growth and the stability of national revenue
are making the public sector environment bases it is predictable that this should be
fluid and forcing it to innovate and evolve. ranked in the top ten drivers (9th). Stable
national revenue bases are considered a
The 50 drivers of change are ranked on prerequisite for the economic well-being of
Table 1 and the top three drivers are countries, as this stability affects
identified for each of the eight categories governments’ ability to provide public
of relevance: the economy; politics and services. Generally, government revenues
law; society and demographics; business of are derived from direct taxes paid by
government; science and technology; households (mainly personal income tax)
environment, energy and resources; the and corporations; and indirect taxes, social
practice of accounting; and the contributions and revenues from state-
accountancy profession, are identified. owned assets and enterprises.

The top three (ranked) drivers of change for POLITICS AND LAW
each of the eight categories identified were:
Governance and provision of
ECONOMY 22 outsourced public services

The level of economic growth

1 24
Level of international political
volatility

Stability of the global economic

7 infrastructure
26
Focus of global governance
institutions

Stability of national revenue

9 bases The public sector is evolving to deliver
services in the most effective way within
the constraints of available public finances
Most public sector leaders and managers and outsourcing is increasingly being used.
have been accustomed to a period of One of the challenges in outsourcing
strong economic growth, but growth is public services is ensuring that there are
now slowing. There is a real question as to suitable and adequate governance
whether the world is entering a new phase arrangements for contracts and contract
where low growth will become the norm. management.
Therefore it is unsurprising that the level
of economic growth was ranked the top Over 70% of survey and roundtable
driver of change. Indeed the top 10 participants identified the continuous
drivers featured three were identified volatility of global politics as a driver of
from the category. change. A similar number agreed that
global institutions such as the World Bank,
The global economy, trade and financial World Trade Organization (WTO) and
flows are dependent on a complex United Nations (UN) could influence the
infrastructure that comprises a range of key emerging new world order and its
agreements, standards, systems, checks, response to the pace of global change.
HIGHLIGHTS Drivers of change 5
Professional accountants – the future:
50 drivers of change in the public sector

Table 1: Ranking of the 50 drivers of change for the public sector

RANK DRIVER CATEGORY

1 The level of economic growth Economy
2 Quality and availability of the global talent pool Business of government
3 Business leaders’ responsiveness to change and disruption Business of government
4 Use of Public Private Partnerships (PPPs) Business of government
5 Big data: the development and exploitation of large organisational databases, data mining and Science and technology
predictive analytics
6 Non-financial information and integrated reporting The practice of accountancy
7 Stability of the global economic infrastructure Economy
8 Cybersecurity challenges for government Science and technology
9 Stability of national revenue bases Economy
10 Spread of diversity in society and the workplace Society
11 Workforce age structure Society
12 Experimentation with and adoption of new business models Business of government
13 Balance between external financial accounting and internal managerial accounting The practice of accountancy
14 Clarity in financial reporting and defining the audit function The practice of accountancy
15 Competition for limited natural resources Environment, energy and resources
16 Defining the scope of the accountant’s role The practice of accountancy
17 Speed and duration of business cycles Business of government
18 The digitisation of work Science and technology
19 Accounting skills capacity in transitional economies The accountancy profession
20 Flexibility, suitability and cost of accountancy training The accountancy profession
21 Global climate change Environment, energy and resources
22 Governance and provision of outsourced public services Politics and law
23 Extent of foreign direct investment in developed and developing economies Business of government
24 Level of international political volatility Politics and law
25 Scale and distribution of global population growth Society
26 Focus of global governance institutions Politics and law
27 Level of entrepreneurial skills in the accountancy profession The accountancy profession
28 Public perception and attractiveness of the accountancy profession The accountancy profession
29 Manageability of national and international debt Economy
30 Societal expectations and definitions of accounting The accountancy profession
31 Scale of take-up in alternative energy by organisations Environment, energy and resources
32 Rate of democratic transition Politics and law
33 New industries and production models Science and technology
34 Carbon tax and other environmental market mechanisms Environment, energy and resources
35 Adoption of integrated systems thinking to manage business complexity Business of government
36 Evolution of corporate governance regulation and practice Business of government
37 Size and complexity of the CFOs remit The practice of accountancy
38 Broadening measurement of public sector value and progress Economy
39 Cost and ease of access to higher education Society
40 The workplace expectations of Generation Y, Z and beyond Society
41 Opportunities arising from adoption of global regulation The practice of accountancy
42 Consideration of alternative economic perspectives Economy
43 Enterprise risk management capability Business of government
44 Level of investment required to maintain national physical infrastructure Economy
45 Scope and diversity of expectations of external stakeholders Business of government
46 Adoption of globally accepted accounting standards The practice of accountancy
47 Total scale and distribution of global inequality and unmet needs Economy
48 Crowdsourced funding for innovation: the consumer as investor Business of government
49 Pressure to manage reputation as part of business strategy Business of government
50 Advances in genetic science, impact of nanotechnology advances and robotic science across Science and technology
business sectors
HIGHLIGHTS Drivers of change 6
Professional accountants – the future:
50 drivers of change in the public sector

SOCIETY AND DEMOGRAPHICS public sector. The challenges of managing

The challenges and addressing the needs and expectations
of managing and Spread of diversity in society of a multicultural, global and age-diverse
addressing the needs 10 and the workplace workforce and the wider population will
become ever more complex.
and expectations of a
multicultural, global Workforce age structure BUSINESS OF GOVERNMENT
and age-diverse 11
workforce and the wider Quality and availability of the
population will become Scale and distribution of global 2 global talent pool

ever more complex. 25 population growth

Business leaders’ responsiveness
The spread of diversity in society and the 3 to change and disruption
workplace, whether it be increased female
participation in the workforce or the Use of Public Private
rapidly ageing population and financial
pressures making people work on into
4 Programmes (PPPs)

their late-60s, 70s or 80s (particularly in

Western countries), and the resulting The three drivers that relate to the ways in
implications for workforce age structure, which government organisations conduct
were highlighted as the top two drivers their business take the second, third and
under the ‘society’ category. ACCA’s fourth ranks among the critical drivers.
Generation Next report highlights the Respondents considered the global
particular challenges for the public sector talent pool to be the second most critical
as 76% want to leave the sector but only driver for the public sector for the period
14% want to work in the sector. 2017–2021 and there was also a clear
emphasis on the critical role of public
Expectations of the scale and distribution sector leaders’ attitudes to change and
of global population growth is also the level of business complexity, followed
emphasised as a critical social driver for the by the use of PPPs.
HIGHLIGHTS Drivers of change 7
Professional accountants – the future:
50 drivers of change in the public sector

SCIENCE AND TECHNOLOGY First, it will need to consider the impact of

With the vast volume increased population and economic growth
and variety of data that Big data: large organisational on the environment and the citizen, and to
databases, data mining and put mitigations in place. Environmental
governments hold and 5 predictive analytics
concerns will also mean that budgeting
the speed with which it and accounting within the public sector will
accumulates, they will Cybersecurity challenges increasingly have to take into account
need to ensure that they 8 for government factors linked to natural capital.
have adequate measures
Second, the public sector will need to
in place to deal with the
The digitisation of work consider the environmental impact of
evermore sophisticated 18 public services. This may involve factoring
and unrelenting nature extra costs into government budgets for
of cyberattacks. Technological advances offer huge new areas, areas such as stronger flood
opportunities for government. Big data defence mechanisms and research into the
analytics allow governments to map impact of rises in temperature on the
demographic changes, allowing better country’s eco-systems.
preparation for the services required in the
future. Predictive analytics is increasingly At the same time, governments worldwide
used to influence behaviour, both to are grappling with the potential of
prevent problems and to anticipate renewable sources of energy and have
change. With the vast volume and variety of been exploring the potential of diversifying
data that governments hold and the speed away from heavy reliance on fossil fuels.
with which it accumulates, they will need to This is a complicated area for governments
ensure that they have adequate measures and one that requires an integrated
in place to deal with the evermore approach involving engagement between
sophisticated and unrelenting nature of government and industry and between
cyberattacks. At the same time, digital governments around the world.
advances also present opportunities for
governments to design services that are THE PRACTICE OF ACCOUNTING
citizen-focused. Both cybersecurity and the
digital services will require significant Non-financial information and
investment and a rethink of the traditional 6 integrated reporting
functions of government departments,
which will need to come together and Balance between external
assess how public services are provided in a financial accounting and
more holistic and technology-enabled way. 13 internal managerial accounting

ENERGY, ENVIRONMENT AND

RESOURCES Clarity in financial reporting
14 and defining the audit function
Competition for limited natural
15 resources Financial reporting in the public sector
varies globally. Some countries meet global
standards of advanced financial reporting
Global climate change while others are grappling with reporting
21 the cash position (cash accounting.)
High-quality financial reporting is a
Scale of take-up in alternative prerequisite to building and maintaining
31 energy by organisations trust and ensuring that limited funds are
used economically, efficiently and effectively.

The need to sustain rising populations and There has been growing realisation that
fuel economic growth must be balanced traditional financial reporting provides
against the planet’s finite resources. There insufficient information for decision-
are two impacts that the public sector making. Integrated reporting (<IR>) goes
needs to consider.
HIGHLIGHTS Drivers of change 8
Professional accountants – the future:
50 drivers of change in the public sector

further than assessing the financial THE ACCOUNTANCY PROFESSION

A constant challenge for resources previously captured on the
accountants is striking balance sheet to include other resources Accounting skills capacity in
the right balance between that are less easy to measure, such as 19 transitional economies
human, natural, and intellectual capitals,
external financial which have a bearing on the value of an
reporting requirements organisation. As a result of these
Flexibility, suitability and cost
and internal managerial considerations, <IR> is being championed 20 of accountancy training

accounting. by many accountancy bodies and public

bodies as the way forward. Level of entrepreneurial skills
27 in the accountancy profession

The adoption of either International Financial

Reporting Standards (IFRS) or International
Public Sector Accounting Standards
(IPSAS) by countries is an important step in
demonstrating transparency to citizens and
other stakeholders.

Accounting skills, however, vary from

country to country, particularly in the public
sector. To implement IFRSs or IPSASs
(either cash or accruals), the public sector
requires finance people of the right calibre
with professional accountancy training (or
to build the capacity and capability to
develop them) and an understanding of
the public sector landscape and how
government works.

There is an overwhelming case that the

public sector will require more accountants,
A constant challenge for accountants is but they will now be required to fulfil the
striking the right balance between external growing need for accountability and
financial reporting requirements and transparency, as well as providing better
internal managerial accounting. Both are financial insights to help public sector
expected to become more demanding and organisations to meet future needs that will
complex over time. Respondents often arise as a consequence of lower economic
cited the level of complexity and expense growth, continued commercialisation of
(especially in countries where there are public services (through the use of PPPs or
constant challenges with capacity and public finance initiatives (PFIs)) and
capability in this area) as a big challenge, population growth.
and questions were raised as to the value
of the information gleaned from it. With these changes in mind, public sector
accountants are being asked to take on a
As the practice of public sector accounting broader strategic and entrepreneurial role
evolves, it is important to note the distinction – as they are now becoming the bridge
between the audit function and the financial between the public and private sectors.
reporting function. Both have a crucial role
in providing greater accountability to the
citizen: the preparation of the accounts is
enhanced by having an independent audit
review conducted on them.
Public sector finance function 9

In this constantly evolving global landscape QUALITY AND QUANTITY OF

In a constantly evolving global the public sector finance function will need INFORMATION
landscape, the public sector to play a pivotal role. It needs to help lead
The citizen is becoming more demanding
finance function will need to the public sector to effectively manage
of the availability and quality of public
play a pivotal role. It must lead both the challenges of the day and those
services delivered. There is a thirst to
on the horizon.
the public sector in managing understand where and how public funds
challenges – both current and are used. This is a key area for finance
TECHNOLOGICAL ADVANCES
those on the horizon. professionals to add value.
Will replace routine low value activity and
give the finance function more time to GREATER AGILITY
focus on greater interpretation and
In an ever changing often ambiguous
understanding of the numbers, and to
environment, the public sector and finance
identify trends and their impact.
function will need to become more agile
and adept at operating effectively. This is
A SMALLER FINANCE FUNCTION not an easy task given government legacy
The level of economic growth, which structures and bureaucracy.
respondents ranked the top driver for
change, will continue to impact the public VISIONARY, MORE RESPONSIVE AND
sector. In many parts of the world public LESS REACTIONARY
sector spending has been reducing, The unique perspective provided by a
resulting in lower staff numbers. As part of deep understanding of the organisation
this trend, the finance function will become through visibility of the funds flow, gives
lean too. finance a big advantage. This, together
with the breadth in the training required to
GREATER COMMERCIAL FOCUS. become a qualified professional
Increasing collaboration between public accountant, makes them ideally suited to
sector and the private sector (through step outside the narrow ‘number-crunching’
outsourcing or PPPs) will require role sometimes associated with the finance
governments to be more commercial in function. Active risk management and
their outlook and approach. The finance broader understanding of the link between
function will be at the heart of this. financial data and operational performance
will also be increasingly needed.
HIGHLIGHTS Public sector finance function 10
Professional accountants – the future:
50 drivers of change in the public sector

INNOVATIVE AND CREATIVE THINKING FINANCE SKILLS IN THE FUTURE

New disruptive thinking
The finance function will need to be more The professional accountant working in
is required that allows for innovative in its approach to managing the public sector will need to upskill in
modern models of service public service delivery. Operating in a the evolving public sector landscape.
delivery that are scalable, period of reducing public spending will They will require a mix of technical and
while placing the needs need innovative and creative thinking to behavioural skills.
continue to provide public services that best
of citizens at the core. meet the needs of the citizen. The typical Strong technical skills
approaches of efficiencies via budget cuts Strong technical accounting skills will
remain the foundation for the professional
accountant. These range from technical
financial reporting knowledge to
forecasting, operations management,
budgeting and planning including scenario
planning, to driving enhanced performance
management and many others acquired
through the qualification.

Professional Judgement
The professional accountant will need to
demonstrate good judgement in the
analysis and interpretation of data (financial
and non- financial) and to convert this into
meaningful insight for the organisation. In
a public sector context this is even more of
a challenge where it is not as easy to assess
the impact of government spending in a
linear or strictly numeric way.

Communication Skills
Traditionally, professional accountants
have not always been seen as good
communicators. The ability to explain
is not enough. New disruptive thinking is complex financial issues clearly and
required that allows for modern models of concisely is an increasingly important skill.
service delivery that are scalable, while In a time-poor environment the professional
placing the needs of citizens at the core. accountant will need to embrace modern
media to present complex information in
ACHIEVING A BALANCE BETWEEN THE an engaging and compelling way.
SHORT TERM AND THE LONG TERM
Leadership skills
There will always be short term pressures
Good leadership skills such as influencing,
in the public sector that will have to be
persuasion, building networks, emotional
managed. But these should not be at the
intelligence, and greater self-awareness are
expense of long term strategic thinking.
required now and in the future.
The finance professional can add value
by providing information to help decision The professional accountant is part of a
makers gain a sense of perspective. team and the importance of good and
This ensures that focus and energy is effective team-working must not be
devoted on macro-issues that are of the underestimated. To become an effective
highest importance. ‘business partner’ the professional
accountant will need to influence and
Therefore the finance function in the public persuade a range of stakeholders.
sector will become leaner but more
focused delivering high value insight that Vision
draws together a broad range of data. It The successful professional accountant of
will need to be responsive to short term the future will need to be able to see
pressures but focus on long term strategic interconnections and explain the ‘big
(macro) value. It needs a forward-looking picture’. Having a professional accountancy
learning culture, remaining on top of the qualification provides a unique lens that
professional accountancy best-practice as the professional accountant can use to
well as embracing insights across sectors navigate their way through complex data
(eg commercial skills from the private sets and to turn this into insight that can
sector) and regions. drive the organisation forward.
Summary 11

The professional accountant in the public operating environment. They will need to
The public sector needs sector needs to ensure they are equipped have excellent communication skills, sifting
professional accountants now, with the right mix of awareness of the factors the golden nuggets from masses of data
more than ever, to improve that are driving changes in the sector and and presenting this in a clear concise way
public services to meet the skills to be able to successfully rise to the that connects with the audience. Proper
challenges and/or maximise opportunities. planning and preparation for these
needs of the citizen, and ensure
meetings will be crucial to achieve the
good public financial The changing economic environment, desired outcomes. They will need to
management. This needs to be political landscape, societal changes such as demonstrate leadership and management
done sustainably, to meet the the rising and ageing population all impact skills – learning to operate as a wider team
needs not only of the current on the public sector. These will invariably of professionals each with unique core
generation but, importantly, impact the level of public services required. skills and to lead in often challenging
also for future generations. The public professional accountant will circumstances. In summary, the public
need to be alert to macro issues and be professional accountant of the future will
able to consider these in the finance advice. need great vision to be able to fully support
the organisation today and steer it through
Public service delivery is changing too the changing landscape on the horizon.
through increased collaboration with the
private sector and digital agenda. These The professional accountant in the public
create an opportunity to rethink existing sector has a unique opportunity to serve
public service delivery models but the risks the community they live in and make a
associated must be managed. For example tangible difference to people’s lives
the threat of cyber-attacks and risk that through better public financial
public services are not delivered to the management to provide: schools, roads,
appropriate standards. Such risks will need hospitals, transport links and public
careful management to ensure public services: education, welfare support and
funds are used effectively, efficiently and health care support. To do this well the
economically. The practice of accounting public professional accountant needs to be
and the accountancy profession is also able to successfully navigate through all the
changing and will have an effect on the drivers of change to ensure public funds
professional accountant. The professional deliver value for money public services.
accountant must maintain their continuing The public sector needs professional
professional development requirements if accountants now more than ever to help
they are to remain up to date on current and deliver better public services that meet the
future changes such as integrated reporting. need of the citizen, delivers value for
money and provides good public financial
It is also important for employers and management. This needs to be done in a
professional accountancy bodies to sustainable way, not only for the current
provide the infrastructure to support the generation but for future generations too.
development and training of public sector
professional accountants. A PLATFORM FOR ENGAGEMENT

To be fully effective the public sector The aim for this global project is to provide
professional accountant will need to a platform for engagement between public
develop new skills. At the foundation they sector organisations, professional
will need to have good professional skills accountants and the wider community of
with a strong ethical core running through stakeholders. No future-oriented work of
all their professional interactions. They this type can ever hope to be definitive,
must exercise great care and judgement, but this report provides an important input
fully considering all aspects of the relevant into the development of future public
information and apply their professional sector strategy. It provides accountancy
skills as an accountant and business professionals, and the organisations in which
knowledge via an understanding of their they work, with a framework for preparing
for, adapting to and influencing change.
PI-HIGHLIGHTS-DRIVERS-CHANGE-PUBLIC-SECTOR

ACCA The Adelphi 1/11 John Adam Street London WC2N 6AU United Kingdom / +44 (0)20 7059 5000 / www.accaglobal.com