PFM skills gaps
Identifying and addressing capacity needs in the public sector.
AUGUST / 2023
According to PEFA (2018) there are four constraints to PFM reform: political, legal, institutional and capacity, each of which can impact the extent and speed of reform implementation. Although none of these constraints are easy to tackle, building capacity of PFM professionals can be an impactful, if not a quick win. Building a pool of qualified professionals will have a multiplier effect on the entire public sector and the wider economy, ranging from improvements in operational performance to driving institutional change and sparking political will for reform.
Capacity is a problem
Capacity, both in terms of numbers of qualified PFM professionals and the level of their expertise is a lingering issue in public sector finance. There is a general consensus that due to lower levels of remuneration, a perception of limited career prospects and learning opportunities, public sector organizations are finding it difficult to retain talent in their finance functions. Another area of unease is that those working in the PFM space often do not have formal finance qualifications when they enter the profession and do not obtain any at later stages of their careers leading to skills gaps, outdated methodologies and failed reforms.
In addition to being a priority area in PFM reform plans, professionalization in the public sector should be business as usual for all governments. Initiatives should be aimed at both those driving PFM reforms and those engaged in specific areas of PFM, although the approach, breadth, depth and content of learning would noticeably differ for each category.
Capacity, both in terms of numbers of qualified PFM professionals and the level of their expertise is a lingering issue in public sector finance. There is a general consensus that due to lower levels of remuneration, a perception of limited career prospects and learning opportunities, public sector organizations are finding it difficult to retain talent in their finance functions. Another area of unease is that those working in the PFM space often do not have formal finance qualifications when they enter the profession and do not obtain any at later stages of their careers leading to skills gaps, outdated methodologies and failed reforms.
In addition to being a priority area in PFM reform plans, professionalization in the public sector should be business as usual for all governments. Initiatives should be aimed at both those driving PFM reforms and those engaged in specific areas of PFM, although the approach, breadth, depth and content of learning would noticeably differ for each category.
Weakest links
Ideally, each PFM unit should perform skills assessment of its staff to identify what the gaps are and design a tailored development plan to execute with the support of a Professional Accounting Organization (PAO) or an accredited learning institution. However, such a holistic approach might not be possible due to lack of time and expertise.
An alternative to a detailed skills evaluation could be a country PEFA assessment which can provide high-level insights into areas of PFM weakness at least at central government level. Although not every PFM weakness is based in capacity constraints, the assessment results are a good starting place.
The 2022 PEFA Global Report highlighted areas of PFM with the highest concentration of deficiencies in the countries assessed. Many problem areas are common across the globe, the weakest of which include fiscal risk reporting, public investment and asset management, expenditure arrears, financial reporting and audit report scrutiny. Other areas such as internal audit, service delivery performance and public access to various types of information also need improvement.
Dissecting the results further, countries find preparing capital budgets, costing multi-year projects and evaluating investment performance a challenge. Preparation and maintenance of asset registers, valuation of public assets, application of medium-term budget frameworks also present problems to many. A common theme then can be drawn encompassed in the inability to implement specific financial management techniques and medium-term perspectives.
Deficiencies in financial reporting and internal audit and control are not surprising of themselves as the topic is highly technical. What is surprising is that the topic is persistently a problem area even though it is one of the more adaptable areas that can be taken from the private sector and numerous learning resources are available to help professionals upskill.
Many countries have been putting together PFM reform action plans. Whether aligned to PEFA assessment results or not these plans often feature an element of capacity-building either as a cross-cutting theme or a separate reform target. Largely, the plans focus on specific areas of PFM often overlooking the need to develop the skills of those at the helm of the reforms and compared to legal and institutional changes upskilling is often given a lower priority in a setting where only limited resources are available to implement reforms.
Ideally, each PFM unit should perform skills assessment of its staff to identify what the gaps are and design a tailored development plan to execute with the support of a Professional Accounting Organization (PAO) or an accredited learning institution. However, such a holistic approach might not be possible due to lack of time and expertise.
An alternative to a detailed skills evaluation could be a country PEFA assessment which can provide high-level insights into areas of PFM weakness at least at central government level. Although not every PFM weakness is based in capacity constraints, the assessment results are a good starting place.
The 2022 PEFA Global Report highlighted areas of PFM with the highest concentration of deficiencies in the countries assessed. Many problem areas are common across the globe, the weakest of which include fiscal risk reporting, public investment and asset management, expenditure arrears, financial reporting and audit report scrutiny. Other areas such as internal audit, service delivery performance and public access to various types of information also need improvement.
Dissecting the results further, countries find preparing capital budgets, costing multi-year projects and evaluating investment performance a challenge. Preparation and maintenance of asset registers, valuation of public assets, application of medium-term budget frameworks also present problems to many. A common theme then can be drawn encompassed in the inability to implement specific financial management techniques and medium-term perspectives.
Deficiencies in financial reporting and internal audit and control are not surprising of themselves as the topic is highly technical. What is surprising is that the topic is persistently a problem area even though it is one of the more adaptable areas that can be taken from the private sector and numerous learning resources are available to help professionals upskill.
Many countries have been putting together PFM reform action plans. Whether aligned to PEFA assessment results or not these plans often feature an element of capacity-building either as a cross-cutting theme or a separate reform target. Largely, the plans focus on specific areas of PFM often overlooking the need to develop the skills of those at the helm of the reforms and compared to legal and institutional changes upskilling is often given a lower priority in a setting where only limited resources are available to implement reforms.
Finding the right resources
If the most common PFM weaknesses identified by PEFA (2022) are mapped to publicly available learning resources it is clear that those topics are generally overlooked by the educators. As many PFM professionals have to find resources on their own and study in their spare time, availability of relevant programmes and courses becomes quite important, especially when the employer is most often not able to provide development opportunities and funding to their staff.
PFM professionals working in accounting and reporting functions, generally do not lack resources relating to their subject-matter. IPSAS courses and certificates are easy to find, there are a number of full professional accounting qualifications offered by the likes of CIPFA, ACCA, ICEAW etc., which are aimed either directly at the public sector or the private sector but where skills are highly transferrable. Internal audit and control topics are also addressed by well-known accounting qualifications or internal audit-specific programmes like IIA’s Certified Internal Auditor.
However, more niche areas are harder to come by. Public investment management is normally translated into project and contract management courses, but little is available on the technical aspects of appraisal, costing and evaluation of public investments. Asset management is similarly underrepresented. Fiscal risks are largely overlooked.
IMF and World Bank run either very detailed online learning courses, for example, on debt management and contingent liabilities or very high level programmes on PFM as a whole. Development partners also provide significant support to their loan and grant recipients as part of PFM-focused project implementation which may lead to governments aiming to establish civil servant academies. Nevertheless, these are largely one-off initiatives during development project implementation and further actions are need to build a sustainable, continuous and progressive system of building capacity in PFM which entails creation of sector-wide infrastructure.
If the most common PFM weaknesses identified by PEFA (2022) are mapped to publicly available learning resources it is clear that those topics are generally overlooked by the educators. As many PFM professionals have to find resources on their own and study in their spare time, availability of relevant programmes and courses becomes quite important, especially when the employer is most often not able to provide development opportunities and funding to their staff.
PFM professionals working in accounting and reporting functions, generally do not lack resources relating to their subject-matter. IPSAS courses and certificates are easy to find, there are a number of full professional accounting qualifications offered by the likes of CIPFA, ACCA, ICEAW etc., which are aimed either directly at the public sector or the private sector but where skills are highly transferrable. Internal audit and control topics are also addressed by well-known accounting qualifications or internal audit-specific programmes like IIA’s Certified Internal Auditor.
However, more niche areas are harder to come by. Public investment management is normally translated into project and contract management courses, but little is available on the technical aspects of appraisal, costing and evaluation of public investments. Asset management is similarly underrepresented. Fiscal risks are largely overlooked.
IMF and World Bank run either very detailed online learning courses, for example, on debt management and contingent liabilities or very high level programmes on PFM as a whole. Development partners also provide significant support to their loan and grant recipients as part of PFM-focused project implementation which may lead to governments aiming to establish civil servant academies. Nevertheless, these are largely one-off initiatives during development project implementation and further actions are need to build a sustainable, continuous and progressive system of building capacity in PFM which entails creation of sector-wide infrastructure.
Ways to upskills
Embedding capacity-building into PFM reform plans is an extremely important step as it sets the tone and provides legitimacy to the initiatives that should follow. The next most common step is establishment of civil service academies to execute education programmes which makes sense but only when they serve their ultimate purpose of continuous and relevant learning.
Capacity-building should not be limited to ad hoc courses and once time professional qualifications. Instead it should be the driving force behind enhancing public sector infrastructure enabling continuous professionalization. There needs to be a sector-wide, continuous approach to learning in partnership with PAOs, MDAs and SOEs.
PAOs have an important role to play in supporting professionalization in the PFM space by instilling ethics, due care, professional values and a learning mentality in their public sector members. But PAOs need to expand their public sector membership and cater to their member needs to the same extent as those working in the private sector by providing learning opportunities and designations relevant to their needs.
For example, a professional qualification dedicated to the public sector would be an ideal state. However, a qualification alone is not the solution. Creating a new qualification aimed purely at the public sector is expensive and timely. Also, it might actually not be effective as this kind of qualification will likely be too general and hence, not fit-for-purpose for professionals working in specific PFM areas. The key might lie in add-on sector or topic-specific modules embedded into a more general accounting qualification which would provide various pathways into the public sector.
To support any professional qualification, continuous learning options should be provided to professionals such as deep-dive courses, up-skilling and re-skilling programmes. PAOs can drive these initiatives as voices of the profession but employers and private learning institutions as well as civil service academies could contribute to building a pool of skilled professionals.
Whether a full-scale qualification or a short course, every learning programme should be underpinned by a robust competency framework and a comprehensive syllabus that is regularly reviewed together with public sector organizations and updated to meet their and the public’s expectations. PAOs and learning institutions can especially contribute in this area and take the initiative leveraging their networks to spur focused discussions on skills required for those working in the public sector. These organizations often have the capabilities, both internal and within their network to develop competency frameworks and syllabi.
The private sector cannot be left out as it is well positioned to provide the technological solutions for flexible learning, using online, virtual reality, gamification and simulation tools.
Every agent in the economy can have a role to play in professionalizing the public sector whether through advocacy, learning content development or learning mode design and delivery. Working together and innovating would benefit not just the learners themselves but the whole profession, public sector service delivery and ultimately the citizens.
Embedding capacity-building into PFM reform plans is an extremely important step as it sets the tone and provides legitimacy to the initiatives that should follow. The next most common step is establishment of civil service academies to execute education programmes which makes sense but only when they serve their ultimate purpose of continuous and relevant learning.
Capacity-building should not be limited to ad hoc courses and once time professional qualifications. Instead it should be the driving force behind enhancing public sector infrastructure enabling continuous professionalization. There needs to be a sector-wide, continuous approach to learning in partnership with PAOs, MDAs and SOEs.
PAOs have an important role to play in supporting professionalization in the PFM space by instilling ethics, due care, professional values and a learning mentality in their public sector members. But PAOs need to expand their public sector membership and cater to their member needs to the same extent as those working in the private sector by providing learning opportunities and designations relevant to their needs.
For example, a professional qualification dedicated to the public sector would be an ideal state. However, a qualification alone is not the solution. Creating a new qualification aimed purely at the public sector is expensive and timely. Also, it might actually not be effective as this kind of qualification will likely be too general and hence, not fit-for-purpose for professionals working in specific PFM areas. The key might lie in add-on sector or topic-specific modules embedded into a more general accounting qualification which would provide various pathways into the public sector.
To support any professional qualification, continuous learning options should be provided to professionals such as deep-dive courses, up-skilling and re-skilling programmes. PAOs can drive these initiatives as voices of the profession but employers and private learning institutions as well as civil service academies could contribute to building a pool of skilled professionals.
Whether a full-scale qualification or a short course, every learning programme should be underpinned by a robust competency framework and a comprehensive syllabus that is regularly reviewed together with public sector organizations and updated to meet their and the public’s expectations. PAOs and learning institutions can especially contribute in this area and take the initiative leveraging their networks to spur focused discussions on skills required for those working in the public sector. These organizations often have the capabilities, both internal and within their network to develop competency frameworks and syllabi.
The private sector cannot be left out as it is well positioned to provide the technological solutions for flexible learning, using online, virtual reality, gamification and simulation tools.
Every agent in the economy can have a role to play in professionalizing the public sector whether through advocacy, learning content development or learning mode design and delivery. Working together and innovating would benefit not just the learners themselves but the whole profession, public sector service delivery and ultimately the citizens.
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