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Auditor-General goes into bat for Australia’s accountants

WA’S top government accountant, Des Pearson, is the new national president of Australia’s largest professional body, CPA Australia, the first Western Australian to hold the role for 15 years.

He has become the public representative for 94,000 members, replacing Joycelyn Morton.

Mr Pearson said he would not be taking as large a public a role as Ms Morton.

“There will be occasions where I’ll need to stand up but my role will be more to facilitate the profession.”

Besides his new CPA Australia role, Mr Pearson is WA’s Auditor General and has been for the past 10 years.

He believes the quality and sophistication of WA public sector reporting has improved considerably during that decade.

The public sector now reports on an accrual basis rather than a cash basis. That means income and expenditure are reported in the period they actually occurred. It brings into account all expenses. Under cash accounting a lot of an organisation’s overheads are not recorded.

Mr Pearson said the public sector’s reporting regime was now internationally recognised, especially its use of performance indicators.

WA is one of the few jurisdictions in the world that requires its public sector to produce performance indicators and have them audited. Under the performance indicator regime, government departments work out their objectives and find ways to measure them.

“When we first started using performance indicators, the agencies started designing them to get a clean bill from the auditor,” Mr Pearson said.

“Now a lot of agencies integrate these indicators with their management systems.

“The report of the performance indicators this year is not as important as the trend over time. We now have five to seven years of reliable history for government departments.”

Mr Pearson and his staff are in constant international demand to advise on how other governments can set up performance indicator-based reporting.

“I have to blow the whistle on things that are wrong.”

– Des Pearson

When Mr Pearson took on the role, the Government’s audit process was 90 per cent financial-based and 10 per cent efficiency and effectiveness.

“Financial-based auditing is the core but efficiency and effectiveness reporting is where you get the results,” Mr Pearson said.

“Now we’re about two thirds financial and one-third efficiency and effectiveness focused.

“The efficiency and effectiveness auditing shows where a positive contribution has been made. We’re able to assist agencies to find better ways to deliver programs.

Mr Pearson said public sector reporting was difficult because of the number of “soft services” government agencies provided.

“In the public sector, because the achievements are softer, it puts particular demands on public sector managers,” he said.

“In the private sector, the financial bottom line tells a pretty definitive story. The story’s not so clear in the public sector.

“In the private sector the shareholders are looking for good returns. In the public sector, everybody is a stakeholder and they all have different views on what the returns should be.”

He believes the improvement is due to a number of factors. Initially it was a reaction to the Commission on Government report in the early 1990s and later was driven by principle.

While he has helped drive the improvement in reporting, Mr Pearson admits his job does create some personal difficulties.

“As the auditor general I have to focus on the exceptions. By and large we have a very good public service but it is a very large and complex sector. There will undoubtedly be exceptions,” he said.

“The hardest part of the job for me personally is having to criticise areas where the people have been very conscientious but not working effectively.

“More broadly, as the auditor I have to blow the whistle on things that are wrong.

“Things such as the sale of Central Park by the Government Employee Superannuation Board.”

Mr Pearson believes one of the big improvers in government reporting has been – surprisingly enough – the health sector.

“The health sector’s performance indicators have shown good results,” he said.

“In the mid-1990s it showed it had a long way to go. Now it is reporting well on the quality and availability of its services.”

Despite the recent change of government, Mr Pearson believes it will be business as usual for his department.

The auditor general’s office is an independent accountability official that reports to Parliament.

“Under the legislation, I am required to audit as I see fit and report to Parliament on matters of significance,” Mr Pearson said.

He has just under 100 staff and a budget of about $10 million to keep an eye on WA’s 300 public sector agencies that employ 100,000 people between them and have a combined turnover of $25 billion a year.

However, Mr Pearson believes WA Premier Geoff Gallop’s plan to reduce the size of WA’s public service should, theoretically, make his job easier.

“Obviously the transitional period will be tough but after that there should be a smaller number of more coordinated agencies,” he said.

Mr Pearson entered the public sector after studying accounting, taking a cadetship with the Aust-ralian Auditor-General’s Office and rising to become the Northern Territory region’s chief auditor.

Mr Pearson also worked with the Australian Department of Primary Industries and Energy and the Australian Quarantine and Inspect-ion Service before becoming an associate director of the Australian Capital Territory Institute of TAFE. A lot of that time was spent as the institute’s acting director.

He is also a member of the Institute of Chartered Accountants of Australia, a Fellow of the Australian Institute of Management and a Member of the Institute of Public Administration of Australia.

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