The Government is committed to ensuring that the state of NSW has a world-class public sector. This Memorandum sets out formal tertiary educational and professional qualifications which will henceforth be expected of public service employees who are employed in Departments (as specified in Schedule 1 to the Public Sector Management Act) and who are responsible for:

• the preparation of external financial reports of public sector agencies
• the preparation of financial reports for use by agencies' management
• the conduct of external audits of financial reports
• financial management functions within agencies.

Statutory bodies, including State Owned Corporations, are also strongly encouraged to adopt the standards set out below as well.

BACKGROUND

In recent reports both the Council on the Cost of Government and the Auditor-General have emphasised the need for financial managers within the public sector to hold tertiary universityqualifications and membership of either of the two major professional accounting bodies. Full membership was recommended on the grounds that financial managers would then:

• be professionally bound to comply with accounting and other professional standards issued by the Australian accounting bodies
• be kept up to date with current accounting issues
• be required to undertake continuing professional development, and
• be subject to peer review and professional oversight.

The Auditor-General has also expressed the view that staff undertaking audits of financial reports should either have relevant tertiary university and professional qualifications, or be pursuing courses of study leading to the award of those qualifications.

POSITIONS WHICH ARE AFFECTED BY THIS POLICY

I have considered these recommendations and have determined that persons recruited or promoted to the financial management positions described below must have relevant tertiary university qualifications and current full membership of either The Institute of Chartered Accountants in Australia or the Australian Society of Certified Practising Accountants.

The possession of the qualifications described above will be an essential requirement for all staff recruited or promoted to the following positions from 1 September 1998:

• chief financial officer (or similarly titled positions).
• any specialistsenior position responsible for the preparation of financial reports. These positions would generally be classified at Administrative and Clerical Officer Grade 7/8 and above.
• any specialistsenior position responsible for undertaking external audits of financial reports.

The 'chief financial officer' is the most senior position within a Department that has, as a substantial part of its role, responsibility for the accounting and financial management functions.

The essential requirements relating to the positions referred to above do not apply to those departments:

• where the person responsible for the accounting and financial management functions are also held accountable for other significant functions such as corporate support and administration services, or
• where the accounting and financial management functions have been substantially outsourced to, for example, another agency provided that in the above circumstances, the persons (including the contractors) mainlyresponsible for the preparation of the agency's financial reports have relevant tertiary universityqualifications and current full membership of either The Institute of Chartered Accountants in Australia or the Australian Society of Certified Practising Accountants.

Each agency should examine relevant positions and determine those positions where possession of appropriate tertiary universityqualifications and membership of an appropriate professional body should be essential requirements.

EXEMPTIONS

Exemptions from these requirements will be granted in the following circumstances:

• Staff who are already holders of such positions are exempt and will be exempt if and when they are reappointed to that or an equivalent position after 1 September 1998
• Staff who accept a position prior to 1 September 1998 are encouraged to become a full member of either professional body cited above but membership will not be obligatory for such an officer while the officer holds that particular position
• People who hold the tertiary qualifications necessary for membership of either The Institute of Chartered Accountants in Australia or the Australian Society of Certified Practising Accountants and who, in principle, object to mandatory membership of a professional body may be exempted. However, they must agree to follow a program of continuing professional development and current awareness of changes in accounting practice and policy. The professional development must be of a standard at least equivalent to that provided by the prescribed professional bodies. This agreement is to be made a condition of their employment in the position and adherence to the agreement must be monitored as part of the officer's staff development program.

OTHER POSITIONS WHERE PROFESSIONAL QUALIFICATIONS ARE ENCOURAGED

As well as the senior accounting, auditing and financial management positions listed above staff seeking work and careers in these areas are encouraged to pursue appropriate tertiary universityqualifications and be members of relevant professional bodies such as The Institute of Chartered Accountants in Australia, the Australian Society of Certified Practising Accountants, the National Institute of Accountants and the Chartered Institute of Management Accountants (CIMA). The first three of these have a mandatory continuing professional educational requirement for their members. CIMA keeps members informed of professional developments through its various publications.

Without being prescriptive, these positions are those involved in:

• financial planning
• budgeting
• provision of financial input into policy and management decisions
• financial analysis
• financial management of assets and liabilities
• consideration of capital investment
• risk management and internal control.

C. Gellatly
Director-General