Dutch accountants found an innovative way to fulfil their public role in society. Robert Mul, Director of Public Trust at the Royal Netherlands Institute of Chartered Accountants (NBA), explains how accountants share their knowledge by providing early warnings of overarching strategic risks in a variety of sectors.
Raising awareness about hidden risks
At the NBA we are trying to see beyond the everyday work and raise awareness about strategic risks across sectors. We started our public management letters (PMLs) initiative in response to the financial crisis; to restore trust in accountants’ opinions in a changing economic and cultural environment. Through PMLs accountants can anonymously identify common risks and share their solutions and recommendations. It provides an ‘early warning system’ to alert a specific sector on areas of risk. PMLs can be used as a guide to identify shortcomings in an organisation and communicate them to management.
Since 2010 we have published over 20 PMLs on topics ranging from the banking sector to life sciences. But publishing the PMLs is only half the work. It really gets interesting when other organisations and people start reading and discussing them.
We analysed the effectiveness of 11 PMLs published from 2010-2013 based on how often they are downloaded, to what extent the recommendations are followed and whether they become part of a larger debate. We found that 62% of external stakeholders accepted the recommendations; 83% of were positive about the PMLs; and just over half of the letters (6 out of 11) started a debate or inspired change.
A health check on healthcare
The healthcare sector provides an example of effective PMLs. Thanks to our PMLs, we have successfully advised government, insurers and healthcare providers on how to better work together to lift administrative burdens. In our first healthcare PML in 2010, we focused on long-term care for the elderly and the chronically ill. Our recommendations included improving the information flow on costs, assessing all leases, creating financial buffers and updating IT.
That first PML was quite technical, but in a follow-up letter in 2015, we were able to address the Public Health Minister directly on how to improve affordability, supply chain accountability and management. Another sign of success was when our former committee president was asked to take part in a high-level discussion about reducing red tape in healthcare.
Spreading good practices
Our colleagues at the Institute of Chartered Accountants of England and Wales (ICAEW) have used our PMLs as inspiration to start an ‘audit insights’ section on their website. The NBA has also published PMLs for charities, the energy sector, horticulture, municipalities and secondary vocational education, see all letters in English here. Our most recent one on professional soccer clubs’ financial vulnerabilities has already gathered a lot of attention