International Consortium on Governmental Financial Management (ICGFM)

ICGFM Promotes Knowledge Transfer Among Public Financial Management Experts

2011-09-16T19:42:00.005-04:00

2011 International Consortium on Governmental Financial Management survey report in conjunction with Grant Thornton.

2011 Grant Thornton ICGFM Public Financial Management Responses to an Economically Challenging World

Budget Institutions Supporting Fiscal Consolidation

2011-09-09T19:36:00.002-04:00

Countries around the world are struggling to devise the policies that will best address the challenges resulting from the financial crisis. In a book to be issued by the Fiscal Affairs Department of the International Monetary Fund, the case is made that key budget institutions will be necessary to both devise and execute those policies.

Previewing the book that will be issued later this year, Marco Cangiano kicked off the International Consortium on Governmental Financial Management (ICGFM) fall season by presenting on Budget Institutions for the 21st Century at the monthly DC Forum held at the Carnegie Endowment for Peace in Washington, DC on September 7. Mr. Cangiano, an Assistant Director of the IMF Fiscal Affairs Department, outlined ten budget institutions that will be key to countries around the world in addressing the challenges of dealing with the post-financial crisis environment.

Making the point that countries have to have a solid understanding of their fiscal situation and the challenges they face, the first three budget institutions discussed were Fiscal Reporting, Macro-Fiscal Reporting, and Fiscal Risk Management. Risk management, an area more frequently associated with the private sector, is a discipline in the public sector that will be more critical in coming years as governments come to grips with the real contingent liabilities that they face and the events that could trigger them into becoming overwhelming burdens on public resources. A category of Risk Management of particular interest in the discussion at the DC Forum was Tax Expenditures. Quantifying the use of public resources to promote public policy through the tax code is an area of PFM that is not well developed and few countries serve as a role model in incorporating this in fiscal analysis.

Once an objective view of the size and dimension of the fiscal imbalances are understood, the next step in addressing the fiscal challenges is to develop a Consolidation Strategy. In this category, four institutions were discussed that can be critical in assuring that a comprehensive policy is adopted to address fiscal challenges in a manner that is effective and efficient. A clear set of Fiscal Objectives, a Medium-Term Budget Framework, some element of Performance Orientation, and Independent Fiscal Agencies, all contribute to the development of a strategy fully informed on impacts of policy as well as those policies that will be effective. The increasing creation of Independent Fiscal Agencies was of interest to the ICGFM audience. It was noted that a number of countries are establishing an independent body to produce macro assumptions for the budget or to evaluate fiscal policy and performance.

With a sound understanding of the fiscal problems and a fiscal consolidation strategy developed, three more critical institutions will be key in implementation of the consolidation strategy. A Top-Down Budgeting approach will more likely assure that individual budget components sum up to the goal of consolidation. An informed process of Parliamentary Approval is almost always necessary to establish legal authorities to execute a budget and this is a critical institution to keeping a strategy on track and intact. Finally, the audience agreed that a fiscal consolidation strategy is best implemented through the budget process and that Budget Execution is key to ensuring that fiscal policies are adhered to and tracked.

The forthcoming IMF book on budget institutions will be further highlighted during the ICGFM winter conference. The subject of budget institutions will be the theme of the ICGFM’s winter conference to be held in Washington, DC from December 5-7, 2011.

Registration information for the conference can be found at the website, www.icgfm.org

Posted by David Nummy

ICGFM Public Financial Management Polls

2010-12-08T20:07:00.004-05:00

The International Consortium on Governmental Financial Management conducts polls during conferences. The 2010 Winter Conference focused on transparency and international public sector standards.

2010 12-08 icgfm winter conference polls

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ICGFM Transparency Standards Workshop

2010-12-08T13:31:00.004-05:00

Attendees at the 2010 ICGFM Winter Conference worked through numerous questions on the use and impact of transparency standards in Public Financial Management (PFM). Some observations from the workshop groups.

1. What standards could or have had the greatest impact on transparency?

Standards adopted by the international community, by their very nature, have a positive impact in countries

Some standards have legal basis in the country

IPSAS and accrual accounting standards, auditing standards, aid transparency standards

Transparency portals on procurement, human resources, budget

Right to information

Citizens are recognizing the value of transparency and are now demanding more

Standard accounting information enables benchmarking countries

2. What were or would be the greatest obstacles to transparency?

Political will defines whether standards will be uniformly respected and whether unlawful activity will be punished (just because there is a law doesn't mean that it is respected)

Education and capacity in public servants (one person said "capacity, capacity, capacity")

Proper compensation for public servants

Lack of accountants in developing countries

Brain drain of qualified personnel

Honest and transparent public servants

More effort by citizens and civil society to demand more transparency and create transparency momentum

Lack of credibility by citizens in the information disclosed by governments

Lack of historic information to provide context

Media can often have a political agenda, so may use disclosure for political reasons

Focus of reform can shift after an election

Conflicting laws, lack of legal backing

General resistance to change

Different donor requirements that push governments in different directions

Attempting to do much at the same time

Lack of strong monitoring and evaluation

De-centralization has pushed accountability to lower tiers where the accounting is not always easy to consolidate or audit

Organization structure of internal audit may not be conducive

Nationalism in some countries who feel that they are giving up sovereignty

Barrier based on the "unknown" in order to start the process and give up on previous standards

3. Are there any key preconditions to implementing new standards?

Effective training for public sector employees

Treasury Single Account (TSA)

Appropriate IT infrastructure, power and bandwidth

Uniform Chart of Accounts (COA)

Political buy-in to carry process forward (although there seems to be more will for transparency than in the past)

Legal standing of standards in order to make people and organizations accountable

Acceptable internal PFM standards

Need for public servants to be accountable - that there are legal consequences

Training population and civil society on the information being presented by the government

Use of social oversight tools and access to technology

Strong Supreme Audit Institutions

Freedom of the press

Certification processes to train accountants for government service

Need to define the government controlled entities

Need to build a value proposition to stakeholders, more communications

Aid Policy and Management, the Rwandan Experience

2010-12-08T10:17:00.004-05:00

Clement Ncuti, Budget Advisor, Rwanda, described the challenges facing the government in aid effectiveness at the ICGFM Winter Conference. These included:

Human and institutional capacities

Predictability because of aid conditionality

High transaction costs

Requests for unstructured data from donors

Lack of alignment with government priorities

Mr. Ncuti described the Rwanda aid effectiveness policy. He warned that the challenge is to implement the policy. Lessons were learned to improve the effectiveness of the policy after implementation. Aid effectiveness must be country driven in order to be successful.

The aid effectiveness policy goals of the Government of Rwanda are:

Use of reliable country systems

Alignment to national priorities

Strengthening local capacities

More predictable aid

Untied aid

Use of common arrangements

Results-oriented frameworks

Mutual accountability

Mr. Ncuti described the institutional framework in Rwanda for aid policy implementation. He described the criteria for placing aid on budget and the process of aligning aid to country priorities. Medium Term Expenditure Framework (MTEF) is used in the creation of budgets. The Government of Rwanda uses the Development Assistance Database (DAD) and an in-house Integrated Financial Management Information System. These systems are not integrated.

The key lesson learned, according to Mr. Ncuti is the need for mainstreaming of an Aid Policy requires extensive input and ownership over the policy from across government at both technical and political levels

Ncuti aid policy and management, the rwandan experience

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Ncuti politique d'aide et gestion, l'expérience du rwanda

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Ncuti política de ayuda y gestión, la experiencia de ruanda

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Using Government Chart of Accounts for Tracking Aid Flows and Expenditures in the budget4

2010-12-08T10:00:00.005-05:00

Tithokoze Samuel, Principal Budget Officer, Ministry of Finance, Malawi, describes the financial management systems in use at the ICGFM Winter Conference. She described the Integrated Financial Management System (IFMIS), use of Treasury Single Account (TSA) and expenditure management.

Ms. Samuel described the limitations of the IFMIS. Many transactions are not controlled by the IFMIS including domestic revenues, domestic debt, external loan, donor projects, payments at the council level. This information is uploaded from other information systems, although the data transfer tends to be a month late.

Ms. Samuel described the footprint of donor aid in Malawi. She described the use of the Aid Management Platform. The Government Chart of Accounts tracks donor support in the budget. However, she pointed out, donors have many different unique codes. She described the four Chart of Accounts segments and the donor codes. She pointed out that getting disbursement information from donors is delayed, yet the IFMIS is real-time. She described the difficulties matching information from the IFMIS and the AMP.

Ms. Samuel hopes that donors can be encouraged to use the IFMIS for disbursements in order to get real-time effective data. The Government COA demands a lot of detail that promotes transparency and accountability, she concluded. It is imperative that cooperating partners not using country expenditure system be encouraged to do so as this reduces time required to produce expenditure reports. She stated that it is possible to track all donor financed projects in the budget and the corresponding expenditures if country systems used.

Samuel using government chart of accounts for tracking aid flows and expenditures in the budget

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Samuel l’utilisation du plan comptable gouvernemental pour assurer le suivi des flux d’aide et des dépenses dans le budget

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Samuel utilizar el plan contable del gobierno para registrar los flujos de ayuda y los gastos en el presupuesto

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Malawi Experience in Aid Information Systems

2010-12-08T09:34:00.005-05:00

Aaron Batten, Economist, Ministry of Finance, Malawi, described why aid should be managed at the country level. He described the aid profile of Malawi including funds that are on-treasury, on-budget and on-plan.

Mr. Batten described the problems associated with low technical capacity while managing data from multiple donors within the budget cycle. The Government of Malawi had only ad-hoc information from donors with at least half of the information unavailable to the government. This undermined the budget cycle. He described the process of implementing the Aid Management Platform (AMP) to coordinate aid with the country budget cycle. The biggest challenge was to establish consistent and timely donor reporting to the government.

Mr. Batten described the advantages of using an aid management system in Malawi. Malawi was able to tailor data standards to meet country needs. Donor funds are integrated at aggregate levels, but execution by the government is at a more detailed level. He showed some of the codes.

Mr. Batten found that timely and frequent aid information from donors is more important than accuracy for effective budget control and management. Unless aid information is given to recipients in a very timely manner it is often not very useful for budget control. The Government of Malawi accepts that some of the data may be inaccurate that will need to be fixed later.

Malawi changes classifications and modernizes functions. Therefore, systems much support this type of country level of dynamism according to Mr. Batten. Data needs and priorities change and donors need to be flexible. He concluded that donors need to be responsive and accountable at the country level to enable public financial management reform. The task for recipients is to utilize this information in a way that improves public financial management.

A survey of ICGFM attendees found that almost 1/3 of countries receive no aid information from donors.

Batten aid information management in practise malawi experiences

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Batten gestión de la información sobre ayuda en la práctica experiencias en malawi

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Batten gestión de la información sobre ayuda en la práctica experiencias en malawi

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Technical Solutions and Standards to Bring Transparency to Donor Aid

2010-12-08T09:13:00.005-05:00

Samuel Moon, Research Officer, Overseas Development Institute, moderated a panel discussion on aid transparency and the International Aid Transparency Initiative (IATI). Mr. Moon described the history of IATI since the Accra Agenda for Action.

The ODI studied whether budgetary classifications, in the Chart of Accounts, used in developing countries could be consistent with an aid standards. The study examined any common ground amoung budgetary classifications.

Mr. Moon pointed out that large amounts of aid can disrupt the accountability cycle in developing countries. ODI studied information at the donor and country level. 14 countries were selected. The study examined the OECD/DAC CRS and COFOG classifications.

The study focused on the organization and function codes for government charts of accounts. The study uncovered significant similarities among countries however there were limitations in the CRS and COFOG standards. Mr. Moon described some of the budget classification problems such as in the case of where police is found in the Chart of Accounts. He found that the classifications of health functions were inconsistent in the study.

Mr. Moon described the similarities found with the creation of a "spine" classification that could form the basis of a standard. He concluded that interfacing information on aid with budget systems will be country specific.

The paper is available at: http://www.odi.org.uk/resources/details.asp?id=4801&title=aid-effectiveness-agenda-recipient-countries-budget

Moon approches pratiques pour une aide efficace

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Moon practical approaches to aid effectiveness

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Moon enfoques prácticos para la efectividad de la ayuda

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Public Financial Management Responses to an Economically Challenging World

2010-12-08T08:31:00.007-05:00

Jason Levergood, Senior Manager at Grant Thornton LLP, provided an overview of the ICGFM Worldwide Survey, Public Financial Management Responses to an Economically Challenging World on December 7th. at the ICGFM Winter Conference. Public financial managements from over 50 countries were surveyed in 2010.

The survey found that the financial crisis and stimulus packages have had significant impact on public financial managers. Yet, in this environment of doing more with less, governments have accelerated reforms including support for international standards and improvements in transparency.

Mr. Levergood described the survey results for stimulus programs, use of public private partnerships (PPPs), infrastructure investment and increasing transparency. 76% of respondents said that their countries have made or renewed a strong commitment to public fianncial management transparency. 80% of respondents said that their countries are adopting international standards. The survey found that the use of the eXtensible Business Reporting Language (XBRL) is gaining interest but has not been widely adopted in government.

The survey concludes with the observation that "public financial managers face some of the most challenging times in decades in meeting their responsibilities, but they have faced them no only with a variety of policy measures but with an unprecedented commitment to transparency".

Grant thornton global financial management leaders responses to an economically challenging world

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Grant thornton leaders internationaux de la gestion financière réponses à un monde de défis économiques.pptx

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Grant thornton líderes globales de la gestión financiera respuestas a un mundo económicamente exigente

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Public Financial Management Responses to an Economically Challenging World 2011 ICGFM Survey

Why is Accounting so Important in the Public Sector

2010-12-07T20:43:00.004-05:00

Dr. Jesse Hughes summed up the importance of public sector accounting at the 2010 ICGFM Winter Conference. The Professor Emeritus of Old Dominion University travels the globe helping governments improve public financial management. His passion for a profession not known for its passion is partly captured in this video.

Implementing the Extractive Industries Transparency Initiative

2010-12-07T15:18:00.007-05:00

Dr. Andre Ufer, Sustainable Energy – Oil, Gas and Mining, The World Bank described implementing the Extractive Industries Transparency Initiative (EITI) globally and at the country level at the IGFM Winter Conference. Dr. Ufer asked why it is important to have transparency at the sector level. He contrasted the difference between mineral and fishery industries.

Dr. Ufer provided a history of origins of EITI. He described the "paradox of plenty" in countries with mineral resources: poor development results and high corruption. EITI was luanched in Johannesburg in 2002.

The purpose of EITI is to help resource-rich developing countries in their own national efforts to better manage natural resources. Dr. Ufer described how the “resource curse” effects of oil gas and mining wealth can be managed through accountability and transparency. Transparency gives civil society an oversight role. He described how EITI supports standards for through open dialog, public/private sector balance, and transparency.

Dr. Ufer described the EITI process and the adoption to date by countries and private sector organizations.

Dr. Ufer described EITI benefits to governments:

Demonstrate value of the sector to citizens

Income across all government organizations consolidated

Improve government credit-worthiness

Less risk to private sector investment

Strong brand in accountability

Benefits to business was also described:

Demonstrates value of business to citizens

Reduces operational risks

Improves relationships with governments

Reduces reputational risks

Dr. Ufer described the motivations for countries to implement EITI. He provided case studies of Nigeria and Ghana. Nigeria exceeded EITI requirements and an audit found significant unresolved differences in payments and receipts.

Dr. Ufer suggested that EITI has achieved strong momentum. IASB (International Accounting Standard Board) is currently working on a possible country-by-country reporting requirement. He stated that there is a general agreement that longer-term outcomes need to be tracked. The future impact of EITI is still a work-in-progress. He pointed out that EITI provides a very narrow focus on disclosure.

Ufer eiti globally and implementation at country level current status, emerging results and lessons

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Ufer iniciativa de transparencia de la industria extractiva (eiti)

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Ufer l'itie au niveau mondial et la mise en œuvre au niveau des pays état actuel, premiers résultats et leçons

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IPSAS Case Study in Republic of Georgia

2010-12-07T13:26:00.008-05:00

Nino Tchelishvili, Deputy Head, Treasury Service of the Republic of Georgia described the government adoption of the International Public Sector Accounting Standards (IPSAS) at the ICGFM Winter Conference. She described the challenges of moving from a planned to a market economy. The public financial management functions were designed on the socialist model and did not meet international standards. She described how assets were not properly defined in the old system.

Georgia is a top reformer during according to the World Bank. Ms. Tchelishvili described some of the initiatives taken by the government since 2003 such as the adoption of the Treasury Single Account (TSA). She described the difficulties of accounting for government businesses and local service providers like hospital. Government entities operated on a cash basis, but parastatal organizations operated on accrual accounting. Consolidation is almost impossible to achieve given so many different systems and accounting methods.

Ms. Tchelishvili described some limitations including the lack of an Integrated Financial Management Information System.

Ms. Tchelishvili described the six phase strategy implementation strategy in Georgia:

2010 Initiation
Strategy agreed; Georgian Public Sector Accounting Standards Board formed; translation IPSAS initiated

2012 Pilot
Pilot financial statements under modified cash basis IPSAS

2015 Modified Cash IPSAS
Gov’t consolidated financial statements (excluding GBEs) under modified cash IPSAS (cash IPSAS + additional information)

2017 Some accrual
Simple accrual information provided under modified cash IPSAS Part II (GBEs not consolidated)

2020 Accrual IPSAS
Financial statements in full compliance accrual IPSAS

Ongoing
Programme for ongoing adoption of new IPSAS

Ms. Tchelishvili described the capacity building process in Georgia using a certification process that professionalizing public accountants.

Ms. Tchelishvili described the differences in GFS and IPSAS definitions of government entity and government sector. She pointed out the reform in Georgia will cover all aspects of the public sector. She provided a decision-tree to define whether an organization is a government-owned business or a non-profit organization controlled by the government.

The modified cash approach to be used by the Government of Georgia in phase 3 using IPSAS 2 format cash flow statements. Ms. Tchelishvili described the mandatory and encouraged portions of the standard.

Ms. Tchelishvili described the current status in the Republic of Georgia:

IPSAS Strategy adopted and approved by Ministerial Decree in 2009

Georgian Public Sector Accounting Standards Board (GPSASB) established as permanent consultative body under the Government of Georgia in 2010

11 different pilot organizations selected for implementing modified cash basis IPSAS.

Lessons learned from the IPSAS project include:

If supporting GFS 2001, not that difficult to support IPSAS modified cash accounting

IPSAS implementation needs to be phased over a decade or longer

Fully implementing the Cash Basis IPSAS at national government level is not feasible for any country

A country is not compliant with accrual IPSAS until all implemented and is not feasible except in very long term

Georgia ipsas strategy for ipsas implementation

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Géorgie stratégie de mise en œuvre des normes ipsas

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Georgia estrategia para la implementación de los ipsas

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Ms. Tchelishvili conducting a survey of attendees about IPSAS:

44% same Chart of Accounts for cash and accrual accounting, 40% plan to implement, 16% no plans

26% Permanent independent body for IPSAS, 22% consultative body under the government, no board 52%

82% agreed that IPSAS requires an Integrated Financial Management System (IPSAS) to succeed

Most important success factor for IPSAS adoption: 61% political leadership, 21% IFMIS, 18% skilled staff, 0% dedicated staff

The Transparency Portal of Brazil

2010-12-07T10:13:00.010-05:00

Mário Vinícius Claussen Spinelli, Secretary of Corruption Prevention and Strategic Information, Brazilian Office of the Comptroller General described the “Transparency Portal” in Brazil, He began his presentation by describing the institutional framework and audit and anti-corruption mandate of the CGU unit. The CGU unit has been able to investigate and dismiss over 2,000 public servants changed with fraud and corruption.

Mr. Spinelli described the preventative actions taken by the CGU unit including:

Increased Transparency

Incentive to Social Control

Management Strengthening

Implementation of International Conventions

Improved Legal Framework

Studies and research on corruption

Education for Ethics and Citizenship

The CGU unit has developed on-line games that teach the advantage of ethics to children. Mr. Spinelli pointed out that transparency and "right to know" goes beyond publicity, because it involves the delivery of understandable information and public access to official documents.

Mr. Spinelli described the timeline for the creation of the Brazil Transparency Portal. Procurement and budget execution information is available on the portal. Companies found to have engaged in corrupt practices are listed on the portal. Brazil is now moving to support IFRS and IPSAS standards. Full information about public servants are provided on the portal. Full information on the 2014 World Cup and 2016 Olympic games contracts and expenditures are provided.

Mr. Spinelli described how the transparency portal provides easy access without passwords and accessible information. He emphasized that the information and navigation needs to be simple.

The Brazil Transparency Portal has disclosed $4.4T in total amounts since 2005, with over 1 Billion in registered payments with almost 250,000 monthly accesses and over 30,000 paid subscribers to push services.

The Brazil Transparency Portal has won numerous international awards. It takes approximately 4 1/2 hours for daily document updates.

The Transparency Portal in Brazil is compliant with many international standards:

International Public Sector Accounting Standards

XBRL

IMF Good Practices on Fiscal Transparency Code

OECD Best Transparency Budget Practices

Open Government;

Mr. Spinelli described the Three Laws of Open Government Data

If it can’t be spidered or indexed, it doesn’t exist

If it isn’t available in open and machine readable format, it can’t
engage

If a legal framework doesn’t allow it to be repurposed, it doesn’t empower

Surveys at the conference agreed with Mr. Spinelli

95% agree that transparency required for social participation and preventing transparency

67% agree that citizens have interest in social control and transparency

86% agree that citizens can be encouraged to participate in social control transparency

74% agree that Transparency portal best way for public sector transparency

According to the web site:

“The Transparency Portal was created in November 2004 for the purpose of making it possible for public managers and citizens at large to follow up on the financial execution of all programs and actions of the Federal Government more easily. The information available in it includes: funds transferred by the Federal Government to states, municipalities and the Federal District; funds directly transferred to citizens; direct spending of the Federal Government with procurement or contracts for projects and services, including the spending of each agency with per diems, office supplies, equipment, projects and services; as well as spending through Payment Cards of the Federal Government.

The Portal shows all data on the SIAFI's (Federal Government Integrated System for Financial Management) financial execution, as well as data provided by the National Health Fund, by Caixa Econômica Federal ( Brazil 's federal savings bank), by the National Treasury Secretariat and by Banco do Brasil . Apart from publishing all these data and information, the Transparency Portal makes a communication channel available: the Talk to Us link. Through this channel, users of the Portal can clear any doubts regarding accessibility or its contents, as well as post congratulations or suggestions.”

Spinelli transparencia para los ciudadanos la experiencia brasileña del portal de la transparencia

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Spinelli transparence pour les citoyens l'expérience brésilienne du portail de transparence

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Spinelli transparency for citizens the brazilian experience of transparency portal

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Cooperation on Audit Standards, Internal Auditors and Supreme Audit Insitutions

2010-12-07T09:03:00.011-05:00

Beryl Davis, Director, Standards and Guidance, Institute of Internal Auditors and Bonnie Derby, Senior Auditor of the GAO discussed cooperation on audit standards between internal auditors and supreme audit institutions at the ICGFM Winter Conference. The presentation described INTOSAI GOV 9150 Coordination and Cooperation between SAIs and Internal Auditors in the Public Sector paper.

Ms. Derby introduced the four cornerstones of good governance: public officials; the governing body; internal auditors; and external auditors (SAIs). She concluded that the relationship between internal auditors and SAIs is both critical and beneficial to good governance and the effective use of public resources.

Ms. Derby described the evolution of audit standards, and the roles and responsibilities for internal audit and supreme audit institutions.

According to INTOSAI GOV 9100 (Guidelines for Internal Control Standards for the Public Sector), internal auditors examine and contribute to the ongoing effectiveness and efficiency of the internal control structure through their evaluations and recommendations and therefore play a significant role in effective internal control. Management often establishes an internal audit function as part of its internal control framework. In this tradition, the role of internal auditors is a critical part of an organization's internal control structure.

Ms. Derby introduced the benefits of coordination including:

Strengthen mutual accountability

Improved risk management

More efficient audits

Risks of cooperation on audit standards include:

Compromise on confidentiality

Possible conflict of interest

Use of different professional standards

Ms. Davis advocates the convergence of audit standards. She described the coordination and cooperation on these standards including:

Communication of audit planning and audit strategy

Collaborating on certain audit procedures, such as collecting audit evidence or testing data

Communication of audit reports to each other

Ms. Davis suggested that internal and external auditors could use certain aspects of each other’s work to determine the nature, timing, and extent of audit procedures to be performed. She surveyed the audience to determine that there was not significant coordination between internal and external audit in most countries:

24% use each others work, 69% do not

18% share training programs 64% do not

34% share reports , 52% do not

37% work together on strategy, 41% do not

Ms. Davis advocated cooperation between internal and external audit throughout the entire audit lifecycle. She emphasized that assessment and communication should be documented in respective audit documents.

Derby davis coordination et coopération entre les sai et les auditeurs internes du secteur public

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Derby davis coordination and cooperation between sa is and internal auditors in the public sector

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Derby davis coordinación y cooperación entre las instituciones de auditoría suprema (sai) y los auditores internos en el sector público

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Convergence of Public Sector Audit Standards

2010-12-06T16:24:00.006-05:00

Jeanette Franzel, Managing Director, Financial Management and Assurance GAO was the moderator for the panel. The session started with an overview by Kelly Anerud, Senior Technical Manager, The International Federation of Accountants (IFAC).

Ms. Anerud described how International Organization of Supreme Audit Institutions (INTOSAI) worked with the International Standards of Auditing with the International Auditing and Assurance Board (IAASB). She described how the "clarity" project enabled the convergence of public sector audit standards. She showed the INTOSAI and IFAC structure for developing standards and how these standards were rationalized.

Mr. Anerud described the differences between private and public sector audit including:

Terminology differences

Broader role of government audit, especially in performance

Inability for the government auditor to "withdrawal"

Need for confidentiality in private sector audit vs. transparency in public sector

Differences in materiality in government and what public expects to see reported

Jan Van Schalkwyk, Acting Corporate Executive from Auditor-General of South Africa described lessons learned. He described how audit is critical to democracy. Mr. Van Schalkwyk described the adoption audit standards by the Government of South Africa. Adoption of any standards in government requires legal standing and legal reform. He described challenges and lessons learned in adopting the INTOSAI standards. Mr. Van Schalkwyk pointed out that audit is critical to improving the lives of citizens.

Gail Flister Vallieres, Assistant Director, Financial Management and Assurance GAO described the move from the US "yellow book" standard to INTOSAI and international audit standards. Ms. Vallieres described how GAO could not immediately move to INTOSAI standard. Instead, GAO is sequencing a convergence to the standard. This process was facilitated when the AICPA US private sector auditing converged with ISA. She showed how the audit standards consist of basic accounting principles with standards specific to the public sector.

The exposure draft of the yellow book is available at the GAO web site.

Convergence of public sector audit standards

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Convergencia de los estándares de auditoría del sector público

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Convergence des normes d’audit dans le secteur public

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IPSAS Implementation at the OAS

2010-12-06T15:10:00.002-05:00

Heather Alsopp of the Organization of American States presented a case showing how the OAS adopted IPSAS standards. suggested that the move to IPSAS was somewhat of a baptism of fire.

The OAS used different accounting methods for operating, voluntary, special reserve, fiduciary and internal service funds. Ms. Alsopp pointed out that the adoption of IPSAS typically happens in the context of wider management reforms. She suggested that the move to a common language through IPSAS enables improved transparency, accountability and manage for results.

The OAS project was primarily funded by a grant from the Canadian International Development Agency (CIDA).

The OAS experienced some challenges when adopting IPSAS including:

Difficulty of moving to accrual accounting
Resistance to change
Competition for IPSAS experts

Ms. Alsopp suggested that the benefits of accrual accounting need to be articulated rather than the theoretic differences between cash and accrual. One major lesson learned is having dedicated qualified expertise to move to accrual accounting.

Ms. Alsopp described how IPSAS impacted:

Consolidation of controlled entities
Revenue recognition
Expense recognition
Employee benefits
Property plant and equipment

She said that there is a lot of qualitative and legal assessments required for accrual based IPSAS. Ms. Alsopp pointed out that there was a concern that the move to accrual accounting loses important information. She recommended that budget variance reports based on cash basis can provide this information.

Although the move to accrual accounting and support of IPSAS has been a major project, Ms. Alsopp believes that the benefits in transparency and accountability will help improve decision making.

Alsopp ipsas a case for accounting reform at the oas

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Alsopp ipsas ipsas un cas pour la réforme comptable à l'oea

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Alsopp ipsas ipsas en favor de una reforma contable en la oea

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Supporting IPSAS in the Government of Honduras

2010-12-06T14:37:00.003-05:00

Carlos Castejon, Deputy Minister of Finance, Jose Romero, Accountant General and Angel Moncada, Deputy Accountant General of the Government of Honduras described the implementation of cash-based IPSAS (International Public Sector Accounting Standards) planned by the Government of Honduras. Legal reform was required in order to adopt IPSAS into national standards. The IPSAS cash standard for reporting will be adopted on January 1, 2011.

The Government of Honduras faced serious macroeconomic challenges because of the financial crisis. Minister Castejon pointed out that the financial management system was not able to report effectively on the financial situation of the government.

Sr. Romero described legal reform in Honduras and the move towards supporting international standards. Sr. Moncado described the plan of action to implement IPSAS. Lessons learned included:

Legislation enabling support of international standards
Training is critical to the successful implementation of IPSAS
Numerous changes in reports are necessary to support IPSAS

The application of international standards and a move towards accrual accounting leads to a deeper analysis and makes accounting more accurate in order for government accounting reports to be reliable according to Sr. Moncado. Identifying assets and liabilities of the government has lead theGovernment of Honduras to have better control over the state heritage.
The Government of Honduras plans to adopt the IPSAS accrual accounting standards by January 2014. The Government of Honduras is is currently cataloging all government assets. Sr. Moncado believes that the challanges for the future include rolling out to municipal governments, consolidating financial statements and supporting information in a single accounting system.

Honduras implementing cash ipsas and preparing for the accrual ipsas

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Honduras presentacion sobre la preparacion para implementacion de normas internacionales de contabilidad para el sector publico en

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Honduras mise en œuvre de la norme ipsas relative à la comptabilité de caisse et préparation à la norme ipsas relative à la comptabilité d’exercice

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IPSAS Lessons Learned

2010-12-06T14:23:00.007-05:00

Jesse Hughes, Professor Emeritus, Old Dominion University provided lessons learned on the adoption of IPSAS standards. He commented that people speak many languages around the world, but accounting is the language of management. He emphasized that we can't speak of improved public financial management without improving accounting system. "It is the glue that pulls everything together to see what the whole of government is doing."

Dr. Hughes sees IPSAS as one the strategies to improve public financial management. He also recommended that cash management should be separate from budgetary controls, that the Treasury Single Account (TSA) be used and Integrated Financial Management Information Systems (IFMIS) adopted by governments.

Dr. Hughes emphasized the need for improved education in public financial management. He described the benefits of accrual accounting in government. These benefits include:

Better accountability and better decisions

More meaningful understanding of costs for goods and services

Basis for performance management

Dr. Hughes stated that if we get nothing else about accrual accounting, it ensures that you don't pass along your debt to children and grandchildren.

12 steps for transition to IPSAS was described by Dr. Hughes:

Develop organizational transition plan and coordinate with auditors

Train staff

Assess the information system changes required

Prepare Policy and Procedures Manual for approved IPSAS policies

Pilot test IPSAS policies and procedures in the new/upgraded information system

Prepare IPSAS-compliant opening and closing Statements of Financial Position.

Prepare proforma Statement of Financial Performance.

Prepare proforma Statement of Net Assets/Equity.

Prepare proforma Statement of Cash Flows

Prepare proforma Statement of Comparison of Budget to Actual Amounts

Prepare proforma IPSAS-complaint statements for controlled entities

Prepare proforma Consolidated Statements

Dr. Hughes suggests that IPSAS may tackle public private partnerships, fiscal sustainability and social security reporting standards. He showed the difference in size between the cash and accrual version of IPSAS.

Hughes implementing ipsas to improve public financial management

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Hughes implementando las ipsas para mejorar la gestión de las finanzas publicas

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Hughes implementing ipsas to improve public financial management

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Addressing Current Governance and Risk Management Challenges in Governmental and

2010-12-06T13:25:00.006-05:00

Alan N. Siegfried, Auditor General of the Inter-American Development Bank presented "Addressing Current Governance and Risk Management Challenges in Governmental and
International Organizations" at the ICGFM Winter Conference. The IaDB has been a prime mover in public financial management reform in Latin America and the Caribbean. He described the changes in the organization to improve the performance of the organization.

On a lighter note, Mr. Siegfried described the wonders of risk management thanks to George Costanza from the Seinfeld television series.

Mr. Siegfried described the current global economic challenges that generate uncertainty and unpredictability including turmoil in financial markets, changing regulatory environment and budget restrictions. Mr. Siegfried believes that this uncertainty presents the internal audit profession with an opportunity to demonstrate leadership in risk management, control and governance. He cautioned that internal audit is crucial to improve the credibility of governance structures. He warned the attendees that internal audit is often seen as inflexible and non-responsive to emerging risk. And, many organizations have cut disproportionately in oversight because of reduced budgets.

Mr. Siegfried described the important role of internal audit to help management identify risks, design risk management strategies, and monitor the effectiveness of control. He pointed He described lessons learned. Mr. Siegfried emphasized the differences between risk management, control and governance. He recommended that organizations must take some risk, otherwise the organization become stagnant.

Mr. Siegfried suggested that organizations must balance risk and opportunity. Risk management is about risk mitigation, not about eliminating risk. He described governance structures and the principles for enterprise risk management. He recommended more holistic views on risk management. He pointed out that Standard & Poors is now using enterprise risk management as part of organizational valuation.

Mr. Siegfried presented an overview of risk management for international organizations. He suggested that risk management does not need to be a centralized function. Accountability is critical regardless of whether centralized or decentralized risk management models are used.

He showed the roles that internal audit should take, could take and should not take in risk management. He spoke about risk velocity where problems can happen very quickly, like the earthquake in Haiti.

There is a significant value proposition to internal audit. Internal audit needs to move from recognized to trusted to valued. Mr. Siegfried provided an overview of the risk management evaluation framework. He provided a list of financial, compliance, strategic and operational risks to consider.

Mr. Siegfried concluded by suggesting that risks facing organizations are unprecedented and stakeholders’ expectations continue to increase. He recommended that individual practitioners and organizations must ‘raise the bar’ to most effectively represent and advocate for strong governance and risk management. Organizations need to move from hindsight to insight to foresight.

Siegfried addressing current governance and risk management challenges in governmental and international organizations

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Siegfried relever les défis de la gouvernance et de la gestion de risques actuels dans les organisations gouvernementales et internationales

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Siegfried abordar los desafíos actuales del gobierno y la gestión de riesgos en organizaciones gubernamentales e internacionales

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ICGFM Winter Conference Opens in Washington

2010-12-06T12:50:00.005-05:00

Jim Ebbitt, President of ICGFM, openned the Winter Conferece, Practical Uses of New Standards to Enhance Transparency and Program Performance. Emerging standards that will be discussed include:

International Public Sector Accounting Standards

Extractive Industries Transparency Initiative

International Aid Transparency Initiative

Extended Business Reporting Language

Mr. Ebbitt welcomed over 100 delegates from over 25 Countries to the Enrique Iglesias Conference Center at the Inter-American Development Bank. Mr. Ebbitt is completing his 2 year term as President of ICGFM.

Mr. Ebbitt thanked sponsors Grant Thornton, Casals & Associates, FreeBalance, Mosley & Associates and the Graduate School. He also thanked the IaDB.

Materiality in Government Auditing

2010-12-04T10:43:00.000-05:00

Frans van Schaik considers the issue of materiality in government auditing in the context of the development of public sector specific guidance on this subject by INTOSAI, the international body for public sector external auditors, based on the private sector standard. The paper finds significant evidence for the materiality level in the public sector to be different to that in the private sector, despite this evidence, such differences are not clearly documented in the auditing standard. In the process, van Schaik reviews the key considerations for materiality for public sector auditors.

Abstract
There is a striking difference in the approach taken in the preparation of public sector specific guidance on accounting and auditing. While the International Public Sector Accounting Standards Board (IPSASB) issues stand-alone public sector accounting standards, the International Organization of Supreme Audit Institutions (INTOSAI) issues practice notes, which provide supplementary guidance for the public sector, in addition to the considerations specific to the public sector contained in the International Standards on Auditing. There is a similarity in that both IPSASB and INTOSAI fly in the jet stream of private sector standard setters. IPSASB only deviates from the International Financial Reporting Standards (IFRS), issued by the IFRS Board, for public sector specific reasons. INTOSAI adds guidance to the International Standards on Auditing, issued by the International Auditing and Assurance Standards Board (IAASB). These public sector specific practice not es are called International Standards of Supreme Audit Institutions (ISSAI).

Materiality in Government Auditing

Public Financial Management Reform in Kosovo

2010-12-04T10:42:00.001-05:00

Doug Hadden provides a case study of public financial management reforms in Kosovo. This post-conflict country has sequenced legal reform, improved governance, and achieved international public financial management standards under difficult conditions. Hadden points out that there are numerous lessons in the Kosovo experience linking reform to context that can be leveraged by governments around the world.

Abstract

The Government of Kosovo has achieved remarkable results in Public Financial Management (PFM) reform. This post-conflict country once managed through a United Nations mandate has sequenced legal reform, improved governance, and achieved international PFM standards under difficult conditions. Sequencing PFM reform is considered a good government practice, although “it is impossible to prescribe a sequence of reforms which is appropriate in all circumstances (DFID 2001).”
There are numerous lessons in the Kosovo experience linking reform to context that can be leveraged by governments around the world.

Hadden Public Financial Management in Government of Kosovo

Telling a More Credible Performance Story: Old Wine in New Bottles

2010-12-04T10:40:00.001-05:00

Rocky J. Dwyer argues that a credible demonstration of public sector impacts depends on understanding the distinction between inputs, outputs, outcomes and indicators. The first aim of the paper is to provide an enhanced understanding of the current literature, reports and documentation on estimating the impacts and results of government programming and policies. Secondly, it shares the definitions and guidelines used to demonstrate economic impacts. Finally, it presents current best practices in measuring incremental impacts. All of which, Dwyer contends, provides new ways of approaching measurement and accountability that are more effective, strategic, comprehensive and credible to the public.

Abstract

A credible demonstration of policy or program impact depends on
understanding the distinction between inputs, outputs, outcomes, and indicators. Moreover, to be trusted by the public, performance reporting needs to focus more selectively on identifying the key measures of performance that will be recognized by stakeholders. The first aim of the article is to provide those involved in the practice of program evaluation with an enhanced understanding of the current literature, reports and documentation on estimating the impact and results of government programming and policies. Secondly, it shares the definitions and guidelines used to demonstrate economic impacts. Finally, it presents current
best practices in measuring incremental impact. All of which, we contend, provides program evaluation staff with new ways of approaching measurement and accountability that are more effective, strategic, comprehensive and credible to the public.

Dwyer Telling a More Credible Performance Story Old Wine in New Bottles

Cash Reporting in Developing Countries: The Case of Nepalese Central Government

2010-12-04T10:38:00.000-05:00

Pawan Adhikari and Frode Mellemvik argue that developing countries have few alternatives other than to accept the rules and standards developed and prescribed by international standard setters, so as to ensure external legitimacy and financial support. Their paper explores Nepal’s move towards the implementation of International Public Sector Accounting Standards (IPSAS). This study shows an interesting case of how public sector accounting in developing countries is being influenced by international organizations, particularly the World Bank and professional accounting institutions. However, it is not clear from this study that such an approach is ensuring that public financial management reforms are focussed on the key areas in Nepal.

Abstract
International organizations such as the International Accounting Standards Board (IASB), the International Federation of Accountants (IFAC), and the International Organization of Supreme Audit Institutions (INTOSAI) have in recent years acquired accounting expertise by gaining the power to command agendas and standards. The impact of these organizations in the accounting world seems greater and more influential in developing countries. Developing countries are left with few alternatives other than to accept the rules and standards developed
and prescribed by these organizations, so as to ensure external legitimacy and financial support. In the context of developing countries, the implementation of accounting standards is seen as imperative in order to avert the possible financial and economical crisis. This paper aims to explore Nepal’s move towards IPSASs, contributing to the literature concerning the role of international organizations in disseminating IPSASs in the developing world.
Adhikari, Mellemvik IPSASs in Developing Countries a Case of Nepalese Central Government

Project Management Perspective on the Adoption of Accrual-Based IPSAS

2010-12-04T10:37:00.001-05:00

Caroline Aggestam considers the need to adopt a project management perspective with the adoption of accrual based IPSAS.
Moving from cash or modified accrual based accounting to full accrual accounting under International Public Sector Accounting Standards (IPSAS) can be a challenging endeavor. Ensuring proper convergence to accrual based IPSAS entails not only a vast amount of work in the accounting arena of any given public sector entity or government but also often major changes in business processes and practices. By using a project management approach in adopting IPSAS an organization/government can make certain that, for example: the project gets necessary support from top management; a sound governance structure is put in place; communication and training plans are developed and managed; new accounting policies are written; and necessary alignment of business processes will take place in a timely manner.

Abstract
Moving from cash or modified accrual-based accounting to full accrual accounting under International Public Sector Accounting Standards (IPSAS) can be a challenging endeavor. Ensuring proper convergence to accrual based IPSAS entails not only a vast amount of work in the accounting arena of any given public sector entity or government but also often major changes in business processes and practices. By using a project management approach in adopting IPSAS an organization/government can make certain that, for example: the project gets necessary support from top management; a sound governance structure is put in place; communication and training plans are developed and managed; new accounting policies are written; and necessary alignment of business processes will take place in a timely manner. Sound project management may facilitate cost-effective adoption of IPSAS and a broader strengthening of business practices across the implementing organization/government.

Aggestam a Project Management Perspective on the Adoption of Accrual Based IPSAS

New Guidance on Accounting and Financial Reporting for Intangible Assets

2010-12-04T10:34:00.000-05:00

Rizvana Zameeruddin considers new guidance on accounting and financial reporting for intangible assets from the Government Accounting Standards Board (GASB) in the USA. Zameeruddin considers that when Statement 51 is appropriately used in conjunction with existing guidance, a more faithful representation of the services capacity of intangible assets, particularly in the areas of recognition, initial measurement, and amortization results. This should improve financial reporting by clarifying the classification of intangibles as capital assets and establishing guidance for internally generated intangibles.

Abstract
Before the issuance of Statement 51, the question of where public sector accountants in the US should look for guidance about reporting and accounting for intangible assets was unclear. An intangible asset was most likely accounted for under Statement 34, which defines an intangible asset as a capital asset; together with Accounting Principles Board Opinion (APB) No. 17, Intangible Assets, and Financial Accounting Standards Board (FASB) Statement No. 142, Goodwill and Other Intangible Assets. Some of the questions existing guidance raised were: should easement rights be reported, should assets donated to the government be reported differently from assets purchased, how should water rights be reported, how should internally created intangibles be valued, which intangibles, if any, should be amortized? After conferring with FASB, the International Accounting Standards Board (IASB), the American Institute of Certified Public Accountants (AICPA), and the International Public Sector Accounting Standards Boards GASB issued Statement 51 to
clarify existing guidance. When Statement 51 is appropriately used in conjunction with existing guidance, a more faithful representation of the services capacity of intangible assets, particularly in the areas of recognition, initial measurement, and amortization results can be made. This ultimately improves financial reporting by clarifying the classification of intangibles as capital assets and establishing guidance for internally generated intangibles.

Zameeruddin GASB 51 New Guidance on Accounting and Financial Reporting for Intangible Assets

Recent Public Financial Management Publications and Other Resources

2010-12-04T10:31:00.002-05:00

As usual, we end this issue with a section reviewing recent public financial management publications and other resources which we hope will be of interest to readers of the Journal. We would be pleased to receive reviews and suggestions of other resources which we should refer to in future issues.

Pre-requisites for a Medium Term Expenditure Framework
“Reference Guide to Modern Trends and Best Practices in Public Financial” – for the Arabic World
Public Financial Management Reform in the Middle East and North Africa
How Far Have Public Financial Management Reforms Come in Africa?
Gestion des dépenses publiques dans les pays en voie de développement
Review of the Cash Basis International Public Sector Accounting Standard – Report of the Task Force
Open Budget Survey 2010
Global Auction of Public Assets: Public sector alternatives to the
infrastructure market & Public Private Partnerships
The basics of integrity in procurement: A guidebook
Expanding Tax Bases is Key to Development and Democracy in Africa
Domestic Resources Mobilization in Sub-Saharan Africa
The Experience of Medium Term Expenditure Framework & Integrated
Financial Management Information System Reforms In Sub-Saharan
Africa – What Is The Balance Sheet?

Recent Public Financial Management Publications and Other Resources

International Journal on Governmental Financial Management, 2010 Volume 2 Published

2010-12-04T10:23:00.004-05:00

For the last dozen years or so, the World Bank and donors that support its approach have dominated the public financial management reform agenda in developing countries. However, this approach has been subject to increasing criticism in recent years. Two important studies published earlier this year, one by the World Bank itself, provide further evidence that the dominant approach is not working, at least in Africa and the Middle East.

The World Bank approach is based on its Public Expenditure Management Handbook (1998). Around half of this publication is devoted to two reforms, the Medium Term Expenditure Framework (MTEF) and the Integrated Financial Management Information System (IFMIS). These have since become standard reforms to be implemented almost everywhere the World Bank has significant influence. So for example, Mat Andrews (2010), in his study of 31 countries in Sub-Saharan Africa found that “they have alarmingly similar reforms in place” (page 44), “an MTEF was implemented in 28 countries, programme budgeting in 25 and an IFMIS in 20”. As a result of these findings, Andrews calls for “less similarity of reforms and more context appropriateness”, as one of his three main recommendations.

Close reading of the World Bank Handbook shows that some criticism of what became the standard approaches is acknowledged. So this publication admits that “program budgeting has not been very successful in either developed or developing countries” (p.13). However, this became an integral approach to most MTEFs. In addition, the Handbook provides a short section on “getting the basics right” including a list of pre-conditions for what became the standard reform agenda.

Two years ago both the World Bank and the IMF held high-level seminars to review the evidence for the success (or more common failure) of their common approach to public financial management reform. One of the presenters warned that an MTEF may cause “enormous waste, frustration, and illusion—for trivial or non-existent benefits. The same is true of the informatics infrastructure for public financial management” (Schiavo-Campo 2008, p.26).

The recent World Bank paper reviewing the experience of ten countries in the Middle East and North Africa provides further support for this view. It found that two of the five most challenging public financial management reforms were medium term sector strategies and large information technology projects. A “number of countries in the MENA region are attempting to develop forward estimates as part of MTEF reforms, but none has a functioning system at present” (p.16). Similarly the level of success with IFMIS projects was found to be disappointing and one of the ten lessons of the study is to “be wary of large financial management information systems”. These have been found to include a high level of risk in both developed and developing countries. Reference is made to another study that found that “fully 75 percent of IT systems implemented in the United States failed to fully deliver in terms of their time, cost or projected functionality” (p.48).

Mat Andrews, of the Kennedy School of Governance, also emphasises that public financial management reform should be “led by an identification of problems requiring change (not the simple reproduction of technical solutions to change)” and be centred “on internal rather than external change motivation, not external coercion” (p.33).

In contrast, the World Bank Handbook introduced what have become accepted as the three basic objectives for public financial management reform:

aggregate fiscal discipline
resource allocation and use based on strategic priories
efficiency and effectiveness of programs and service delivery.

These objectives are consistent with the overall message of New Public Management reforms which emphasise efficiency rather than regularity. This is acknowledged by the World Bank Handbook saying that their objectives are a “reformulation of the three functions – control of public resources, planning for the future allocation of resources, and management of resources – that have driven reform over the past 100 years” (p.17). The recent World Bank study also confirms that regularity remains important, suggesting that public financial management must be “conducted in accordance with the relevant laws and regulations; and undertaken with appropriate checks and balances to ensure financial probity” (p.1).

These two studies warn of the significant risks of implementing the currently standard approaches, for example, an MTEF or IFMIS. They also emphasise the continuing importance of control and regularity, and the importance of context and political support for public financial management reform. We have to understand the environment for the reforms, so the expert knowledge and experience of the local public financial management officials is vital, and we have to know what has been proved to work in similar environments.

That is the role of this Journal, to highlight the successes (or otherwise) of the actual experience of public financial management reforms. In the first paper of this issue, Frans van Schaik considers the issue of materiality in government auditing in the context of the development of public sector specific guidance on this subject by INTOSAI, the international body for public sector external auditors, based on the private sector standard. The paper finds significant evidence for the materiality level in the public sector to be different to that in the private sector, despite this evidence, such differences are not clearly documented in the auditing standard. In the process, van Schaik reviews the key considerations for materiality for public sector auditors.

In our second paper, Doug Hadden provides a case study of public financial management reforms in Kosovo. This post-conflict country has sequenced legal reform, improved governance, and achieved international public financial management standards under difficult conditions. Hadden points out that there are numerous lessons in the Kosovo experience linking reform to context that can be leveraged by governments around the world.

Rocky J. Dwyer argues that a credible demonstration of public sector impacts depends on understanding the distinction between inputs, outputs, outcomes and indicators. The first aim of the paper is to provide an enhanced understanding of the current literature, reports and documentation on estimating the impacts and results of government programming and policies. Secondly, it shares the definitions and guidelines used to demonstrate economic impacts. Finally, it presents current best practices in measuring incremental impacts. All of which, Dwyer contends, provides new ways of approaching measurement and accountability that are more effective, strategic, comprehensive and credible to the public.

Pawan Adhikari and Frode Mellemvik argue that developing countries have few alternatives other than to accept the rules and standards developed and prescribed by international standard setters, so as to ensure external legitimacy and financial support. Their paper explores Nepal’s move towards the implementation of International Public Sector Accounting Standards (IPSAS). This study shows an interesting case of how public sector accounting in developing countries is being influenced by international organizations, particularly the World Bank and professional accounting institutions. However, it is not clear from this study that such an approach is ensuring that public financial management reforms are focussed on the key areas in Nepal.

Similarly, in our penultimate article, Caroline Aggestam considers the need to adopt a project management perspective with the adoption of accrual based IPSAS.
Moving from cash or modified accrual based accounting to full accrual accounting under International Public Sector Accounting Standards (IPSAS) can be a challenging endeavor. Ensuring proper convergence to accrual based IPSAS entails not only a vast amount of work in the accounting arena of any given public sector entity or government but also often major changes in business processes and practices. By using a project management approach in adopting IPSAS an organization/government can make certain that, for example: the project gets necessary support from top management; a sound governance structure is put in place; communication and training plans are developed and managed; new accounting policies are written; and necessary alignment of business processes will take place in a timely manner.

In our final paper for this issue, Rizvana Zameeruddin considers new guidance on accounting and financial reporting for intangible assets from the Government Accounting Standards Board (GASB) in the USA. Zameeruddin considers that when Statement 51 is appropriately used in conjunction with existing guidance, a more faithful representation of the services capacity of intangible assets, particularly in the areas of recognition, initial measurement, and amortization results. This should improve financial reporting by clarifying the classification of intangibles as capital assets and establishing guidance for internally generated intangibles.

As usual, we end this issue with a section reviewing recent public financial management publications and other resources which we hope will be of interest to readers of the Journal. We would be pleased to receive reviews and suggestions of other resources which we should refer to in future issues.

If you would like to continue the debates raised in this issue please start thinking about contributions for the next issue of this Journal, the ICGFM blog or attend future ICGFM events. We look forward to hearing from you!

Andy Wynne
Editor

Doug Hadden
VP Communications

Jim Ebbitt
President

Slaviana Hadden
Editorial Assistant

International Journal on Governmental Financial Management 2010 Volume 2

Control Self Assessment

2010-10-14T09:48:00.003-04:00

Miguel Garcia-Gosalvez Program Director. Anti-Corruption & Local Governance, Casals & Associates, Inc. , a DynCorp International Company presented at the October ICGFM DC Forum on Control Self Assessment.

Control Self Assessment (CSA) is a means for taking the pulse of an organization, collecting information on the state of its institutional health, and assessing risks to achieving
its organizational objectives. Mr. Garciz-Gosalvez explained how the process was implemented in Colombia to improve government informal controls and how it is now being implemented in Paraguay.

Casals control self assessment presentation

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Casals ta control self assessment

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Job Opportunity: IMF Looking for Public Sector Cost Accounting Expert to be Based in Sao Paolo, Brazil

2010-09-10T15:11:00.001-04:00

The IMF Fiscal Affairs Department (FAD) is looking for candidates to work in a project on public sector cost accounting in the State of Sao Paolo, Brazil. The project aims to improve the budget preparation, budget execution, and cost control at the state level. We are looking for highly-qualified public sector cost accounting experts for two assignments: (i) a long-term assignment (one year, renewable for one more year); and (ii) a short-term peripatetic assignment (a two-week visit every quarter during two years). The assignments are in Sao Paulo, Brazil. It is expected that the short-term expert will be a leader in his field and have a strategic guidance role in the project, while the long-term expert will work more intensively on the implementation of the project with Brazilian counterparts.

The objectives of the project are to (i) implement the public cost system in phases, starting with four pilot entities (health, education, prisons, and social assistance); (ii) develop a cost methodology adequate to the public services at the state level; (iii) organize seminars, courses, and other training events to educate the state officials on how to prepare and use cost information; (iv) document the cost methodology used in the existing projects; (v) prepare guidelines for external dissemination of cost data; and (vi) prepare progress reports.

The State of Sao Paolo will create a unit in the Secretary of Finance dedicated to implementing the project. The authorities are also enrolling the University of Sao Paolo to provide support on capacity building and research methodology. The consultants will work directly with this unit and in collaboration with the University.

The State of Sao Paolo has some similarities with US states because Brazil is also a federation. Sao Paolo relies strongly on its own tax resources to implement local policies, and is responsible for the provision of the main public services (education, health, police, etc.). The State has well-functioning integrated financial management information system (IFMIS). The State of Sao Paulo has a population of more than 40 million people and an economy of the size of Argentina. It is indeed a nice place to work and live.

The positions are funded by the State of Sao Paolo itself through a Trust Fund administered by the IMF. The IMF will provide guidance and support (“backstopping”) to the consultants during the entire project, and introduce and support the consultants during the kick-off phase.

Qualification requirements include at least ten years of relevant professional experience, including in cost accounting in the public sector. The ideal candidates would have a degree in accounting, business management, or economics. Portuguese language skill is a plus but it is not a requirement. Fluency in Spanish or English is also acceptable.

The deadline for applications is September 30, 2010. Please send your CV to Mr. Mario Pessoa (mpessoa@imf.org) indicating if you are applying for the short-term or long-term position.

Jess Ford of GAO on US Government Assistance to Mexico

2010-09-09T17:01:00.002-04:00

by Fernando Ruiz

International Consortium on Government Financial Management (ICGFM) held a luncheon in the Carnegie Mellon Endowment for International Peace on Wednesday, September 8. The speaker was Jess Ford of the Government Accountability Office (GAO) who spoke about United States assistance to Mexico in the ongoing fight against the drug cartels on the Mexico-US border.

The essence of Mr. Ford’s presentation was the management of aid going to the Merida Initiative which is a joint program between the United States and Mexico to combat the threats of drug trafficking, and money laundering on the border. According to Mr. Ford, since 2007 the United States has been ramping up its aid to Mexico and Central America in order to fight drug trafficking. US assistance has been heavy on equipment and technical assistance such as the training of police.

The objective of the aid has also shifted and is now concentrated on judicial reform, human rights and community development. The GAO’s main role has been speeding up the pace of assistance delivery which has been very slow. As of March 2010, only 46 percent of the funds had been released and the program was signed into law in June of 2008.

Some of the difficulties lie in the State Department which has been the overseer of the program. It simply has not had a modern enough system to track the status of the funding and could only track outputs with no outcome measurements or targets. Several other government organizations track the status and data on the program but none of them share a standard language and methodology, further exacerbating the problem.

Another major concern in this effort according to Mr. Ford is the lack of a consistent strategy by Mexico and other Central American countries to combat drug trafficking.

Mr. Ford concluded with his “lesson learned” about the program and its funding. He placed an emphasis on the need to build institutional capacity for the program and properly train personnel.

Job Offer: The World Bank has an Opening for a Financial Management Specialist (FMS) Based in La Paz, Bolivia

2010-07-28T12:16:00.002-04:00

Job descriptions and qualifications needed are detailed in the job announcements, posted on the World Bank's website: Financial Management Specialist based in La Paz, Bolivia -- Job # 101546

The Closing Date is August 9, 2010. For convenience, we provide the ICGFM readers with excerpts from the Job Announcement.

Duties and Accountabilities:

The Financial Management Specialist (FMS) will work from the La Paz Country Office and work on all financial management (FM) aspects related to the World Bank’s operations in Bolivia. This will include, but is not limited to: assessing the adequacy of project financial management arrangements, providing implementation support and supervising projects financed by grants and credits; ensuring compliance with the Bank’s audit and other fiduciary requirements, ensuring that the project operations are carried out in accordance with sound financial management practices, performing analytical work on financial management and accountability issues, and carrying out capacity building activities. The FMS will work with the country team, including Task Team Leaders, FMS, Procurement and other technical specialists, and Administrative and Client Service (ACS) staff.

The FMS is expected to assume the following duties and responsibilities:
• Assess the adequacy of the borrower’s project financial management systems and their ability to manage and monitor World Bank financed projects. This includes budgeting, policies and procedures, internal controls, accounting, financial reporting and auditing.
• Provide implementation support and carry out supervision work to ensure that projects financial management systems are functioning appropriately, including the review of periodic interim financial reports.
• Assess the selection and engagement of auditors, ensuring their suitability including their independence, and competence to perform audits; and ensure that the borrower provides auditors with all the relevant information (including Terms of Reference and Bank requirements) necessary to carry out their engagement.
• Review audited financial statements and other periodic financial reports received, monitor the Borrower's compliance with financial covenants including audit compliance, ensure adequate communication with the Borrower and the project implementing agencies with respect to audits and other financial reports, and advise as appropriate.
• Provide advice and support to Borrower and the World Bank Task Teams on project financial management matters.
• Provide guidance and advice to borrowers and Bank staff on capacity building in projects and with public sector accountability institutions.
• Assess the financial and operational viability of implementing entities (e.g. with respect to revenue earning entities), and advise on the design and use of financial performance covenants.
• Monitor implementation of the agreed action plans for public financial management (PFM) and/or corporate financial reporting reform initiatives, and provide technical advice to the Government in the implementation of reform actions.
• As requested by the RFMM, undertake other FM activities, as appropriate.

Selection Criteria:

Education/experience/language:
• The candidate should be a professional accountant (CPA, CA or equivalent membership of an internationally recognized professional accounting institute) with a Bachelors degree in accounting, business, finance, economics or related subject.
• A minimum of 5 years of relevant experience in financial management.
• Language: Fluency in English and Spanish is required.

Technical and other skills:
• Knowledge of International Accounting Standards and International Standards on Auditing.
Experience in designing and assessing internal control systems and procedures, using internationally accepted control frameworks such as COSO.
• Knowledge in the application of accounting, auditing and financial reporting systems and software packages.
• Experience in evaluating audits, assessing auditor competence, and following up on issues raised by the audits.
• Experience in interpreting financial and project management reports and determining appropriate remedial actions.
• Knowledge of current issues in financial management, including relating to the public sector and relating to developing country issues.
• Ability to assess the quality of portfolio performance on financial management.
• Ability to understand cross-cutting issues beyond financial management (e.g. procurement, governance, public sector management) at sector/country level.
• Ability to conceptualize, design and implement country or sector level financial management capacity building initiatives. Ability to promote client/beneficiary participation and commitment to financial management and accountability.
• Ability to distill and disseminate financial management knowledge. Experience in advising clients on the design and implementation of financial management systems, including financial and management reports.
• Experience in financial statement analysis, their use in comparison with industry benchmarks and their application to particular circumstances.
• Strong planning, organization and time management skills to function in a team and contribute towards a common goal. Ability to manage multiple tasks and projects.
• Capacity to function effectively as a member of a multi-disciplinary team, to search for common ground, to resolve problems, and where appropriate, to recommend decisive action.
• Strong analytical capabilities and proven skills to deal with FM issues innovatively and independently.
• Ability to communicate effectively, in writing and orally, including situations requiring negotiation.
• Understanding of information systems and the application of new technology.
• Willingness and ability to travel frequently.

1. A Science-Based Approach to the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities

2010-06-11T12:40:00.001-04:00

The first paper of this issue, by Petri Vehmanen of the University of Tampere, Finland provides an insightful critique of the draft conceptual framework recently issued by the International Public Sector Accounting Standard Board. Petri observes that whilst the prime aim of private sector financial statements is to provide information for investors to make decisions about the entity, the prime purpose of public sector financial statements is to enhance accountability. This should be recognised and would result in the definitions of such prime elements as assets and liabilities being revised. His paper also recasts the qualitative characteristics of public sector financial statements. Petri concludes by saying that his proposals “are by no means radical”. However, they do provide a comprehensive and damming critique of the work of the International Public Sector Accounting Standard Board and so it is re-assuring that so few countries have yet to adopt their approaches to accrual accounting or indeed the cash basis of accounting.

A Science-Based Approach to the Conceptual Framework for General Purpose Financial Reporting by Public Sect...

Public Sector Accounting: Democratic control of public money by using administrative cameralistics

2010-06-11T12:38:00.001-04:00

Our second paper is a further part of the series of articles in which Norvald Monsen has outlined a uniquely public sector approach to accounting and book keeping – cameral accounting. This was developed in German speaking counties and, until now, has remained largely unknown to English readers. Norvald provides an overview of the main tasks of traditional public sector accounting, followed by a detailed exposition of administrative cameralistics, focusing on the closing of the accounts and budgetary comparisons. A commentary section then explains how the four tasks of traditional public sector accounting are taken care of within cameral accounting. This is finally compared with both traditional commercial accounting and the new public sector accounting outlined in the International Public Sector Accounting Standards.

Public Sector Accounting Democratic Control of Public Money by Using Administrative Cameralistics

Sovereign Wealth Funds

2010-06-11T12:36:00.001-04:00

The next paper, by Hany H. Makhlouf, provides a useful introduction and overview of sovereign wealth funds. These funds managed by 23 countries, mainly those with significant income from natural resources, for example, oil, have been of increasing interest in recent years and are expected to grow in the future if, as expected the price of crude oil triples in price over the next 20 years. However, the global economic meltdown had a major impact on their success and led many to a re-think of their strategic approach.

Sovereign Wealth Funds

Public Financial Management in Sudan

2010-06-11T12:34:00.001-04:00

Our next two papers consider two aspects of public sector audit. The first by Hussein Mohamed El-Nafabi considers the issue of corruption in Sudan and the important role of the Auditor General in the fight against it. The objective of this study is to address the perverse incentives for financial corruption and try to provide practical solutions. It is recognised that, as in many countries, financial corruption is deeply rooted and institutionalized and the fight against it is likely to be long and difficult. However, the paper ends with a series of recommendations to assist with this struggle.

Public Financial Management in Sudan

Independence of Supreme Audit Institutions in Sub-Saharan Africa

2010-06-11T12:25:00.001-04:00

In the next paper, Andy Wynne considers the key issue of independence for supreme audit institutions (auditors general in English speaking countries). Models of public sector ‘external’ audit type institutions are described for English and French speaking African countries. Neither approach can claim to fully meet international standards for independence, but different approaches to the provision of audit type services are considered to be acceptable. This emphasises the need to understand existing systems before external models are adopted as part of a reform process.

Independence of Supreme Audit Institutions in Sub-Saharan Africa

A Prescriptive Model of the Transition to Accrual Accounting in Central Government

2010-06-11T12:22:00.001-04:00

In the next paper Hassan A. G. Ouda returns to the issue of the introduction of accrual accounting. He describes a comprehensive model of the transition framework that aims at explaining the whole reform process including all relevant factors. The model takes into consideration the fact that the transition to accrual accounting is a major cultural, administrative and technical change and, in order to successfully be adopted, must take place in phases with a clear plan of progress established from the outset. However, the challenge of demonstrating the actual (as opposed to the assumed) benefits of moving to accrual accounting is not taken up in this paper.

A Prescriptive Model of the Transition to Accrual Accounting in Central Government

A proposed definition of the Modified Cash Basis & The Four Dimensions of Public Financial Management

2010-06-11T12:18:00.001-04:00

In two relatively short articles, Michael Parry first proposes a definition of the modified cash basis of accounting and then describes the four dimensions of public financial management. We welcome this approach of relatively short articles addressing key issues in governmental financial management and would encourage other authors to follow Michael’s example in future issues.

A Proposed Definition of the Modified Cash Basis
The Four Dimensions of Public Financial Management

Recent Public Financial Management Publications and other Resources

2010-06-11T12:05:00.002-04:00

In this section we review some recent publications which may be of interest to readers of the Journal. We would be pleased to receive reviews and suggestions of other resources which we should refer to in future issues.

Fiscal ROSCS and PEFA Assessments: A Comparison of Approaches
Mario Pessoa and Richard Allen (2010)
http://blog-pfm.imf.org/files/note.pdf

This note summarizes the main similarities and differences in approach and coverage of fiscal ROSCs and PEFA assessments. These are two approaches used by international bodies to assess the quality public financial management in governments, especially those in the Global South.
A fiscal ROSC differs from a PEFA assessment in focusing particularly on transparency and accountability aspects of PFM systems, grouped under four pillars:

clarity of roles and responsibilities for PFM within government;
open budget processes, covering all PFM-related processes of government;
public availability of information, specifying the kinds of PFM information that should be accessible to the public; and
finally, assurances of integrity, covering issues of data quality as well as the need for and quality of external scrutiny of PFM information.

A PEFA assessment focuses primarily on the extent to which PFM systems and procedures deliver efficient and effective outcomes in the six critical areas. It covers fiscal transparency issues insofar as they affect PFM effectiveness. The emphasis is on the budget process itself, particularly in respect of the main PEFA indicator set, although PEFA assessments also include some description of the legal framework for fiscal management, reforms being undertaken, and public access to key information. PEFA assessments have also focused predominantly on low- and middle-income countries, while fiscal ROSCs have also been carried out in a substantial number of high-income countries.

Achieving Better Value for Money in Health Care
OECD Publishing (November 2009)
http://www.oecdbookshop.org/oecd/display.asp?K=5KSF5CRSGQNS&LANG=EN

Rising public health care spending remains a problem in virtually all OECD and EU member countries. As a consequence, there is growing interest in policies that will ease this pressure through improved health system performance. This report examines selected policies that may help countries better achieve the goal of improved health system efficiency and thus better value for money. Drawing on multinational data sets and case studies, it examines a range policy instruments. These include: the role of competition in health markets; the scope for improving care coordination; better pharmaceutical pricing policies; greater quality control supported by stronger information and communication technology in health care; and increased cost sharing.

Strategic Financial Management
http://www.audit-commission.gov.uk/nationalstudies/localgov/Pages/strategic-financial-management.aspx

This national study from the UK Audit Commission builds on the work done for the World Class Financial Management, especially financial governance and leadership, financial planning, and finance for decision making. The study will review how councils develop and use strategic financial planning tools and will help them to improve strategic financial management and links to the planning of services and other interventions. It will examine the costs and benefits of strategic financial planning, determine which approaches, if any, offer most benefits and identify the key principles of effective strategic financial and risk management.

No evidence that Public Private Partnerships provide value, says National Audit Office (UK)
http://www.publicfinance.co.uk/news/2009/11/no-evidence-that-private-funding-schemes-provide-value-says-nao/

Public Private Partnerships (PPPs) have spread from the UK to many countries, but there is increasing evidence that they may not provide value for money and the alternatives are not adequately researched. UK Ministers do not have strong evidence to show that PPPs offer the best value for money, UK government auditors have warned.
In evidence prepared for a parliamentary inquiry in November 2009, the National Audit Office warned: ‘Our view is that private finance can deliver benefits, but it is not suitable at any price or in every circumstance.’ The NAO paper noted that ‘assessing the pros and cons of alternative procurement routes is especially important in the recession’. Rising costs of private finance since the credit crunch had ‘implications for their value for money’.
The paper added: ‘We have yet to come across truly robust and systematic evaluation of the use of private finance built into PPPs at either a project or programme level’ – evidence that committee chair Lord Vallance described as ‘quite unequivocal’.
Systems to collect comparable data from projects using different procurement routes were ‘not in place’, the paper said. ‘Unless such systems are established, together with robust evaluation of the overall whole-life costs of alternative forms of procurement, government cannot satisfy itself that private finance represents the best VFM option.’
In Nigeria the government has also seen PPPs as an important way of acquiring public investment, but again recently suffered a set-back. Plans to concession airports to private investors in a public private partnership appear to have been abandoned due to opposition from the trade unions.

Greater Aid Transparency: crucial for aid effectiveness, ODI Project Briefings 35, London: ODI
Samuel Moon and Tim Williamson (January 2010)
www.odi.org.uk/resources/details.asp?id=4673

This paper sets out and explores the link between donor aid and recipient country budgets, and the role greater transparency about aid can play in improving budget transparency, the quality of budgetary decisions, and accountability systems. The paper goes on to explore how current initiatives to improve aid transparency can best support better budgets and accountability in aid dependent countries. These efforts provide an important opportunity to enhance the effectiveness of both the recipient governments’ own spending and the aid they receive from donors.
It concludes that publishing better information on aid requires compatibility with recipients’ budgeting and planning systems. The research findings suggest that recipient budgets bear many similarities, but this is not reflected in current formats for reporting aid. Finally, it concludes that the poorest countries will lose out if donors do not publish aid information that is easy to link with recipient government budget systems.

Publishing What We Learned: An Assessment of the Publish What You Pay Coalition
Mabel van Oranje and Henry Parham (2009)
http://www.publishwhatyoupay.org/en/resources/publishing-what-we-learned

Publish What You Pay (PWYP) is a global civil society coalition that helps citizens of resource-rich developing countries hold their governments accountable for the management of revenues from the oil, gas and mining industries. Natural resource revenues are an important source of income for governments of over 50 developing countries. When properly managed these revenues should serve as a basis for poverty reduction, economic growth and development rather than exacerbating corruption, conflict and social divisiveness.
The PWYP coalition was founded in 2002 by a small, ad hoc group of London-based NGO representatives to tackle the ‘resource curse’ by campaigning for greater transparency and accountability in the management of revenues from the oil, gas and mining industries. Since then, the PWYP coalition has grown to become a global network comprised of community organisations, international NGOs and faith-based groups in more than 70 countries.
The report discusses the origins and evolution of PWYP from 2002 to 2007. It also assesses the effectiveness of PWYP’s advocacy and policy endeavours and examines how the Coalition has operated internationally. In this sense, the report is not only a narrative of PWYP’s history and accomplishments, but a practical tool to shine a light on the strengths and challenges which face a global civil society coalition.

Carbon Trading: How it works and why it fails
Oscar Reyes and Tamra Gilbertson (November 2009)
Dag Hammarskjöld Foundation
http://www.tni.org/carbon-trade-fails

Carbon trading lies at the centre of global climate policy and is projected to become one of the world’s largest commodities markets, yet it has a disastrous track record since its adoption as part of the Kyoto Protocol.
This book outlines the limitations of an approach to tackling climate change which redefines the problem to fit the assumptions of neoliberal economics. It demonstrates that the EU Emissions Trading Scheme, the world’s largest carbon market, has consistently failed to cap emissions, while the UN’s Clean Development Mechanism (CDM) routinely favours environmentally ineffective and socially unjust projects. This is illustrated with case studies of CDM projects in Brazil, Indonesia, India and Thailand.
The UN climate talks in Copenhagen discussed ways to expand the trading experiment, but the evidence suggests it should be abandoned. From subsidy shifting to regulation, there is a plethora of ways forward without carbon trading – but there are no short cuts around situated local knowledge and political organising if climate change is to be addressed in a just and fair manner.
This accessible, well-researched book provides a devastating critique of both the theory and practice of carbon trading.

Why Has Domestic Revenue Stagnated in Low-Income Countries? London: The Centre for Development Policy and Research, Development Viewpoint 41
Terry McKinley (2009)
http://www.soas.ac.uk/cdpr/publications/dv/file55026.pdf

"There has been miserably slow progress in increasing domestic revenue in low-income countries since the 1990s. In order to find out why, this publication draws on an extensive analysis of disaggregated revenue data for low-income countries in sub-Saharan Africa, South and Southeast Asia, and Central Asia.
Based on this analysis, it is contended that the reigning 'tax consensus' has placed an inordinate emphasis on boosting domestic indirect taxes, and the value added tax (VAT) in particular. These taxes cover domestic goods and services in the formal sector.
At the same time, the 'consensus' has advocated eliminating import taxes (in order to liberalise trade) and lowering tax rates on corporate profits (in order to compete with other rate-cutting countries).
Consequently, trade taxes have been particularly hard hit while increases in direct taxes, which cover mainly personal income and corporate profits, have generally been anaemic.
Overall revenue has ended up stagnating because of the resultant reliance on boosting revenue from only one major component, i.e., taxes on domestic goods and services. The pre-eminent instrument for this purpose has been the VAT, which has replaced sales taxes (as well as import duties) in many countries.

ActionAid on Tax
http://www.actionaid.org.uk/doc_lib/accounting_for_poverty.pdf

ActionAid UK has published a report, Accounting for Poverty, to underpin its tax campaign. The report draws together a wide range of sources, some familiar and some new, to make the case for tax justice and development.
One new contribution is ActionAid’s calculation that, if every developing country were able to achieve tax revenues equivalent to just 15% of national income (the OECD average is 37%, while Bangladesh raises just 8%) $198 billion per year of new money would be available to fight poverty in the poorest countries.

A Study on Gap Analysis of Indian Government Accounting with International Standards
Government Accounting Standards Advisory Board (November 2008)
http://www.gasab.gov.in/pdf/Gap_Analysis.pdf
The Cash Basis International Public Sector Accounting Standard (IPSAS) may be the international standards for public sector accounting, but it cannot claim to represent best practice as it appears that not a single country has implemented this standard since it was first issued in 2003.
The key problem appears to be the mandatory requirement to produce consolidated accounts which should include all controlled entities (including government companies, business enterprises and all parastatal organisations). Many countries have decided that this is not practically possible, is too onerous or would produce misleading information. This includes a number of governments who would otherwise like to have implemented the Cash IPSAS including India, Malaysia, Mongolia, Ghana, Uganda and Malta.
This publication reviews the experience of the Government of India in comparing its approach to financial reporting to that outlined in the Cash Basis International Public Sector Accounting Standard. India is attempting to adopt this standard, but it does not accept some of the Standard’s key requirements, for example, the consolidation of government business enterprises and the disclosure of third party payments.
On the first issue, the document actively argues against providing such a consolidation. “Though this is fundamental requirement of Cash IPSAS” it says, “it is likely to cause more distortion than bringing in clarity in the financial statements of government” (page 9).
It is hope that the current review of the Cash Basis IPSAS will result in the development of a more practical standard which most governments which are not experimenting with the accrual basis will be able to use. However, what is really needed is some extensive research to identify current best practices in public sector accounting and to codify this. We need to develop international standards, from the bottom up, based on existing good practice not on pre-conceived ideas borrowed from the private sector.

Gender Budgeting: Practical Implementation Handbook
Sheila Quinn (2009)
http://blog-pfm.imf.org/files/gender-budgeting-practical-implementation-handbook.pdf
The book’s focus is “to act as a guide to the practice of gender budgeting." It is, however, not really suited for those who have no prior knowledge of gender budgeting; there are many other publications which articulate the rationale for, the background of, and the history of gender budgeting, and a sample of these are listed toward the end of the handbook in the resources section. The handbook assumes an understanding of gender budgeting, of the objectives of a gender equality strategy, of the ways in which gender inequality manifests itself, of the need for structural change in order to tackle unintentional gender bias, and of the basics of gender mainstreaming as a strategy to address gender equality. Gender budgeting, as a tool of gender mainstreaming, cannot be implemented without a grasp of these fundamentals.
Gender budget pilot initiatives have over the years brought about a new and deeper understanding of gender issues. Adopting a gender budgeting strategy requires prior experience in addressing gender equality. The chapter, "How to do Gender Budgeting" starts by discussing the type of experience and conditions that need to be in place in order to engage with gender budgeting. The temptation in using this handbook might be to skip these sub-sections and move ahead to the text dealing with specific tools and approaches. There is a considerable demand for specific tools, for the ABC of what to do, so to speak. However, the fundamentals cannot be by-passed or short-circuited. This is particularly the case if the practice of gender budgeting is to move beyond an analytic exercise to a mainstreaming strategy. The experience of many practitioners is that, since the tools need to be adapted, it is most important to focus on developing an approach based on local circumstances. The actual tools of analysis, of reformulation, and of mainstreaming will emerge when the goal has been identified.

What are the real risks of adopting accrual accounting?
Many conference presentations, journal articles and books extol the virtues and benefits of the public sector adopting accrual accounting, but few provide any real evidence of the actual experience. Two audit reports from the Auditor General of the Cayman Islands provide a brutally frank and honest account of what can go wrong.
In July 2008, the Auditor General, Dan Duguay, issued a special report, “describing a very grim assessment of the state of financial accountability reporting throughout the Cayman Islands Government”. Ten years after the Cayman Islands agreed to adopt accrual accounting, the first accrual accounts were 2.5 years late and the Auditor General found the “current situation deplorable” and he believed that “the legislative assembly has lost control of the public purse”.
In the second report, issued in April 2010, the Auditor General concluded that, “the state of financial accountability reporting has gotten worse in the two years since I last reported on this matter”. Despite the Government spending an additional $1 million in the last fiscal year to address the problem, the Auditor General assessed these efforts as being, “too limited and therefore; insufficient to address the situation”. He concluded his second report by saying, “I believe this situation has become a national crisis that could lead to tremendous consequences for the Cayman Islands Government if not addressed immediately”.
The Cayman Islands are not a poor country, the per capita income is one of the highest in the world and, as it is a tax haven and financial services centre, there are many qualified accountants available locally. If the introduction of accrual accounting can go so horribly wrong in the Cayman Islands, imagine what could happen in the many developing countries where accrual accounting is still actively being promoted for the public sector.
The next time you hear a speaker listing the many benefits claimed for accrual accounting ask what the actual evidence is from the few countries which have adopted this approach. The objective and authoritative studies, from the UK for example, suggest that the costs are significant and that the actual benefits are minimal. Now we have reports from the Cayman Islands of the very real risks involved of adopting this approach to public sector accounting.
The first report of the Auditor General on the State of Financial Accountability Reporting (July 2008) in the Cayman Islands Government is available from http://tinyurl.com/accrualcayman1
The second report of the Auditor General of the Cayman Islands, issued in April 2010, is available from http://tinyurl.com/accrualcayman2

Recent Public Financial Management Publications and Other Resources

International Journal on Governmental Financial Management published

2010-06-11T11:55:00.002-04:00

ICGFM is happy to announce the publication of Volume 10, Number 1, 2010 of the International Journal on Governmental Financial Management.

Table of Contents
1. A Science-Based Approach to the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities
Petri Vehmanen
2. Public Sector Accounting: Democratic control of public money by using administrative cameralistics
Norvald Monsen
3. Sovereign Wealth Funds
Hany H. Makhlouf
4. Public Financial Management in Sudan
Hussein Mohamed El-Nafabi
5. Independence of Supreme Audit Institutions in Sub-Saharan Africa
Andy Wynne
6. A Prescriptive Model of the Transition to Accrual Accounting in Central Government
Hassan A. G. Ouda
7. A proposed definition of the Modified Cash Basis
Michael Parry
8. The Four Dimensions of Public Financial Management
Michael Parry
9. Recent Public Financial Management Publications and other Resources
Andy Wynne

The world appears as a set of contradictions. High levels of government spending have prevented, for the present at least, a full-scale economic decline. But it is not clear that economic revival will be achieved soon nor the jobs and real economic growth which are needed to eradicate the poverty that still scars the globe. There are also contradictions over government spending. So, for example, whilst the US, UK and other governments face large scale opposition to their military interventions, it is social spending which is still questioned by many of their legislators. Barak Obama faced sustained opposition to the introduction of health reforms which will eventually give access to modern health-care to around 30million Americans. In the UK strikes are threatened in universities and the public service as a reaction to reduced spending whilst the government appears powerless to prevent the continued payments of bonuses to directors, even in banks which have been taken into public ownership. In addition, both the main parties in Britain are promising significant reductions in public spending to bring government debt down to a ‘sustainable’ level.

Greece appears to be the test case, with a series of general strikes in opposition to the draconian public spending cuts aiming to reduce the level of the government’s budget deficit. It is ironic that it was the toxic debts of the banks that led to the credit crunch and the resulting world recession. However, it is these same financial institutions who are now determining whether government debt, arising from the need to save their own banking and financial sector, is sustainable.

In this situation it is to be hoped that public sector financial managers and auditors will gain greater self-confidence. After two or three decades of criticism of so called public sector inefficiency and exhortations for the public sector to adopt private sector approaches, the experience of the global recession should lead to some serious re-thinking – a process which this Journal is attempting to play an active role.

The first paper of this issue, by Petri Vehmanen of the University of Tampere, Finland provides an insightful critique of the draft conceptual framework recently issued by the International Public Sector Accounting Standard Board. Petri observes that whilst the prime aim of private sector financial statements is to provide information for investors to make decisions about the entity, the prime purpose of public sector financial statements is to enhance accountability. This should be recognised and would result in the definitions of such prime elements as assets and liabilities being revised. His paper also recasts the qualitative characteristics of public sector financial statements. Petri concludes by saying that his proposals “are by no means radical”. However, they do provide a comprehensive and damming critique of the work of the International Public Sector Accounting Standard Board and so it is re-assuring that so few countries have yet to adopt their approaches to accrual accounting or indeed the cash basis of accounting.

Our second paper is a further part of the series of articles in which Norvald Monsen has outlined a uniquely public sector approach to accounting and book keeping – cameral accounting. This was developed in German speaking counties and, until now, has remained largely unknown to English readers. Norvald provides an overview of the main tasks of traditional public sector accounting, followed by a detailed exposition of administrative cameralistics, focusing on the closing of the accounts and budgetary comparisons. A commentary section then explains how the four tasks of traditional public sector accounting are taken care of within cameral accounting. This is finally compared with both traditional commercial accounting and the new public sector accounting outlined in the International Public Sector Accounting Standards.

The next paper, by Hany H. Makhlouf, provides a useful introduction and overview of sovereign wealth funds. These funds managed by 23 countries, mainly those with significant income from natural resources, for example, oil, have been of increasing interest in recent years and are expected to grow in the future if, as expected the price of crude oil triples in price over the next 20 years. However, the global economic meltdown had a major impact on their success and led many to a re-think of their strategic approach.

Our next two papers consider two aspects of public sector audit. The first by Hussein Mohamed El-Nafabi considers the issue of corruption in Sudan and the important role of the Auditor General in the fight against it. The objective of this study is to address the perverse incentives for financial corruption and try to provide practical solutions. It is recognised that, as in many countries, financial corruption is deeply rooted and institutionalized and the fight against it is likely to be long and difficult. However, the paper ends with a series of recommendations to assist with this struggle.

In the next paper, Andy Wynne considers the key issue of independence for supreme audit institutions (auditors general in English speaking countries). Models of public sector ‘external’ audit type institutions are described for English and French speaking African countries. Neither approach can claim to fully meet international standards for independence, but different approaches to the provision of audit type services are considered to be acceptable. This emphasises the need to understand existing systems before external models are adopted as part of a reform process.

In the next paper Hassan A. G. Ouda returns to the issue of the introduction of accrual accounting. He describes a comprehensive model of the transition framework that aims at explaining the whole reform process including all relevant factors. The model takes into consideration the fact that the transition to accrual accounting is a major cultural, administrative and technical change and, in order to successfully be adopted, must take place in phases with a clear plan of progress established from the outset. However, the challenge of demonstrating the actual (as opposed to the assumed) benefits of moving to accrual accounting is not taken up in this paper.

In two relatively short articles, Michael Parry first proposes a definition of the modified cash basis of accounting and then describes the four dimensions of public financial management. We welcome this approach of relatively short articles addressing key issues in governmental financial management and would encourage other authors to follow Michael’s example in future issues.

As initiated in our last issue, we end this issue with a section introducing recent public financial management publications and other resources which we hope will be of interest to readers of the Journal. We would be pleased to receive reviews and suggestions of other resources which we should refer to in future issues.

2010_Vol_X_No_1_IJGFM

If you would like to continue the debates raised in this issue please start thinking about contributions for the next issue of this Journal, the ICGFM blog or attend future ICGFM events. We look forward to hearing from you!

Andy Wynne Doug Hadden Jim Ebbitt
Editor Vice President: Communications President

Impressions of ICGFM Spring Conference

2010-06-02T15:35:00.004-04:00

by Jim Ebbitt, President, ICGFM

I recently returned from ICGFM's 24th annual conference in Miami, where we had about 200 participants from about 40 different countries from around the globe. I came away with a real sense that I had just been involved in a great conference. We had excellent speakers and subjects and great interaction from conference participants. I talked with many participants during the conference and heard many good comments and positive feedback about the conference. One of the many things we talked about in Miami was how to stay involved and informed about ICGFM and financial management issues in general and we concluded that the ICGFM blog was a great way to participate, be informed and add your voice to the discussion. I admit I am a "new blogger"; this is my first post, and I promise others. But I wanted to take just a minute now and thank all who participated in Miami. It was a great conference!

BTW: I am not entirely hidden among the Uganda delegation

Using Country PFM Systems for AID

2010-06-02T14:58:00.003-04:00

USAID Chief Financial Officer David Ostermeyer spoke at the ICGFM June DC Forum about the use of country PFM systems for donor funding. He introduced some ideas and described efforts to develop a consistent and transferable assessment tool that would objectively evaluate risk in pushing aid dollars through host country PFM systems. According to Ostermeyer, USAID is incredibly risk-averse. He wonders whether innovations and opportunities are lost as a result of shying away from pushing aid through country systems. He questioned how donors can identify country systems as high risk without an objective and standardized assessment tool.

Ostermeyer and his team have a plan to develop a new evaluation tool. The process will begin with analysis pilots in five countries beginning with Liberia and moving throughout 2010 to include Rwanda, Pakistan, Nepal, and Peru. Participating pilot countries were chosen based on how innovative the missions are and how well the mission understands and is committed to the Accra accords. The methodology for creating the assessment tool will involve examining what agencies like DFID and the World Bank have done to evaluate or mitigate risk and to build the capacities of country systems at the national level. This assessment tool will be transferrable among countries. It will also support national and sub-national government tiers.

Ostermeyer hopes that this initiative will assist in achieving stronger capacity and sustainability within host countries. This approach will enable the United States to compare host country systems and evaluate which are most ready to take on ownership of aid allocation and spending.

International Conference: Improvement and development of Performance Budget systems as a tool of multi-annual planning and public financial management

2010-06-02T14:51:00.002-04:00

Draft Agenda

Improvement and development of Performance Budget systems as a tool of multi-annual planning and public financial management
Warsaw, 24-25 June 2010 – Novotel Hotel

1st day
8.30-9.30 – Registration

9.30-10.00 – Welcome

National Coordinator for Performance Budget – Dr. Piotr Perczyński.

10.00-10.30 Current challenges and activities, undertaken for improvement of implemented mechanisms in the scope of public finance reform in Poland

Director of Public Finance Reform Department, Ministry of Finance Dr. Marta Postuła.

10.30-11.00 – Coffee break

11.00-12.30 Evaluation and conclusions from implementation progress in the early stage of Performance-based Budget systems

University of Paris – Prof. Michael Bouvier;
European Commission – Julio Escudero-Bustamante;
International Monetary Fund, former Minister of Finance – Dr. Andrzej Raczko.

12.30-12.45 – Discussion

12.45-13.45 – Lunch

13.45-15.15 Public finance management by Performance Budget methods with focusing on multi-annual planning aspect – development prospects

Minister, Member of the Council of Ministers – Dr. Michał Boni;
International Consultant – Dr. Marc Robinson;
Idilmat Ltd. Director – Jerome Dendura.

15.15-15.30 – Coffee break

15.30-17.00 Risks connected with Performance Budget implementation process, opportunities and methods of reduction of theirs negative results, as well as future influence on implemented systems functioning

Minister of Interior and Administration – Jerzy Miller;
Kozminski Academy, former Minister of Finance – Dr. Halina Wasilewska-Trenkner;
Secretary of State, Ministry of Finance – Elżbieta Suchocka-Roguska.

18.30 Dinner

2nd day

9.30-11.00 The role and effectiveness of the control-audit institutions in their activities towards enhancing methodological solutions quality in the scope of Performance Budget

Director at the Netherlands Court of Audit – Dr. Peter Van der Knaap;
Member of Board of Supreme Chamber of Control – Dr. Józef Płoskonka.

11.00-11.30 – Coffee break

11.30-13.00 Development of multi-annual management based on medium term progressive objectives in the context of rapidly changing conditions come from the current economic situation

Minister of Regional Development – Elżbieta Bieńkowska;
Warsaw School of Economics – Prof. Dr. Krzysztof Marczewski;
World Bank – Dr. Anwar Shah;
French Ministry of Finance – Emmanuel Millard.

13.00-13.30 – Summary

National Coordinator for Performance Budget – Dr. Piotr Perczyński.

13.30 Lunch

Marketing Intern Position in FreeBalance Washington DC Office

2010-06-01T15:52:00.003-04:00

FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance software solutions for public financial and human resource management support reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results.

Founded in 1984, FreeBalance is a for-profit-social-enterprise (FOPSE) company headquartered in Ottawa, Canada, with international sales, support and development. FreeBalance solutions have been implemented in countries across the globe, including Canada, United States, Sierra Leone, Guyana, Pakistan, Mongolia, Afghanistan, Antigua & Barbuda, Timor-Leste, Republic of Kosovo, Palestine, Panama, and Uganda.

FreeBalance is currently seeking 2 Interns in Washington for a period of 3 months during June – September 2010.

The interns will work closely with the Marketing department to support FreeBalance activities. During this internship you will participate and support the following activities.

Update position and branding
Web 2.0 social networking (blog, wikis, Slideshare, YouTube etc)
New web collateral
Proposal responses and updating response templates
Regional and country research for business development
Product requirement gathering
Conference and event support
Product documentation
Market, technology and customer research
Translation

Requirements:

3 year students enrolled in a discipline of either Political Science, Bachelor of Business - Finance
Excellent writing and editing skills in English

To apply for this position, please send us an email with your cover letter and resume.

24th Annual ICGFM Conference Comes to an End

2010-05-21T12:18:00.003-04:00

Co-Chair David Nummy of Grant Thornton reflected on the strength of the workshops on cash management, Treasury Single Account and gender equality. He thanked the audio visual and translation teams.He encouraged attendees to look to the upcoming Winter Conference in Washington DC. There will be a competition for presentations

ICGFM President Jim Ebbitt brought the 24th Annual International Consortium on Government Financial Management to an end in Miami. Mr. Ebbitt welcomed the discussions and disagreements with speakers because this advances public financial management practices. He thanked the program steering committee and Pat Cornish, the managing director.

Ensuring Gender Equality in Government

2010-05-21T08:42:00.008-04:00

Nadereh Chamlou of the World Bank discussed the talent crisis and the need for gender diversity to support economic growth. She started her presentation with surveys about the workforce in participant countries.

79% of the ICGFM attendees believe that there is a link between female participation in the workforce and an increase in GDP. The most binding constraint on development in countries survey found:

Financial 56%
Natural resources 12%
human resources 43%

Most consistent global challenge was found to be food security and climate at 57%. 2/3s of the audience believes that the issue of gender inequality is important or very important. 57% of people believe that the route of gender inequality comes from tradition and religion.

Ms. Chamlou believes that the world is at the dawn of a new talent crisis. Demographic changes means that the talent pool is being reduced while countries attempt to develop. This is a problem for all governments and businesses. She pointed out that forecasts suggest that the global population of 60+ is projected to exceed the under15 cohort for first time in history. She warns that developed economies will not find enough employees in home markets to sustain profitability and growth. There is also a brain drain from developing to developed countries. She discussed the "brain waste" defined as women and minorities being underutilized in the work place.

Numerous studies were quoted by Ms. Chamlou that ties GDP growth with gender equality.

Gender is Smart Economics (The World Bank, 2009)
The Bottom Line: Connecting Corporate Performance and Gender Diversity (Catalyst, 2004)
Stimulating Economies through Fostering Talent Mobility (World Economic Forum, 2009)
The Gender Corporate Gap report (World Economic Forum, 2009)

Ms. Chamlou recognizes that there is a causality between female managers and growth. However, studies suggest that better talent management, may also lead to better management of other assets/operations. This Catalyst report found 35% higher Return on Equity (ROE) and 34% better Total Return to Shareholders (TRS) with companies with a higher percentage of women in top management roles. A French study showed that companies with a higher percentage of women in top management roles did far better during the financial crisis.

Ms. Chamlou provided additional statistics on the persistent gender gap. She pointed out that the gender gap is a persistent problem in developed and developing countries. She presented studies from the Middle East and North Africa region. Many of these studies overturned some myths about gender inequality.

Ms. Chamlou concludes that Human Capital is the most indispensable driver of economic growth and the foundation of innovation. Bridging the gender gap at all levels is critical for talent management according to Ms. Chamlou. She warns that the talent gap may be much wider than many think.

Nadereh Chamlou is Senior Advisor to the Chief Economist for the Middle East and North Africa Region of the World Bank. In her 28 years with the World Bank, she has worked in technical and managerial positions across the organization in such areas as economic management, private and financial sector development, infrastructure and environment, corporate governance and the knowledge economy. Her experience also extends to Latin America, East Asia and Pacific, and Eastern Europe. She co-authored a World Bank flagship report, "Corporate Governance: A Framework for Implementation," in 1999, and was co-founder of the World Bank/OECD-sponsored Global Corporate Governance Forum, which she headed from 1998 to 2000. She was the principal author of "Gender and Development in the Middle East and North Africa Region–Women in the Public Sphere" in 2003, and of "The Environment for Women's Entrepreneurship in the Middle East and North Africa Region" in 2008.

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Value of Treasury Single Accounts in Government

2010-05-21T08:34:00.005-04:00

Sailendra Pattanayak, Senior Economist, Fiscal Affairs Department, the International Monetary Fund, discussed Treasury Single Accounts (TSA). He suggests that the TSA aids cash management and facilitates other functions in public financial management. He presented diagrams showing the typical payment system with many bank accounts and the use of a TSA.
Mr. Pattanayak pointed out the TSA handles payments from all spending units separately. Unlike the use multiple bank accounts, the cash balances roll up to a single account.
The TSA is not just a single bank account. It can be multiple accounts rolled up to a single accounts. Mr. Pattanayak pointed said that the TSA is a unified structure of government bank accounts that gives a consolidated view of government cash resources. It could be just one account or a set of linked accounts (main and subsidiary). He warned that as far as possible, all public entities should be consolidated to the TSA. The TSA should be legally recognized, institutionally robust and stable according to Mr. Pattanayak.

Mr. Pattanayak agreed with previous presentations on cash management in that cash controls should be de-linked from budget controls. He emphasized that the TSA can contain ledger sub-accounts for control and monitoring purposes, but these should not contain over-night balances. He said that options for accessing the TSA is mainly dependent upon institutional structures and payment settlement systems. The cash balance in the TSA is maintained at a level sufficient to meet daily operational requirements of the government according to Mr. Pattanayak.

The TSA is nothing new according to Mr. Pattanayak. He warned that revenue and expenditure transactions should be classified through a well-developed chart of accounts and not by maintaining distinctive bank accounts for them. He recommends that the TSA should be maintained in the national currency because budget execution is in the national currency.

The benefits of the TSA includes:

Ensures complete, real-time information on government cash resources
Helps preparation of accurate and reliable cash flow forecasts
Optimizes the cost of government operations
Facilitates efficient payment mechanisms
Improves operational and appropriation control during budget execution
Enhances efficiency and timeliness of bank reconciliation
Facilitates timely and more complete accounting statements/reports

Mr. Pattanayak described the TSA structure when there are limited and advanced Treasury communications and information systems, and through integration with the banking industry. He introduced the requirements for an efficient TSA:

Co-operation of the line ministries
Development of an Interbank settlement/clearing system
Real Time Gross Settlement System (RTGS) at the central bank for high value transactions
Major commercial banks and treasury connected to the RTGS
Development of a small payments clearing system

Mr. Pattanayak described different banking arrangements and the management of payments, receipts and balances. He said that individual cash books are not needed when using the TSA.

Mr. Pattanayak described the coverage of the TSA. The minimum is to manage the entire central government. Public corporations are generally not included in the TSA. He described the possible integration of social security and other trust funds.

Mr. Pattanayak described how the TSA could include both central and sub-national governments. He also described the integration of transaction processing with government accounting systems. He warned that centralized payment systems can lead to inefficiencies and high transaction costs without IFMIS automation and accounting controls.

Many donors are concerns about putting funds into the TSA:

Assurance for use of donor aid on specific projects (or non-diversion of funds)
Some ring-fencing to avoid liquidity problems (and ensure timely payments during project execution)
Minimize exposure to exchange related fluctuations/losses in the value of donor aid (when currency exchange rate regime is volatile)
Reliability of controls (in managing donors’ funds) and information produced by the national PFM systems

These donor issues can be addressed by activities such as the separation of currency sub accounts according to Mr. Pattanayak

Mr. Pattanayak described some of the issues that need to considered when designing a TSA. He described country-specific issues. He recommended that the design of the TSA should form part of the design of an Integrated Financial Management Information System (IFMIS). He described the preconditions for establishing the TSA including political support, regulatory requirements and the need for technological integration. He emphasized the need to formalize banking agreements. The Chart of Accounts may need to be extended to cover non bank expenditure transactions. He pointed out that moving to a TSA will require some capacity development among users.

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Last Day of 24th Annual ICGFM Conference

2010-05-21T08:33:00.005-04:00

Conference Co-Chair David Nummy introduced the final day of the 24th Annual Conference with additional surveys about public financial management. An ICGFM attendee survey found the following:

92% of attendees say their countries have embarked on improving transparency
82% of attendees say that their countries have adopted international public sector standards to improve transparency
IPSAS and GFS are the 2 most adopted international standards for #transparency
14% of countries represented have adopted XBRL
Of those from countries that have not adopted XBRL 21% expect to adopt it, 2/3 interested

The International Consortium on Governmental Financial Management conducts numerous surveys to identify the state of public financial management and transparency around the world.

Private Public Partnership Survey at ICGFM Conference

2010-05-20T16:16:00.003-04:00

Conference attendees were surveyed about PPPs. The results show that many PPP projects have not been successful. The lack of policy and guidelines is the most frequently sited reason for failures in PPPs.

Has your country used Public Private Partnerships to find sustainable funding for infrastructure investments:

Yes 43%
No 53%
Do not know, does not apply: 3%

If you answered yes to the previous question, have PPPs been successful?

Yes 39%
No 26%
Do not know, does not apply: 35%

If you answered no to the previous question, why were PPPs not successful?

Lack of policy and guidance 45%
Lack of PPP unit to provide guidance 20%
Lack of government guarantees 15%
Lack of interest from investors and operators 15%
Political circumstances 5%

Cash Management: Managing Cash Inflows and Outflows

2010-05-20T15:33:00.007-04:00

Mike Ablowich of the US Department of the Treasury, Office of Technical Assistance, discussed the managing of cash inflows and Outflows at the 24th Annual ICGFM Conference in Miami Florida. The presentation formed part of the workshop on government cash management.

Mr. Ablowich pointed out that there are accounting and banking controls than can be used. Better control over inflows and outflows enables better cash management.

Accounting controls includes allotments and appropriations. Additional accounting controls include:

Payment frequency
On-demand vs. once per week disbursements
Vendor analysis
Aggregation of multiple payments to single vendors
Payment terms

Banking products that are leveraged in the United States are available in other countries:

Mobile phone banking
Zero balance account to eliminate idle balances
Fraud prevention
Wire transfers
Automated Clearing House
Disbursements
Purchasing and T/E Cards
Deposits - Paper Checks and reducing fraud through issue file, positive pay & payee name verification
Armored car/currency
Lock box
Credit cards

Mr. Ablowich suggests that developing country governments can advocate these products to banks. The result can be that the private sector in these countries can also make use of the efficiencies associated with these products.

Mr. Ablowich described the advantage of issuing purchasing cards. Purchasing cards reduce controls. Nevertheless, there are numerous advantages for purchasing cards including:

Simplifies purchasing and payment process
Responding quickly to disaster problems
Provide controls by type of expenditure
Lower overall transaction processing costs per purchase
Increased information for analysis
Reduced paperwork
Set/control purchasing limits
Simplify end of year tax reporting

Bank reconciliation is a critical part of cash management according to Mr. Ablowich. He advocates daily reconciliation because of the lag between payments and cash balance.

2010-05-20T14:35:00.003-04:00

Surveys at ICGFM shows some important trends in Public Financial Management (PFM) in the era of the "New Normal". Countries represented at the ICGFM conference see infrastructure investment is critical for economic expansion with education being the most important initiative. Countries are also encouraging external investment with transparency being the most important initiative to draw investment.

Does your country needs substantial investment in infrastructure to support economic expansion?

Yes: 95%
No: 0%

Which areas of infrastructure present the most critical need?

Education 38%
Transport 23%
Renewables and Energy 13%
Healthcare 10%
Housing + Urban regeneration 8%
Information Technology 5%

Is your country focused on increasing outside investment in your economy?

Yes 70%
No 25%
Does not apply 5%

If you answered yes to the last question, what are the primary areas of focus to increase investment?

Greater transparency to build investor confidence 36%
Improve necessary infrastructure 26%
Tax incentives 18%
Currency reforms 8%
Improved legal system 5%

Cash Forecasting from Cash Management Workshop

2010-05-20T12:34:00.013-04:00

Mike Ablowich of the US Department of the Treasury, Office of Technical Assistance, discussed government cash forecasting at the 24th Annual ICGFM Conference. Cash forecasting can be used as the basis for evaluating strategic financial policy objectives. He described the entire budget planning and execution lifecycle. He emphasized the importance of cash flow forecasting during budget execution.

Cash flow planning and forecasting synchronizes revenue estimates and spending plans according to Mr. Ablowich. The budget is built in law. But, the budget is different from the authority to spend. This results in a need for a coordinated effort to make sure that resources are available when needed to properly execute the budget and meet the needs of a variety of budget stakeholders. Mr. Ablowich pointed out that cash flow forecasting may or may not be done in conjunction with the process of preparing allotments and apportionments. He pointed out that if a strong system is in place to control spending rates then some cash flow forecasting functions presented are not entirely applicable.

Financial & Treasury Control includes comparing actual cash flows to estimates including asset and liability management to shorten "float." Mr. Ablowich said that preparing cash flow estimates will lead to improvements in the collections and disbursement processes and reduce the cost of funds. He advocates Net Present Value (NPV) analysis even though not all NPV concepts are applicable to the public sector.

Mr. Ablowich addressed liquidity management. He pointed out that liquidity management requires forecasting the cash position to manage maturities and issuance of investments and debt. In other words, "Do I have the right amount of cash when I need it?"

Cash Flow Forecasting Process

The cash flow forecasting process includes selecting forecasting horizons: short term (less than 1 month), medium term (quarterly) and long term (1 year or more). Mr. Ablowich cautions that the longer the forecast horizon, less accurate the forecast. He suggests that it does not make sense to spend time doing a daily forecast for a year from now.

Mr. Ablowich recommended coordinating many participants in cash forecasting such as spending units, central banks, macro-economic planning, treasury and budget.

It is important to remember that the Treasury, according to Mr. Ablowich, in the initial stage of the preparation of a cash flow statement, has to act as an impartial assembler of information to coordinate the preparation of a cash flow forecast. For that reason the forecast must tie back to the budget, otherwise other agencies or stakeholders will believe that the treasury is trying to alter or make judgments about the budget that has already been passed by the legislature. He pointed out that budgets are typically provided on a cash basis, so this should flow nicely into the cash forecast.

Mr. Ablowich recommends using the 80 - 20 rule. He said that this is the most important slide in his presentation to remember. 80% of revenue comes from 20% of the sources. VAT and customs taxes typically represent the 80% of government revenues. Some countries generate significant revenue from resources. Therefore, more time needs to be spent on sources that generate 80% of the revenue.

Cash Forecasting Methodologies

Mr. Ablowich described different cash forecasting methodologies. He described forecasting on afund or agency basis. The choice has to be rational and be supported by the cost/benefit of different planning, collection and forecasting techniques. If a strong I.T. system exists for compiling and synchronizing spending plans then the agency approach might make the most sense according to Mr. Ablowich. If there are three or four major fund groups of equal size then it may make sense to approach this on a fund basis.

Mr. Ablowich described forecasting on an economic or functional basis. Using the economic classification likely lends itself to the easiest forecast to compile and analyze. The functional approach is likely not needed if realistic plans are prepared by agencies on an economic classification basis.

Mr. Ablowich warned that there will always be different degrees of certainty about cash flows. Less predictable cash flow should be considered in risk management, according to Mr. Ablowich. He suggests that payroll represents a certainty for payment. But, large payments on construction projects are less certain.

The types of information sources were discussed by Mr. Ablowich. Integrated Financial Management Information Systems are a data source. The information sources need to be analyzed: cash vs. accrual accounting, treasury single account vs. multiple bank accounts, and methods of budget execution.

Cash Flow Forecasting and Budget Management

Mr. Ablowich discussed revenue forecasting. Budgets should be the source reference. A bad budget will lead to a bad cash flow forecast especially if the revenue estimates are poor from the beginning. The initial budget revenue estimate must be backed by some consistent, corroborating macroeconomic analysis.Weekly or daily estimates of the monthly plan can be prepared using historical daily data lined up against “payment due dates”. Some payments are affected by seasons.

Expenditures can be analyzed based on spending plans and historical trends according to Mr. Ablowich. The past is usually the best predictor of the future in countries with mature financial and budgetary systems. The past can be the best predictor of the future in countries with young financial and budgetary systems if information can be “normalized” for the current year’s situation. He pointed out that governments must be able to predict payroll and pensions payments. He also pointed out looking at the calendar for patterns. For example, standard payments of one source may be made every Friday. Some months have 5 Fridays.

Mr. Ablowich discussed the impact of assets and liabilities on cash forecasting. He introduced how other balance sheet accounts need to be examined for forecasting. He showed spreadsheets from Zambia and Madagascar as examples. He suggested that long-term forecasts require larger teams from throughout the government.

Cash Forecast Variances

There are numerous factors that can be responsible for variances between forecasts and actuals according to Mr. Ablowich. These include:

Economic growth higher or lower relative to assumptions
Economic conditions leading to increased borrowing costs or higher investment earnings
Inflation rates higher than expected leading to higher rates of growth in indexed payments.
Disasters/Emergency Situations
Foreign Exchange

Mr. Ablowich pointed out that legal issues can affect cash flow variances including:

Changes to tax laws by legislature that effect revenue collections.
Payouts of settlements of court cases.
Court interpretations of existing tax laws or spending mandates.
Sharing ratio of taxes between levels of government.

Understanding and Measuring "Float"

Details about understanding and measuring "float" was presented by Mr. Ablowich. He provided clear definitions:

Collection Float

Mail Float: the delay between the time a check (payment) is mailed and it is received.
Processing Float: The delay between the time a payment is received and it is deposited.
Availability Float: The delay between the time a payment is deposited and the time the account is credited.

Disbursements Float

Mail Float: The delay between the time a check is mailed and the date the check is received.
Processing Float: The delay between the time the payee receives the check and the time the check is deposited.
Clearing Float: The delay between the time the check is deposited and the time it is presented to the payor’s bank for payment.

Mr. Ablowich described float analysis in cash management. The purpose of analyzing disbursement and collections float is to shorter this float to as few days as possible. Decreased costs will come in the form of higher interest earnings, avoidance of interest costs and fewer errors in processing. Decreasing process time should also lead to improved internal efficiencies and improved customer service according to Mr. Ablowich. Cutting down the time for funds to go from point A to point B and having information systems tracking this information every step of the way will lead to decreased costs. Shortening disbursement or collections float will likely be the result of using improved banking products or making changes in internal administrative processes.

Float is measured as:

Average Daily Float = Total Dollar Days of Float/Total Calendar Days in Period

Annual Cost of Float = Average Daily Float * Opportunity Cost of Funds

Cash Management Workshop Debt and Investment Policies

2010-05-20T11:33:00.004-04:00

Laura Ross from the US Treasury, Office of Technical Assistance described debt and investment policies for proper government debt management. She described how many policy documents are obsolete. Policy documents must not be static.

Ms. Ross explained the importance of tying debt issuances to forecasts. This includes planning matching of service dates to cash forecasts. She described the type of debt vehicles like bonds and notes. She recommended that debt policies should include:

Issuance Guidelines
Allowable Investments for Proceeds
Statements on Projects
Refinancing
Glossary of terms

Ms. Ross described the need to also tie investments to forecasts. She recommended benchmarking investments to determine investment priorities. Investments should be secure. She recommended:

Follow the code of your state or country, then be conservative
Be very specific in your investment policy on what can and cannot be used (examples on the next few pages)
Investment policy needs to have oversight
Constantly monitor information
Monitor investment report daily
Should be selected by a committee
Should understand how the investment works
Diversify the investment portfolio

Ms. Ross talked about internal and external investment risk. Risk can be mitigated. She described an investment policy should include:

Objective – typically safety, liquidity, yield.
Roles – who is responsible for investing the funds (ultimately)
Investment Monitor
Finance Board
Ethics and Conflict of Interest
Internal Controls
Uses for Investment Proceeds
Benchmarks
Purchasing Investments – Mechanics
Allowable Investments
Report Components
Glossary of terms

Ms. Ross explained the importance of determining how investment revenue should be used. She warned that investment revenue should not be used to reduce taxes. She showed an example of portfolio management.

She recommended the following links for information on debt and investment policies:

Debt Policy Links - Links

Municipal Bond Terms - Links

http://emuni.com/glossary.php

Investment Policy - Links

Banking Relations

2010-05-20T11:07:00.006-04:00

Laura Ross from the US Department of the Treasury, Office of Technical Assistance, discussed the development of Requests for Proposals for banking services. She warned that RFPs should only be issued when it is needed. There are proper times to create RFPs. You do not need an RFP to ask banks for new proposals on new services.

Step 1 – Document the current environment

The purpose of this step is to understand the current environment for banking services, the key business and technical requirements and identify potential service gaps and improvement opportunities, according to Ms. Ross. This step includes:

Banking Needs Assessment
Prepare a customized packet for each area of your treasury organization regarding their current banking services
Request current bank account analyses for all banks and accounts
Design a checklist determining necessary information to gather from each function

Step 2 – Develop the RFP

Developing the RFP takes the longest time according to Ms. Ross. Ms. Ross has been on both sides of the banking RFP process. She warns that many RFPs are too large, often include the same question asked five times. The RFP provides a conceptual design of the future banking structure. This step requires:

Develop an overall vision for banking structure and services required
Analyze current bank account structures and providers
Inventory and assess specific concerns and issues for bank service requirements
Determine list of banks to be included in RFP process
Develop the customized RFP for those selected banks and issue RFP

Step 3 - RFP Evaluation

Ms. Ross said that the third step focuses on evaluating and prioritizing the bank responses to determine which banks can realistically be considered to move from the current to the target environment. The purpose is to objectively prioritize banks based on their capabilities and responses and to recommended banks identified to participate in bank presentations and visits. She recommends a pre-bid conference. All questions received should be officially answered in writing and provided to all bidders. The evaluation process includes:

Customize RFP evaluation tool for bank services
Conduct quantitative analysis of RFP responses
Score bank RFP results on a weighted basis
Perform additional technical and qualitative analysis on bank RFPs
Complete cost analysis on proposed pricing using the estimated volumes
Determine the short list of banks to participate in the presentation phase

Ms. Ross recommends developing a check list, best on a single page, that ranks the responses. There should be a ranking method. Cost analysis is the most important aspect. She warned that many government RFPs do not provide accurate numbers to enable proper pricing.

Step 4 - Finalist Presentations and On-Site Tours

The fourth step is the research and validation to ensure that the bank can meet the current and future requirements, as stated in their response, at a level of satisfaction to your needs. This step validates the response with the real requirements. Ms. Ross provided explained the process:

Notify the banks that did not make the final cut
Contact the short list of banks that made the final cut to let them know of next steps and give them advance notice
Develop the desired presentation format/script, and provide this to the banks
Schedule the presentations and bank visits
Evaluate the demonstrations formally and debrief after each meeting
Conduct on-site tours of finalist banks as necessary

Ms. Ross suggests getting a list of bank references. She recommends starting at the bottom of the list because the bank will not have time to brief all references.

Step 5 - Bank Selection and Plan Development

The fifth step is the selection of the bank and development of an overall plan which will consider the key tasks, the staffing / skill requirements, timeframes and estimated costs required as next steps to move towards the targeted environment. The process includes selecting the preferred bank(s). Ms. Ross stressd that the implementation plan is the critical step. The result is a documented implementation plan for the conceptual design of the preferred banking structure. She recommends a signed contract.

Cash Management Workshop: Organization and Communication

2010-05-20T10:01:00.001-04:00

Gail Ostler of the US Treasury, Office of Technical Assistance, recommended how cash management should be organized in governments. She described the responsibilities of the cash management unit:

Forecasts, monitors and tracks cash flows
Prepares cash flow reports and identifies and reports on variances
Provides leadership and direction to all ministries / departments on cash management issues
Develops and maintains cash management policies and procedures
Recommends improvements in all aspects of cash management to strengthen internal controls and enhance available cash balances
Prepares risk and cost benefit analysis
Maintains banking relationships

Ms. Ostler pointed out that leadership is the most critical responsibility for cash management units. She suggested that many government cash management units do not proactively recommend improvements. She described the qualifications needed to be an effective cash manager. The ability to communicate is critical to be effective, according to Ms. Ostler.

A slide showing the flow of information needed in cash management was presented by Ms. Ostler. It is important to know when there will be large pieces of revenue coming to the government. Information sources include:

Banking System (Commercial and / or Central Bank)
Accounting System
Budget Spending Quotas, Plans and Amendments
Reports Monitoring Budget Execution
Macro-Economic Forecasts
Major Budget Institutions (Exception Reporting)
Revenue Institutions (Exception Reporting)
Debt Unit

Ms. Ostler stressed that information from big spending units is critical to cash management. She described the use and purpose of cash management committees.

Public Financial Management RSS Feeds

2010-05-20T09:02:00.007-04:00

ICGFM has created a pagecast in pageflakes to support RSS feeds. Many public financial management professionals may be using other RSS readers. Many may be using mobile devices. The RSS feeds in the pagecast include:

ICGFM Blog: http://icgfm.blogspot.com/feeds/posts/default
ICGFM Twitter: http://twitter.com/statuses/user_timeline/40955118.rss
ICGFM Programs Twitter: http://twitter.com/statuses/user_timeline/113113941.rss
Association for Government Accountants Blog: http://feeds.feedburner.com/agaweblog
IMF PFM Blog: http://feeds.feedburner.com/pfmblog
World Bank Governance Matters Blog: http://blogs.worldbank.org/governance/rss.xml
Open Budgets Blog: http://internationalbudget.wordpress.com/feed/
Development Gateway Zunia Blog: http://zunia.org/post
Development Gateway Blog: http://devgateway.blogspot.com/feeds/posts/default
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What is Government Cash Management

2010-05-20T08:43:00.010-04:00

Gail Ostler of the US Treasury says the financial crisis has created a significant awareness of the cash management. She believes that many PFM experts have a narrow view of cash management. Cash management is much more than cash flow forecasting or Treasury Single Accounts. Ms. Ostler defines cash management as "having the right money in the right place at the right time to meet government objectives."

Cash Management Objectives

Ms. Oslter said that the objectives of cash management include cash mobilization, controlled disbursements, investing money and reduce borrowing. Other objectives include:

Safeguard cash and investment
Minimize the volume of idle balances
Match the timing of cash inflows and cash outflows
Reduce operational risk
Pay vendors on time because late payments increases the cost of goods and services.
Reduce the cost of borrowing
Minimize transactions costs
Increase investment income

What Cash Management Is Not

Ms. Ostler pointed out that cash management is not a substitute for poor budgeting decision. It is not a substitute for spending in excess of budget authority or any form of budget and accounting controls. Many governments have incorrectly managed budgets through cash management according to Ms. Ostler. Many governments use Ministry bank accounts to attempt to control budgets. The result is that the government loses cash control. Ms. Ostler advocates that cash management must be delinked from budget controls.

Results of a Poorly Defined Program

Ms. Ostler articulated the problems associated with poorly defined programs, particularly those resulting from the proliferation of both private and central bank accounts. Other poor results include:

Restrictions of the use of cash often results in unnecessary borrowing or lost investment income
Impossible to reconcile all accounts
Treasury isolated from cash information
Thwart central bank monetary policy
Cash rationing that prevents proper budget execution
Overly expensive bank changes

Components of a Strong Program

Ms. Ostler defined the components of a strong program including:

Written policies and procedures
Strong cash management organization
Bank relationships
Reduction of bank accounts
Collections made through the banking system
Deposit accounts swept daily to central government accounts
Treasury performs centralized payments
As many payments as possible should be electronic
Cash disbursements eliminated or minimized
Ministries and agencies penalized for making commitments outside of their budget authority
Full cash flow forecasting, on a 12 month roll-forward basis
Follow-up on variances between cash flow forecasts and actual payments

Ms. Ostler advocates strong banking relationships where the government is managing the relationship with banks. She pointed out that many governments do not use spending plans effectively. The surprises in disbursements relate to large infrastructure and capital projects. It is difficult for Ministries to stick to spending plans. She advocates the use of exception reporting. Governments can look at these large projects and find ways to match expenditure with revenue patterns.

Many cash managers analyze information in their offices according to Ms. Ostler. She advocates being proactive and understanding where there are cash is coming from. Ms. Ostler advocates that governments should look at the banking relationships in other countries.

Ms. Ostler responded to a question about deficits. She says that managing cash when there is not cash means looking at systemic issues. Governments need to reduce expenditure budgets when there are revenue shortfalls.

Procurement linkage with commitments is needed for effective cash management according to Ms. Ostler. Many long-term projects have multiple year commitments. She advocates linking with government commitment accounting systems.

Ms. Ostler said that there are ways to allow ministries to manage projects that are tied to revenues the ministry has collected without giving them cash control and separate bank accounts.

Government Cash Management Workshop

2010-05-20T08:29:00.009-04:00

The financial crisis has increased the burden for governments to manage liquidity, cash and debt. The public financial management (PFM) workshops at the 24th. Annual International Consortium on Governmental Financial Management (ICGFM) Conference began with a full day session on cash management. The intense training was provided by financial experts from the United States Department of the Treasury.

The majority of participants at ICGFM conferences come from developing countries. The US Department of the Treasury is very active in international technical assistance to governments around the world. The workshop was led by four members of the US Treasury Technical assistance who have significant international experience:

Laura Trimble, Associate Director, Budget and Financial Accountability, US Department of the Treasury
Michael Ablowich, Budget and Financial Accountability, US Department of the Treasury
Gail Ostler, Budget and Financial Accountability, US Department of the Treasury
Laura Ross, Budget and Financial Accountability, US Department of the Treasury

The workshop was opened by Laura Trimble who described the services provided by the group. She pointed out that US Treasury is the equivalent of the Ministry of Finance in other countries.

Agenda for Government Cash Management training:

Session 1: Gail Ostler: What is Cash Management

Definitions & Objectives
What Cash Management Is Not
Results of a Poorly Defined Program
Components of a Strong Program

Session 2: Gail Ostler: Organization and Communication

Establishing Cash Management Unit
Flow of Information
Policy Committee

Session 3: Gail Ostler & Laura Ross: Treasury Single Account & Banking Relationships

Definition of a TSA
Challenges and Steps to Moving toward Centralized Accounts
Central Bank Versus Commercial Banks
Learning About the Banking Environment
Examples of RFPs for Banking Services

Session 4: Laura Ross: Debt and Investment Policies

Tying Debt Issuances to Forecasts
Short-term Versus Long-Term Debt
Assumption of Investment Risk
Ensuring Investments Are Secure
Examples of US State and Local Government Investment Policies

Session 5: Mike Ablowich: Cash Flow Forecasting

Objectives
Process of Cash Flow Forecasting
Components of the Forecast
Analysis of Variances
Understanding and Measuring Float

Session 6: Mike Ablowich: Managing Cash Inflows and Outflows

Objectives
Techniques

Laura Trimble: Wrap-up

Q&A
Evaluations

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Public Financial Managments Workshops Open at 24th Annual ICGFM Conference

2010-05-20T08:26:00.006-04:00

ICGFM Conference Co-Chair, David Nummy, opened the Public Financial Management workshop sessions of the 24th Annual Conference. He discussed the importance of cash management in government. The ICGFM conference participants were asked about the effects of the financial crisis on government. The survey results included:

88% of participants say that the financial crisis has affected public financial management reform in their countries
39% say that the financial crisis has had a positive effect on PFM reform
52% of participants say that the biggest effect of the financial crisis has been in revenue collection
over 80% believe that the effects of the financial crisis on PFM reform is not permanent

Main Session of ICGFM PFM Conference Comes to an End

2010-05-19T12:18:00.004-04:00

The main session of the 24th. ICGFM International Conference: Public Financial Management in the Era of the "New Normal" came to an end this afternoon in Miami Florida. ICGFM President, James Ebbitt closed the main session. Detailed workshop sessions begin on Thursday.

Conference co-chair, David Nummy reflected on the changes because of the financial crisis. He observed that many countries that were considered the most stable have been more adversely affected by the crisis. Transparency and accountability demand has increased thanks to the crisis as the public questions how countries got into the crisis and how stimulus money is being spent.

Public financial managers are becoming more important. PFM managers are increasing their role in government. It is a robust and important profession according to Mr. Nummy.

Mr. Nummy suggested that XBRL adoption is reaching critical mass. XBRL promises to improve efficiencies and transparency.

XBRL Work Shop at ICGFM Conference

2010-05-19T10:54:00.009-04:00

Liv Watson managed an XBRL workshop at the 24th Annual Conference on Public Financial Management. This is a follow-up from her presentation XBRL: The Language of Government 2.0. Attendees to the conference were very interested in the use of XBRL in government. Ms. Watson encouraged attendees to read XBRL documents on-line.

Many countries do not mandate the use of XBRL. XBRL often becomes widely adopted according to Ms. Watson. Regulation sometimes follows adoption.

Global adoption drivers according to Ms. Watson include:

Economics to reduce administrative burden, support multiple languages easily
Support global standards and pressure from large international organizations
IFRS adoption and GAAP alignment
Support for capital market transparency
Alignment in regulatory consistency
Basel II banking supervision
Integrate with multiple standards such as ISO, W3C, Swift, OECD

The workshops identified many drivers for XBRL adoption in their countries:

Support frequent legislative changes, particularly for changes to reporting standards
Legislature or Ministry of Finance may drive adoption
Pressure from funding agencies for proper tracking
Improved budget planning
Support of decentralized reporting such as from municipalities to the central government
Improved data collection through standards in areas such as taxation, land registration
Integration of tax information with procurement processes
Ease of audit through supreme audit institutions
Encouragement from international organizations and development partners
Improved statistical information for regulators
Trade facilitation for regional and global trading organizations
Ease of business registration
Media and civil society may put pressure on governments
Globalization affect where countries that are more transparent will be seen as more stable for business
Demands for government transparency
Faster closing of government accounts and production of reports

Transparency and Accountability Most Important PFM Reform

2010-05-19T09:56:00.003-04:00

50% of attendees at the 24th Annual ICGFM Conference agreed that transparency and accountability improvement is the most important government reform necessary after the financial crisis.

ICGFM, the International Consortium on Governmental Financial Management, attracts members from around the world. The Public Financial Management (PFM) experts at the conference in Miami Florida come from over 35 countries.

ICGFM uses audience voting to ask questions about PFM reform. The top votes for the most important reform initiative in wake of the financial crisis was:

Transparency and accountability 50%
Budget planning and analysis 18%
Cash and debt management 16%
Audit 13%
Procurement reform 8%

Impact of Financial Crisis on Ongoing PFM Reforms

2010-05-19T08:59:00.005-04:00

Conference c0-chair David Nummy introduced today's theme at the 24th Annual ICGFM Conference. The conference theme is Public Financial Management in the Era of the New Normal - post financial crisis. The focus today will be on the impact of the financial crisis on ongoing PFM reforms. Mr. Nummy observed that PFM reforms have been accelerated because of the financial crisis. Government realize that improving governance, efficiency and effectiveness is necessary because of reduced government revenues.

50% of attendees believe that transparency and accountability is the most important reform initiative during this era of the "new normal".

Rakesh Verma received an award for the longest trip to ICGFM at 34 hours.