Showing posts with label PEFA. Show all posts
Showing posts with label PEFA. Show all posts
Friday, December 13, 2013
Saturday, December 4, 2010
Public Financial Management Reform in Kosovo
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
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
Recent Public Financial Management Publications and Other Resources
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?
Friday, June 11, 2010
Recent Public Financial Management Publications and other Resources
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:
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
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
Wednesday, June 3, 2009
ICGFM May Conference Survey Shows Improvements
ICGFM Conference Participants Highly Satisfied
Conference surveys from the 2008 and 2009 ICGFM annual conferences shows high satisfaction among delegates.
The vast majority of participants in the Spring conferences agree or strongly agree that speakers were effective, useful information was presented and the conference contributed to professional development.
ICGFM endeavours to improve professional development and share good practices among governments. Conference delegates are encouraged to rate sessions and the overall conference quality.
Results improved in Spring 2009 with results in the mid 90s. Participants found the PEFA workshop and other interactive sessions very useful, according to the survey.
Friday, May 22, 2009
Public Financial Management Key to Overcoming the Financial Crisis
ICGFM surveys delegates at conferences to determine the state of public financial management. The surveys at the 23rd Annual ICGFM Conference presented interesting evidence of a renewed focus on public financial management reform because of the financial crisis. PFM professionals from over 40 countries participated in the Miami conference. The largest contingent of delegates came from Africa.
Most of the participants are public servants from emerging countries. These participants believe that public financial management reform has become more critical because of the crisis. The surveys suggest that many countries are facing similar challenges and can learn from each other. Most use the ICGFM and other PFM conferences to learn and execute good practices (63%). The lack of political will was noted in numerous polls as the first or second most important barrier for reform. Nevertheless, the majority of delegates come from countries with formal PFM reform programs (68%).
Important Role of Public Financial Management Reform in the Financial Crisis
ICGFM delegates believe that government financial experts have an important role in identifying financial issues (92%). The delegates believe that the G20 can do more to overcome the financial crisis (70%).
The majority of countries represented at the conference have formal PFM reform programs (68%). Increased transparency (30%), improved budget expenditure (26%) and improved accountability (24%) were cited as major factors encouraging reform.
The most important resources needed by countries for PFM reform include employee training (32%) and automated financial management systems (24%). When asked to determine the most important type of technical assistance required, the implementation of an Integrated Financial Management Information System received twice as many votes (33%) as the number two choice, from 10 choices.
PEFA assessments have been carried out in many of the countries represented at the conference. Most respondents (72%) believe that PEFA assessments can improve PFM reform.
International Changes Required
The emphasis should be on green growth (70%) according to the majority of delegates at the conference. Somewhat more than half believe that the IMF and World Bank need to undergo reform as well as countries (57%). Many believe that there should be an international regulator (56%), but most believe that national governments will be reluctant to allow this (70%).
Common Problems and Solutions
ICGFM delegates believe that the financial crisis will continue for two years or more (77%). Most indicated that their country faces similar challenges as the United States (72%). Most have a local banking crisis (59%) that is reducing domestic financing for infrastructure (68%). Most countries represented (60%) have developed a stimulus program.
Public Private Partnerships were discussed as a solution to find more financing (40%), although many (23%) thought that PPPs are created for political reasons.
Some countries are seeing a reduction in donor funds since the financial crisis (39%). Most agree that there is poor aid coordination (68%).
Country legislative branches require more budget expertise (60%) according to delegates.
Transparency and Accountability
Transparency and accountability issues were discussed. Most delegates believe that their government does not adequately communicate with the local media (67%). More believe that the local media does not adequately report local economic events (74%).
More than half of delegates say that governments do not effectively inform the public about public spending (55%). This lack of effectiveness is attributed, most often, to a lack of political will (62%). Yet, transparency and accountability represents 2 of the 3 leading motivators for PFM reform, according to delegates.
Most of the participants are public servants from emerging countries. These participants believe that public financial management reform has become more critical because of the crisis. The surveys suggest that many countries are facing similar challenges and can learn from each other. Most use the ICGFM and other PFM conferences to learn and execute good practices (63%). The lack of political will was noted in numerous polls as the first or second most important barrier for reform. Nevertheless, the majority of delegates come from countries with formal PFM reform programs (68%).
Icgfm Conference Polls
View more OpenOffice presentations from icgfmconference.
Important Role of Public Financial Management Reform in the Financial Crisis
ICGFM delegates believe that government financial experts have an important role in identifying financial issues (92%). The delegates believe that the G20 can do more to overcome the financial crisis (70%).
The majority of countries represented at the conference have formal PFM reform programs (68%). Increased transparency (30%), improved budget expenditure (26%) and improved accountability (24%) were cited as major factors encouraging reform.
The most important resources needed by countries for PFM reform include employee training (32%) and automated financial management systems (24%). When asked to determine the most important type of technical assistance required, the implementation of an Integrated Financial Management Information System received twice as many votes (33%) as the number two choice, from 10 choices.
PEFA assessments have been carried out in many of the countries represented at the conference. Most respondents (72%) believe that PEFA assessments can improve PFM reform.
International Changes Required
The emphasis should be on green growth (70%) according to the majority of delegates at the conference. Somewhat more than half believe that the IMF and World Bank need to undergo reform as well as countries (57%). Many believe that there should be an international regulator (56%), but most believe that national governments will be reluctant to allow this (70%).
Common Problems and Solutions
ICGFM delegates believe that the financial crisis will continue for two years or more (77%). Most indicated that their country faces similar challenges as the United States (72%). Most have a local banking crisis (59%) that is reducing domestic financing for infrastructure (68%). Most countries represented (60%) have developed a stimulus program.
Public Private Partnerships were discussed as a solution to find more financing (40%), although many (23%) thought that PPPs are created for political reasons.
Some countries are seeing a reduction in donor funds since the financial crisis (39%). Most agree that there is poor aid coordination (68%).
Country legislative branches require more budget expertise (60%) according to delegates.
Transparency and Accountability
Transparency and accountability issues were discussed. Most delegates believe that their government does not adequately communicate with the local media (67%). More believe that the local media does not adequately report local economic events (74%).
More than half of delegates say that governments do not effectively inform the public about public spending (55%). This lack of effectiveness is attributed, most often, to a lack of political will (62%). Yet, transparency and accountability represents 2 of the 3 leading motivators for PFM reform, according to delegates.
OECD / DAC Benchmarking Tool for Public Procurement
Pamela Bigart of the World Bank introduced the OECD/DAC benchmaking tool for public procurement at the 23rd Annual ICGFM Conference. This tools is based on broadly accepted international tool. It was attended to achieve good practices in many countries across a spectrum of capacity.
The benchmarking tool has been used in over 50 countries and enables self-assessments. The tool analyzes elements of public financial management such as budgets and controls because of the impact on the procurement process. It also integrates with PEFA assessments. It is a qualitative assessment rather than a performance assessment.
The OECD/DAC tool covers four pillars:
Overview of the application of the OECD/DAC Procurement Assessment Tool
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La reforma de la adquisición pública y su importancia en el clima económico actual
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Visión global de la aplicación de la herramienta de evaluación de adquisición OECD/DAC
View more OpenOffice presentations from icgfmconference.
The benchmarking tool has been used in over 50 countries and enables self-assessments. The tool analyzes elements of public financial management such as budgets and controls because of the impact on the procurement process. It also integrates with PEFA assessments. It is a qualitative assessment rather than a performance assessment.
The OECD/DAC tool covers four pillars:
- I – Legislative and Regulatory Framework
- II – Institutional Framework/Management
- III – Operations and Market Practices
- IV – Integrity and Transparency
Ms. Bigart described the 12 indicators and 54 sub-indicators.
She cautioned about poor procurement practices including not paying vendors on time. This increases the cost because vendors recognize the long payment cycles. Some governments start projects without sufficient budgets. This causes projects to be abandoned. Budget and procurement systems should be integrated.
Ms. Bigart pointed out some other poor practices including lax contract administration and no delegation of procurement responsibility. The private sector and civil society should be enabled to question government procurements.
Lessons learned from the use of the OECD/DAC benchmarking tool includes:
- The tool is useful and relatively easy to use
- Standardization through the tool creates need to use flexibly in a given country – may require some customization and interpretation
- Some indicators will require adjustment after experience from over 40 countries
- Use of the tool is an input to a process so scoring is not as important as the information learned
- Results of any benchmarking exercise needs to be more clearly linked to other tools like PEFA
- Reform strategy must be integrated and prioritized on the basis of overall public sector management and public financial management strategy
Thursday, May 21, 2009
PEFA Assessment Workshops
Frans Ronsholt, Head of the PEFA Secretariat and Franck Bessette, PFM Expert at the PEFA Secretariat lead ICGFM delegates in a workshop about Public Financial Management performance assessments. A case study was introduced.
The Secretariat provides training material and a comprehensive performance measurement framework document on the PEFA web site.
Mr. Ronsholt provided an overview of the PEFA framework, the reasons behind it and what it can accomplish. He suggested that PEFA assessments do not identify root causes of poor assessments nor does it evaluate policy. Mr Ronsholt says the trend to self assessment is a good sign, but that 3rd party scrutiny is very helpful.
Publish at Scribd or explore others: Business & Economics Research frans ronsholt public expenditure f
Publish at Scribd or explore others: Business & Economics Research frans ronsholt public expenditure f
Publish at Scribd or explore others: Business & Economics Research frans ronsholt public expenditure f
Publish at Scribd or explore others: Business & Economics Research frans ronsholt public expenditure f
Publish at Scribd or explore others: Business & Economics Research frans ronsholt public expenditure f
Publish at Scribd or explore others: Business & Economics Research frans ronsholt public expenditure f
Tuesday, May 19, 2009
Good Government Financial Management Helps Countries During Financial Crisis.
Behxhet Brajshori from the Government of Kosovo described the establishment of public financial management in Kosovo. The financial management system in Kosovo is modern and integrated throughout the country.
Mr. Brajshori described many of the challenges in Kosovo including a majority of population under 30 and high unemployment. Remittances to Kosovo is expected to reduce because of the global crisis.
The Government of Kosovo has changed new tax rates in response to the financial crisis. Income and business taxes have been reduced. VAT and tobacco excise taxes have been increased.
Despite the difficulties in the international financial market, the Kosovo financial system continues normal operations. The banking sector which represents the largest share of the financial market in Kosovo is characterized with a significant growth in terms of financial intermediation. Deposits and loans in banks in Kosovo have increased since 2005. The financial sector in Kosovo continues to grow, increasing its contribution to the economic development as well as the range and quality of products offered to clients.
Mr. Brajshori described the recent PEFA assessment and comparing 2009 with 2007. "A", "B" and "B+" indicators have improved. 12 indicators have improved. He concluded that Kosovo has improved government financial management.
The recent financial crisis in the international financial market is having an impact in the real sector in economies more exposed to the crisis. Mr. Brajshori says that the Kosovo economy is an open economy and may absorb some impacts of the potential recession in the region and EU.
A very important instrument for stimulating the consumption and investments in Kosovo is prudent fiscal expansion, according to Mr. Brajshori.
Measures taken by the Government of Kosovo because of the financial crisis includes:
Mr. Brajshori described many of the challenges in Kosovo including a majority of population under 30 and high unemployment. Remittances to Kosovo is expected to reduce because of the global crisis.
The Government of Kosovo has changed new tax rates in response to the financial crisis. Income and business taxes have been reduced. VAT and tobacco excise taxes have been increased.
Despite the difficulties in the international financial market, the Kosovo financial system continues normal operations. The banking sector which represents the largest share of the financial market in Kosovo is characterized with a significant growth in terms of financial intermediation. Deposits and loans in banks in Kosovo have increased since 2005. The financial sector in Kosovo continues to grow, increasing its contribution to the economic development as well as the range and quality of products offered to clients.
Mr. Brajshori described the recent PEFA assessment and comparing 2009 with 2007. "A", "B" and "B+" indicators have improved. 12 indicators have improved. He concluded that Kosovo has improved government financial management.
The recent financial crisis in the international financial market is having an impact in the real sector in economies more exposed to the crisis. Mr. Brajshori says that the Kosovo economy is an open economy and may absorb some impacts of the potential recession in the region and EU.
A very important instrument for stimulating the consumption and investments in Kosovo is prudent fiscal expansion, according to Mr. Brajshori.
Measures taken by the Government of Kosovo because of the financial crisis includes:
- Budget reserve increase -200.mill euro for 2009.
- Fiscal policies reform (cut in personal income tax ,profit tax rates etc.)
- Strengthening transparency and accountability in using the public revenues.
- Enhancing sound regulations,
- Promoting integrity in financial market.
- Strengthening the regional cooperation and development of trade market.
- Through privatization, increasing the investments especially FDI (Foreign Direct Investment) and than consumption.
- Reduction of government expenditures.
Challenges remain for economic development, unemployment, investment growth and European integration.
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