Anti-Corruption Doesn't Mean Anti-Government

Innovations in Public Financial Management (PFM) Fraud Detection

The Transparency Portal of Brazil

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

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


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


3. 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

View more presentations from icgfmconference.

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

View more presentations from icgfmconference.

Spinelli transparency for citizens the brazilian experience of transparency portal

View more presentations from icgfmconference.

Control Self Assessment

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

View more documents from icgfmconference.

Casals ta control self assessment

View more documents from icgfmconference.

Public Financial Management in Sudan

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

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

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:

• 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

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

Social Control Mechanisms for Greater Transparency and Accountability

Dr. Craig Reed, Senior VP at DynCorp introduced the panel looking at the use of civil society and other non-governmental independent mechanisms to provide oversight for development. He introduced the panel:

• Gema Aragones, Deputy Chief of Party on the USAID/MCC Threshold Anti-corruption Project for Paraguay
• Eduardo Flores, Deputy Chief of Party on USAID’s Mobilizing Action Against Corruption Project in Armenia
• Varazdat Karapetyan, President, Chamber of Commerce and Industry, Gegharkunik Province, Armenia

Ms. Aragones described the MCC Threshold program in Paraguay. The project targets government areas that have the highest changes of corruption. She described how internal, audit and external controls are being strengthened in 12 public institutions in Paraguay. Ms. Aragones said that information and communications systems provide accountability reports to the public. Citizen participation and oversight is encouraged through these reports and the devolution of government services. She described the process of citizen oversight of local health councils and the need for political will.

The Government of Paraguay has developed an Office of Support for Citizen Control with the assistance of Casals and Associates. Access to information is essential to promote integrity. The office also manages citizen complaints. Ms. Aragones said that there has been significant improvements in transparency over the past 2 years but that more civil society organizations need to be involved in Paraguay.
Gema Aragones,ICGFM Accountability English

Gema Aragones,ICGFM Accountability Espanol

Gema Aragones,ICGFM Accountability Francais

Eduardo Flores described transparency initiatives in Armenia. Mr. Flores asked what organizations are responsible for transparency. He described the need for political will, independent media, professional audit, independent legislature, effective law enforcement and other civil society actors. He suggests that not all accountability pillars need to be strong in order to achieve positive anti-corruption. NGOs are used as advocacy and assistance centers in Armenia to manage anti-corruption activities. 11 regional centers have been established. He provided statistics showing 863 corruption cases resulting, so far, in 87 under prosecution. Institutional inefficiencies have also been identified. Armenia anti-corruption processes are gaining improved government credibility according to Mr. Flores.

Mr. Flores had some interesting observations on how citizens change behaviour depending on where they are.

EduardoFloresTrejo ICGFM Social Control Mechanisms Armenia.english

EduardoFloresTrejo ICGFM Social Control Mechanisms Armenia Espanol
EduardoFloresTrejo ICGFM Social Control Mechanisms Armenia-Francais

Varazdat Karapetyan, President, Chamber of Commerce and Industry, Gegharkunik Province in Armenia provided specific anti-corruption cases. He described the systemic analysis of the case of where a doctor demanded payment for free services. Mr. Karapetyan pointed out that underpaying doctors creates corruption. He described how holistic analysis provides a roadmap for reform. He emphasized that the culture from the former Soviet times needs reform.

Mr. Karapetyan described how systemic extortion by tax and the registry of new business government ministries was addressed. He also described how individual instances of corruption were adjusted.

VarazdatKarapetyan ICGFM Transparency English

VarazdatKarapetyan ICGFM Transparency Francais

VarazdatKarapetyan ICGFM Transparency Espanol

Main Conference Ends Today - Workshops Begin Tomorrow

Participants to the 23rd Annual ICGFM Conference woke up with the sun this morning. The main headline in USA Today delivered to hotel rooms of the Marriott Biscayne bay,demonstrated the need for good goverance and knowledge sharing.

The press is often quick to point out allegations of corruption and mismanagement in emerging countries. The sensational headline "Corrupt Afghan officials hurt aid" implies that governance procedures such as parliamentary budget oversight is robust in developed countries. Yet, ICGFM members heard a different story from David M. Walker, the former Comptroller General of the United States on Monday. And, the openning keynote this morning by Kevin Page, the Parliamentary Budget Officer of the Parliament of Canada promises to be as enlightening

Joseph Achua - The Imperatives of Prudent Management of Nigeria's Rich Resources

There is a discernibly wide expectation gap in the way Nigeria’s resources have been managed over time. This paper stresses the strategic importance of the human factor in the nation’s resources management. Only a responsible leadership, kept in check by a well organised and progressive workforce in a conducive environment, can be trusted with prudent use of the nation’s resources. Therefore, in the light of the “Nigerian Factor” syndrome, the imperatives of sustainable prudent management of Nigeria’s resources include an urgent need for a political will to effect robust fiscal responsibility, pragmatic public accountability, and good public governance. This will entail a Nigerian renaissance towards rebuilding basic mechanisms of democratic governance to make elected and appointed officials accountable to their constituents through free and fair elections; strong government institutions; and well-organized and informed citizens with the power to stand up to the existing elite and demand performance. Accomplishing this Herculean task is the responsibility of all Nigerians. Encouragingly, the eventual installation of a former union leader as Edo State Governor after a protracted struggle at the polls and the tribunals is a manifestation that change is possible. This should serve as an impetus to other concerned citizens and pressure groups.

Achua - The Imperatives of Prudent Management of Nigeria's Rich Resources

Publish at Scribd or explore others: Business & Economics Research corruption prudent management

The World is out of Balance

Djordjija Petkoski of the World Bank Institute says that the annual cost of corruption is over $1 Tillion. Mr. Pekoski put a human face on the effects of corruption at the ICGFM conference explaining that the world is out of balance. "It is not a transaction."

Over 2.6 billion people or 40% of the world lives on less than 1$ day. "Should we be sorry," he asks. "It is more about opportunities."

Mr. Petkoski (left) was joined by Eugenio Marulanda Gomez, President Confecemas Colombia (center) and John Sullivan from the Center for International Private Enterprise. Mr. Gomez spoke about the need for measurement to determine how effective programs are working.

Statistics show that the amount of net flows from the private sector to developing nations is far more than official donor and government funding. Therefore, the private sector must play a larger role in reducing corruption. The private sector can work for collective action to motivate the reduction of corruption. The World Bank and partner organizations are setting up a portal to assist the private sector to reduce corruption.



John Sullivan described how important the OECD Convention on Anti-Bribery has been to break the taboo about talking about corruption. Mr. Sullivan does not believe that corruption is based on culture. He recommends reading the book, The Logic of Collective Action, by Mancur Olson to show how collective action can work to reduce corruption.

Copies of Development Outreach was provided to attendees.

Business in partnership against corruption, out of balance

View more presentations from icgfmconference.

Business in partnership against corruption

View more presentations from icgfmconference.