Commonwealth Country Self Assessment in Public Finance

Management: 2009 report & lessons learnt

Kaifala Marah Commonwealth Secretariat

FMMCyprus 2009

Overview

• Why trouble with self assessment?

• What did we assess?

• Lessons learnt (quantitative & qualitative outcomes)

• Challenges identified

• Some good practices to note

• Next steps

• Conclusion

Why trouble with self assessment?

• Independent country assessments: are relative to own environment present little opportunity for data sharing learning is limited

• However, the CPFM-SAT presents a common platform for learning:

sharing of country experiences enhanced

• Assists COMSEC with intervention strategy

Participating countries

Africa

Botswana

Ghana

Kenya

Lesotho

Malawi

Mozambique

Sierra Leone

Zambia

Asia

Brunei

India

Maldives

Singapore

Participating countries ...

Caribbean

Barbados

Grenada

Jamaica

St. Lucia

Mediterranean

Cyprus

Malta

Pacific

Australia

New Zealand

Tonga

TOTAL: 21 from all regions

What did we assess?

Countries self assessed 166 PFM attributes arranged under 5 main building blocks:

1. Structure of PFM: • Legislation and regulation• Role of authorities and committees, for example Public procurement (complaints review, etc) Revenue agencies Internal audit

What did we assess...

Aid and debt management units Debt strategy committee, etc Resource and capacity building

2. Accountability and Stewardship

• Transparency and accountability (PACs, OAG, etc)• Accounting for public funds• Public asset management• Safeguarding public moneys• Reporting• Monitoring and evaluation

What did we assess...

3. Planning and Resource Allocation• Planning budgets• Prioritisation and allocations• Flexibility and autonomy

4. Measurement• Financial data (moving from cash to accrual accounting)• Non financial data (performance targets easy to

understand, updated and institutionalised), etc• Chart of accounts• Expenditure reports, (full cost basis – depreciation,

evaluation) etc

What did we assess...

5. Performance & Value Creation• Enhancing value• Efficiency and economy integrated in the budgetary

process• Incentives and penalty system built in the system• Effective procurement system (for example, black list of

non-performing contractors, etc) obtains

So, what are the quantitative outcomes?

What did we assess?

Score for each of the attribute was done in the following:

Activity not yet established=1

Activity established=2

Activity implemented=3

Activity effectively implemented=4

https://gate.commonwealth.int/pfm

Variables, biases skewing results

• Individual’s position (junior/senior), knowledge of PFM, style of answering, and experience in working with others

• Level of consultations, subjectivity, tough or soft stance taken on issues

• Human error, understanding of questionnaire, selectivity and omissions

• Nature of questions – political, etc.

Lessons learnt (qualitative outcomes)

Overall, progress has been made across member countries, for example:

• There has been a floodgate of new PFM legislations especially since early 1990s

• A number of regulations being reviewed and updated

• Marked improvements identified in budget planning, consultation and allocation

Lessons learnt...• E-financial management is thriving• Procurement functions devolved in some

economies; e-procurement being improved• Internal audit, asset and risk management

enhanced in some jurisdictions• Cash flows/management & debt

management enhanced• Monitoring/evaluation of performance

improved

Challenges identified

1. Challenges in the following areas are faced by many of our jurisdictions:

• Intensions are mistaken for results; for e.g. legal frameworks mistaken for implementation

• Asset management: framework & implementation

• Risk management not mainstreamed

Low profile of internal audit

1.Need for a conscious commitment to change the long held notion of internal audit

2. Craft a sustainable

medium term strategy

22 of 42 22 of 24

Challenges identified...

• Ineffective debt strategy

• Managing tax exemptions (e.g user pay policy, etc), mostly absent

• Safeguarding public moneys

• Monitoring and evaluating public expenditure

• Monitoring, assessing, enforcing performance targets, etc

Challenges identified...

• Cash management (inflows vs outflows)

• Transitioning from cash to accrual accounting

• Enforcing procurement compliance

• Establishing tax assessment tribunal

• Effective records management

• Old legislations in need of review

Challenges identified...

2. Big Six PFM issues to note:

• Pre-election audits

• Financial autonomy of auditors general

• Declaration of assets by public officials

• Maintaining & publishing a black list of non-performing contractors

• Powers of parliament on budget tampering

• Chairmanship of PACs

Some good practices to note

Australia:

• Financial autonomy of the National Audit Office is guaranteed

• FMA requires agencies to set up internal audit and a “fraud control plan”

• The Charter of Budget Honesty Act provides for Pre-Election Economic and Fiscal Outlook Report (PEFO)

Some good practices to note

Singapore

• Tax exemptions fully funded under a user pay policy

• Effective asset management system in place

• Black list of non-performing contractors maintained and published

Some good practices to note

India:

• Instruction manuals are updated and accessible

• Specialised training institutes established to enhance capacity

New Zealand:

• Effective debt management system in place

Some good practices to note• Effective monitoring and evaluation• Assessment and review of performance• Budget flexibility: allows carry-forward of

activities • Systematic transition from cash to accrual

accounting

Malta:• Passed Local Loans Act as far back as in 1959

Some good practices to note

• Efficient cash flow management system through “weekly swing operation” to forecast the inflow & out flow of cash

Cyprus:

• All government officials declare assets and liabilities

• Internal control reviews are carried out “daily, monthly and annually”

Some good practices to note

Ghana:

• Internal audit agency – responsible for transforming internal audit and risk management

• The IAA reports directly to the President & report is tabled in Parliament

Grenada:

• Maintains a debt coordinating committee

Some good practices to note

Jamaica:

• Zero balance account known as “clearing accounts” obtains in MDAs

Sierra Leone:

• Procurement appellate board exists

• Asset declaration provided for in the law

Kenya:

• Performance audits carried out

Some good practices to noteTonga:• Debt sustainability policy put in place

St. Lucia:• Government vehicles insured

Maldives:• Independent commissioners declare asset

Botswana:• Government transportation system

effectively regulated

Next steps

• The Commonwealth Secretariat: to commission a further study on country

specific good practices to enhance experience sharing. Areas to be identified by senior officials

propose that all country finance ministry websites to be linked to the Commonwealth PFM portal to enhance sharing, research and learning

Next steps...

Crafted a medium-term response strategy to assist member countries in closing specific gaps under the Building Pyramids in the Valley project

Review CPFM-SAT against the 2011 self assessments

Provide a full and non-publishable report of the 2009 assessments to member countries

Conclusion

“Learning is the key to both implementation and evaluation. We evaluate to learn, and we learn to implement. Evaluation is a method of inducing learning within an organisation geared for implementing. And it is not only evaluators but the programme personnel, the implementers, who are to do the learning. Were this not so, were evaluation isolated from implementation

Conclusion……

The latter would be blind and the former would be dumb, and neither could change for the better”.

(Implementation, J.L Pressman & A Wildavsky)