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Sequencing of Activities in Stage 2 of PFMRP

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The problem

• Stage 2 has many activities• Some activities cannot happen until others are

complete

• Sequencing of activities is needed• Target some specific activities to be

completed in 2010

The solution

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SUMMARY OF WORK UNDER PFMRP STAGE 2 – CAP2

Platform 1 – more credible budget

Platform 3 – fully affordable policy agenda through policy budget linkage

Platform 2 – effective financial accountability

4 OBJECTIVES FOR FURTHER - Revenue policy and administrationSTRENGTHENING: - Debt management

- Cash and bank a/c management - Public procurement

8 OBJECTIVES BUILDING ON PLATFORM 1: - Roles, functions and responsibilities - Incentives and sanctions - Budget classification & chart of accounts - Budget execution and transactions - Accounting and financial reporting - Internal auditing / inspection - Fiscal decentralisation - Institutional capacity and motivation

2 OBJECTIVES FOR ADVANCE WORK: - Improve & extend program budgeting - Comprehensiveness and integration of budget

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Stage 2 PFMRP

• Strengthening Platform 1 Activities is a priority

Platform 1 – more credible budget

4 OBJECTIVES FOR FURTHER - Revenue policy and administrationSTRENGTHENING: - Debt management

- Cash and bank a/c management - Public procurement

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Stage 2 PFMRP

• Advance work for platform 3 can continue but should not be a priority

Platform 3 – fully affordable policy agenda through policy budget linkage

2 OBJECTIVES FOR ADVANCE WORK: - Improve & extend program budgeting - Comprehensiveness and integration of budget

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Stage 2 PFMRP

• What about the work on Platform 2?

Platform 2 – effective financial accountability

8 OBJECTIVES BUILDING ON PLATFORM 1: - Roles, functions and responsibilities - Incentives and sanctions - Budget classification & chart of accounts - Budget execution and transactions - Accounting and financial reporting - Internal auditing / inspection - Fiscal decentralisation - Institutional capacity and motivation

What should be done first?

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Stage 2 PFMRP

• At the PFMRP conference in Sihanoukville on 16-17 January 2010 the Chief Technical Adviser, Peter Brook, stated his opinion that immediate Platform 2 activities should focus on five reform areas that are ‘catalysts’ for all other changes.

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Five reform areas that are ‘catalysts’ for change

CAP2 Activity1 21.3,

21.5 Define budget entities and budget entity

managers.2 22.1,

22.2 Define freedoms and flexibilities for budget

entities. Define sanctions against inappropriate budget

management. 3 23.1,

24.2 Road map for further reforms to budget

classification/chart of accounts. Improve business processes, to prepare for

FMIS.4 25.1 Identify accounting standards5 26.3 Framework for internal audit reports and plans

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Five reform areas that are ‘catalysts’ for change

CAP2 Activity1 21.3 and

21.5 Define and identify budget entities and

budget entity managers.

Outcomes•Will create a framework for delegation within which line ministries can work. •Will force a view on the extent of deconcentration that is acceptable now and in the future.

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Five reform areas that are ‘catalysts’ for change

CAP2 Activity1 21.3 and

21.5 Define and identify budget entities and

budget entity managers.

Detailed work for line ministries:21.3, 21.5

Identify full schedule of existing budget entities and budget managers

Receive manual and training from MEF on empowerment and responsibilities of budget entities and budget managers

Propose new schedule of budget entities and budget managers, new budget flows and new accountability arrangements, based on MEF guideline

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Five reform areas that are ‘catalysts’ for changeCAP2 Activity

2 22.2 and 22.1:

Establish a list of freedoms and flexibilities to be given to budget entities.

Establish clear sanctions for wrong, inappropriate and inefficient budget management.

Outcomes•Will identify what standards are expected of budget managers who are responsible for controls•Will give a clear requirement to line ministries that they must develop internal control procedures.

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Five reform areas that are ‘catalysts’ for changeCAP2 Activity

2 22.2

22.1

Establish a list of freedoms and flexibilities to be given to budget entities.

Establish clear sanctions for wrong, inappropriate and inefficient budget management.

Detailed work for line ministries:

22.2: Provide an input to MEF in defining powers that should be transferred to line ministries.

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Outcomes•Will enable the opportunity to computerise and streamline processes, and to introduce appropriate accounting analysis and controls.•Will encourage a view on realigning the organisation to fit the business processes.

Five reform areas that are ‘catalysts’ for changeCAP2 Activity

3 23.1 and 24.2

Deepen reforms to budget classification /chart of accounts and produce a road map for further reforms.

Improve business processes for transaction processing to be implemented through FMIS system.

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Detailed activities for line ministries•Develop in-house training for the economic classification•Comment to BD on problems with economic classification•Provide input to BD on program and functional classification•Compliance with chart of accounts and accounting rules•Eliminate inappropriate use of advances

Five reform areas that are ‘catalysts’ for changeCAP2 Activity

3 23.1 and 24.2

Deepen reforms to budget classification /chart of accounts and produce a road map for further reforms.

Improve business processes for transaction processing to be implemented through FMIS system.

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Five reform areas that are ‘catalysts’ for changeCAP2 Activity

4 25.1 Identify appropriate accounting standards to be implemented.

Outcomes•Will provide a clear roadmap for phased improvements in standards of financial reporting.

•Will ensure that introduction of FMIS is based on the first step within that framework, while enabling further steps at a later stage.

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Five reform areas that are ‘catalysts’ for changeCAP2 Activity

4 25.1 Identify appropriate accounting standards to be implemented.

Detailed activities for line ministries•LMs respect the dateline to submit payment orders by 25 December of each year.•(no other work is required from Line ministries at present)

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Five reform areas that are ‘catalysts’ for changeCAP2 Activity

5 26.3 Develop a framework for internal audit annual reports and plans

Outcomes•Will provide the basis for terms of reference and recruitment of audit teams in the line ministries. •Will give a clear requirement for line ministries to take action.

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Five reform areas that are ‘catalysts’ for changeCAP2 Activity

5 26.3 Develop a framework for internal audit annual reports and plans

Detailed work for line ministries•Submit audit plan to MEF IAD for review.•Attend MEF workshop•Submit audit reports to MEF for review.

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Five reform areas that are ‘catalysts’ for change

Next steps•Instructions on many of the priority areas for 2010 need to come from MEF.

Meanwhile we will focus on awareness of the issues.