Public Financial Management:
Basic Concepts
A process of effectively handling the
public purse
By
Arjun P. Pokhrel
Joint FCG
PFM is all about public money
.
Presentation Outline
•
•
•
•
•
•
•
•
PFM concept
PFM Cycle
Planning aspects of PFM
Budgeting aspects
Audit and scrutiny
Nature of PFM
PFM issues in Nepal
Reform areas
PFM Concept
Public financial management is
a system , processes and
institutions to handling public
purse in a prudence manner
The PFM Cycle
Planning /Policy
Scrutiny and Audit
Optimum
utilization
Budget
implementation.
Accounting, recording
and reporting
Budgeting
Planning Aspects of PFM
•
•
•
•
Long term plan : guide
Medium Term Plans
Annual plan, policy and programs
Line ministry programs
Budgeting Aspects
.
Budgeting: Converting Programs
into monetary term
1.
•
•
•
•
•
•
•
Budget Formulation:
Deciding Budgetary ceiling
Circulation of ceiling
Preparation of budget by line agencies
Negotiations
Accumulation : expenditures and revenues
Presentation before parliament
Parliamentary Approval
Budgeting.....................
2. Budget Execution:
• authorization
• procurement
• revenue collection , loans and grants
• accounting , recording and and reporting
• internal control
Audit and Scrutiny
• Internal Audit: judging the sufficiency of
internal control system and suggesting for
ongoing corrections
• External Audit: overall financial judgment for
future corrections and reforms
• Parliamentary Scrutiny: Audit over auditors
and corrections over the policies
• External scrutiny: correction over the
behaviors , for eg. CIAA
• Peoples' voice : overall correction
Nature of PFM
• PFM is a creature of law .Due process is
always necessary
• Results should be targeted towards the
people at large
• Public accountability is the heart of PFM
• It is the fundamental pillar of governance
Issues of PFM in Nepal
•
•
•
•
•
•
•
•
•
•
Planned vs ad hoc
Budget: incremental
Due process breached?
Results neglected
Problems in procurement
Weak accounting , recording and reporting
Lack of performance audit
Parliament missing : frequent
Weak governance: utilization of resource
Articulating peoples' voice
Reforms Areas
•
•
•
•
•
•
•
MTEF/MTBF
Timely budget: budget law?
Treasury management : core TSA
IFMIS
Procurement practices reforms
Accounting Reforms: NPSAS ,commitment acc.
Internal Audit Reforms and focus on
performance audit
• Parliament and people voice
• Greater Transparency
Discussion Session
YOUR QUESTIONS?
.
Thank You