PFM Reform Roadmap and
Developments
(A Presentation for the 27th DepEd National
Seminar/Workshop on the Preparation and
Reconciliation of the CY 2012 Mid-Year
Financial Reports)
July 23, 2012, Tagaytay City
By: Assistant Secretary Luz M. Cantor
Philippine PFM Reform Roadmap 1
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Presentation Outline
PART I: PFM System Gaps/Weaknesses
A.
What is PFM?
B.
What ails the Philippine PFM system?
PART II: PFM Roadmap and Developments
C.
Executive Order No. 55
D.
PFM Reform Roadmap
E.
PFM Governance Structure
F.
PFM Reform Projects
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PART I
PFM GAPS
Philippine PFM Reform Roadmap
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What is PFM?
Public Financial Management (PFM) is a system of
rules, procedures and practices for government to
manage public finances in the areas of:
 budgeting
 accounting
 auditing
 cash management
 management of public debt
 revenue generation
 public reporting on public sector financial
operations
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4
Benchmarks of a Good PFM
•
Credibility of the budget
•
Comprehensiveness and transparency
•
Policy-based budgeting
•
Predictability and control in budget execution
•
Accounting, recording and reporting
•
External scrutiny and audit
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PFM Gaps in the Budget Process
PREPARATION
messy traffic of documents
lack of budget credibility
ACCOUNTABILITY
budget not results based
AUTHORIZATION
lack of funding predictability
weak oversight of Congress and public
lack of efficient cash management
weak monitoring of contingent liabilities
EXECUTION
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Messy Traffic of Documents
This is now…
In the long run, Philippine PFM
needs this kind of information
system
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GAP/WEAKNESS
STRATEGIES
Lack of credibility of the
budget
Avoid re-enacted budgets, tighten
savings concept, flesh out lump sum
funds
Budget supports targets in the Plan
More efficient, transparent and
accountable budget execution
Development of a Government Integrated
Financial Management Information
System (GIFMIS)
Engage CSOs in the budget process
Real time reporting on budget utilization
by agencies and the Government.
Pro-active CSO support for budget
transparency
DESIRED
RESULTS
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GAP/WEAKNESS
Budget not yet resultsbased
STRATEGIES
Make agency accountability reports
performance based; improve costing
methodology for outputs
Strengthen results orientation of
Agency Performance Reviews (APRs)
Institutionalize results based
budgeting framework through the
OPIF
Institutionalize Zero Based
Budgeting (ZBB)
Budget decisions based more and more
on physical and financial performance
DESIRED
RESULTS
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GAP/WEAKNESS
Lack of a common
classification system for
budgeting, accounting,
auditing and cash
management
STRATEGIES
Harmonize budgetary and accounting
classifications and reporting
Codify PFM rules and complete PFM Rules
Manual for capacity building
Identify common reporting requirements of
oversight agencies and line departments
Consolidated FM reporting
requirements based on harmonized
classification of all accounts
Real-time reports, access to financial
data and control of obligations and
disbursements for more effective
financial control and accountability
Revise New Government Accounting System
(NGAS) Manual and chart of accounts
DESIRED
RESULTS
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GAP/WEAKNESS
Lack of funding
predictability
STRATEGIES
DBM and DBCC to approve allotment and
cash release program at start of year and
update midyear
BTr and DBCC to improve cash
management practices
Review validity of SAROs and NCAs
Study feasibility of using GAA as budget
release document and eliminate releases thru
SAROs
Predictable and streamlined allotment and
cash release programs throughout the year
to support agency operations based on
DOFs reliable revenue forecasting and
programming.
DESIRED
RESULTS
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GAP/WEAKNESS
STRATEGIES
Weak oversight role of
Congress and the public
over the budget process
Capacity building
for Congress and
CSOs
Oversight Committees in Congress and
the public use DBM and COA reports
more extensively
DESIRED
RESULTS
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GAP/WEAKNESS
Lack of efficient cash
management
STRATEGIES
Improve Treasury Cash Management
operations
Complete inventory of agency bank
accounts and rationalize their
number
Shift to transaction-based fees for
government banking arrangement
Improved Cash Programming by BTr
and DBM
Predictable and stable revenue inflows
and cash disbursements
DESIRED
RESULTS
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GAP/WEAKNESS
Lack of accurate database
on contingent liability
STRATEGIES
Compel agencies to disclose their
contingent liabilities
Make DOF the authority on issuance of
policy on contingent liabilities (for GOCCs
and NGAs)
Monitor and report regularly contingent
liabilities
Improved system for capturing and
reporting all liabilities of government
entities; real and contingent
National Government able to manage
all its financial exposure
Develop database on contingent liabilities
DESIRED
RESULTS
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Where are we now?
(PFM Gaps and weaknesses)
Where are we going?
How are we going to achieve
the reforms?
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PART II
PFM ROADMAP AND
DEVELOPMENTS
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PFM Reform Roadmap
 Master plan for
improving the
financial
management system
of the government
 Jointly formulated
and approved by
fiscal oversight
agencies (COA,
DBM, DOF, BTr) from
2009 to 2011
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PFM reforms support
Aquino Administration priorities
“Kung walang corrupt, walang mahirap”
5 Priority Areas
Societal Goal
Sector Goal
PFM Goal
Anticorruption/
Transparent,
Accountable &
Participatory
Governance
Poverty
Reduction
&
Empower
ment of
the Poor
Rapid,
Equitable
&
Sustained
Economic
Growth
Just,
Inclusive &
Lasting
Peace &
the Rule of
Law
Integrity of the
Environment/
Climate Change
Mitigation &
Adaptation
Inclusive Growth and Poverty Reduction
Good Governance
Fiscal Discipline
Improve efficiency, accountability and transparency of public
fund use to ensure direct, immediate and substantial
delivery of public services specially to the poor.
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Executive Order 55
Directing the Integration and Automation of
Government Financial Management System
(signed by President Benigno S. Aquino on 6 September 2011)
1. Installation of PFM systems:
 Government Integrated Financial Management
Information System (GIFMIS)
 Treasury Single Account (TSA)
 Efficient Budget Release System
 Systematic Financial and Physical Reporting and
Auditing
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EO 55
2. Created the PFM Committee (formerly the
GIFMIS Committee)




Devise a 5-year plan for the development and
installation of GIFMIS
Oversee the implementation of the PFM Reform
Roadmap
Shepherd and champion the passage of
supporting legislation needed in Congress
Coordinate budgetary and donor funding
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PFM Governance Structure
PRINCIPALS
(COA Chair, DBM and DOF Secretary)
PFM COMMITTEE
PROJECT MANAGEMENT OFFICE
PROCUREMENT UNIT
PIU
GIFMIS DEVT
PROJECT
TRACK 1
PIU
BUDGET
REPORTING &
PERFORMANCE
STANDARDS
PROJECT
PIU
IMPROVEMENT
OF TREASURY
CASH
MANAGEMENT
PROJECT
PIU
ACCOUNTING
AND
AUDITING
REFORMS
PROJECT
PIU
LIABILITY
MANAGEMENT
PROJECT
PIU
CAPACITY
BUILDING
PROJECT
TRACK 2
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Funding Support
AusAID
A$30M (P1.2B)
Facility Grant
WB-IDF
GOP
Intl Devt Fund
P978.5
(2012 Budget
eGov Fund)
EU
LGU PFM
ADB
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Outputs and Results
PFM REFORMS ROADMAP
Outputs
Major
Strategies
Results
Based
Budgeting
1. Build up
Credibility of
PFM
Treasury
Single
Account
2. Review
Fund Release
Procedures
3. Capacity
Building for
Congress and
CSOs
GIFMIS
Real Time
Financial
Information
4. Improve
Treasury Cash
Management
Operations
Philippine PFM Reform Roadmap
Better Mgt of
Contingent
Contingent
Liabilities
Liabilities
5. Develop &
Implement
GIFMIS
Initial PFM Reform Projects
Project
Lead Agency
1. Improvement of Treasury Cash
Management Operations
BTr
2. Budget Reporting and
Performance Standards
DBM
3. GIFMIS Development
DBM, DoF/BTr, COA
4. Liability Management
DoF
5. Capacity Building
DBM, DoF/BTr, COA
6. Accounting and Auditing Reforms
COA
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Improvement of Treasury Cash Management
Operations Project
Objective
• to increase operational efficiency of implementing
agencies while minimizing cost of treasury operations
Output and Timeframe
• a system of cash management that can keep daily
cash balances of government at appropriate levels
• Treasury Single Account (TSA) in place by 2014
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Budget Reporting and Performance
Standards Project
Objective
• to produce quarterly reports within 2 weeks of next quarter (short
term)
• to generate real-time reports on budget utilization and financial
performance through GIFMIS (long term)
Output and Timeframe
• Consolidated and agency level budget execution and budget
utilization reports published in COA and DBM website
• Harmonized forms by Dec 2012
• Unified Account Code Structure
• Framework on Performance Standards implemented by March
2014
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GIFMIS Development Project
Objective
• to facilitate physical development of a working GIFMIS
that can collect and organize financial information in a
central database
Output and Timeframe
• Web-based GIFMIS Version 1 – initially for national
government agencies (for completion in 8 months)
• Web-based GIFMIS Version 2 – for all government
agencies (operational by 2016)
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Liability Management Project
Objective
• to put in place a system for managing government's
exposure to contingent and other liabilities
Output and Timeframe
• a complete list of liabilities of the national government,
real and contingent (immediate)
• LM system established by 2013
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Accounting and Auditing
Reform Project
Objective
• continue to enhance government accounting systems and
strengthen external audit capacity
Outputs and Timeframe
• Harmonized PGAS with IFRS and IPSAS by June 2012
• Enhanced NGAS for GIFMIS Track 2 by Dec 2012
• Guidelines on the audit of multi-sectoral programs/projects
• Revised guidelines on participatory audit
• Intensified conduct of IT/ information systems audit (201215)
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Capacity Building Project
Objective
• develop skills of personnel of oversight and
implementing agencies on PFM competencies
• build stakeholder support for the reforms
Target Participants
• personnel of the oversight and implementing agencies
• legislators
• civil society organizations
• other stakeholders
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PFM Reform Roadmap
Leading the way to the right path
Improved Public
Service
Improved
efficiency,
accountability and
transparency of
public fund use
• Direct
• Immediate
• Substantial
Beneficiary
The Filipino
People especially
the poor
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‘…it is incumbent on all of us to confidently assert that
governments that do things right should have no problem
keeping our fellow citizens informed and engaged, and
are thus, partners of government in its fundamental task
of addressing the needs of the people.
The result is an empowered citizenry, which is the
essential aspiration at the heart of the digital revolution
sweeping the globe...’
President Benigno S. Aquino III
Speech at "The Power of Open: A Global Discussion"
Google New York, 75th Ave., New York
19 September 2011
Philippine PFM Reform Roadmap