The Accountant Series

An effective framework for control and audit:

Effective financial management requires effective scrutiny. This is as true in the public sector as it is in the private sector. First and foremost this requires robust internal control systems and independent external audit. Internal control mechanism are generally seen as the first level of governance, allowing the central financial function to monitor spending against annual budgets, and, if necessary, to hold departments to account.

Good internal monitoring systems are considered particularly important when significant financial management responsibilities are devolved to individuals line ministries. They are also highly dependent on the quality and timeliness of financial information which is made available by each departments. In several countries, the drive towards greater simplicity has centred on the metrics used to monitor internal performance. Some respondents described a trend by which the number of measures used is being reduced, reflecting doubts about how useful these are in terms of financial management.

The Right Skills And Qualifications:

Good public financial management depends on having people with professional skill in finance ministries and finance functions across the public sector. In general, there is a sense that senior individuals have the necessary skills and have gained considerable and valuable experience. But below this level, skills and qualifications can vary quite considerably. It’s also clear that qualified finance professionals tend to be restricted to the finance functions. Beyond these departments, detailed financial knowledge is limited. This has significant implications for the management of public finances across the public sector.
A more general observation made by a number of respondents concerns a desire to encourage finance professionals to think more broadly. Many fell that while public sector finance professionals are very strong within their own area of expertise, they can be very narrowly focused on financial matters, with limited appreciation of how finance fits within the wider business of delivering public services and safeguarding the country’s overall financial position. Departments can sometimes lack individuals who are capable of broader thinking and who have the ability to relate, and connect with, public sector issues more generally.

Financial knowledge, experience and skills across government is satisfactory, but the specialisation in many areas is very narrow (eg. In accounting and in budgeting) so the broader insight is missing.

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Clarity Of Roles And Responsibilities:

Effective public financial management is highly dependent on having clear roles and responsibilities within finance ministries from the lowest to the highest levels across both elected and unelected officials. A lack of clarity in this area makes it far more difficult to set financial management objectives and to assess whether they are being met. Clear functions are vital if a finance ministry ( and indeed the government more widely) wishes to set out and execute a clear, joined-up strategy for financial management and thus to better control the financial position of the government as a whole. Without clarity of roles and responsibilities, individuals, teams and even departments can overlap, creating inefficiencies, confusion and unnecessary bureaucracy. Thereby reducing finance ministries day-to-day capacities and capabilities.