Ian Ball (IFAC CEO) Visits the IMF to Discuss the Role of Accrual Accounting in Government Financial Reporting and Fiscal Management

Posted by Abdul Khan

“Accrual concepts are fundamental to both Economics and Accounting” said Mr. Ian Ball, the Chief Executive Officer (CEO) of the International Federation of Accountants (IFAC), the worldwide organization of the accountancy profession. In a well attended and lively seminar of Fund and World Bank staff on Thursday, May 23, Mr. Ball argued that accrual based accounting provides better information, be it to assess the impact of the public sector on the economy, enhance transparency to citizens or tax payers, or facilitate management decisions on resource allocation.

Mr. Ball explained the organization and role of IFAC, with particular emphasis on its work through one of its Boards, the International Public Sector Accounting Standards Board (IPSASB), which develops standards for use by governments in preparing their financial statements. More than seventy countries have agreed processes or have a project in place to adopt or align with IPSAS. In addition, IPSAS have also been adopted by international bodies such the UN system, OECD, the European Commission, and NATO, Mr. Ball said.

Reforming the Management of Public Expenditures on Forests: Some Thoughts

Posted by Anand P. Gupta, Director, Economic Management Institute, New Delhi, India

The article "Reforming the Management of Public Expenditures on Forests: Some Thoughts" (Full text:Download gupta1.pdf) published in Social and Public Policy Review, Volume 2, Number 1 (2008) reviews the available data on forest expenditures of all public entities in India, identifies and articulates the weaknesses in the management of these expenditures, and argues that, with these entities not spending even their current allocations for the forestry sector, inadequacy of financial resources can not be regarded as much a reason for the current dismal state of India’s forest sector as it is made out to be. The article asserts that a good part of the solution to India’s forest problems lies in reforming the management of its public expenditures on forests, with the focus on strengthening the expenditure-outcome link.

Contracts, Budgeting, and Transparency: Lessons from Municipal Budgets in the United States

Posted by François Michel

In a relatively recent survey of how five major US cities handle contracts in their budget (Public Budgeting & Finance Review, March 2006 - Vol. 26 Issue 1), Professor Irene Rubin from Northern Illinois University makes a convincing call for increasing contract reporting standards.

The survey’s results are a hard pill to swallow for budget savvy citizens or other interested taxpayers: even in municipalities with the most developed and transparent budgets, complex contracts remain practically unreadable in budget documents and are thus barely subject to any external scrutiny. This lack of transparency prevents any credible assessments of contract performance or comparison between in-house and external provision of public services. It also allows easy—and potentially manipulated—claims of costs savings by government officials. In response, Dr. Rubin recommends that each individual contract be systematically reported on an individual basis, with its scope, duration, cost, and performance requirements. Contract theory adepts would add that performance specifications should cover quantity, quality, cost and timeliness.

Managing Post-Natural Disaster Reconstruction Finance

-- World Bank Working Paper

Posted by Bill Dorotinsky

Recent PFM blog posts have focused on post-conflict public financial management (PFM) issues. The World Bank East Asia Region recently published a working paper on a somewhat similar topic, Managing post-disaster reconstruction finance, in January 2008. The paper examines eight post-disaster cases (Aceh-Indonesia, Yogyakarta-Indonesia, Sri Lanka, Maldives, Pakistan, Colombia, Grenada, and Honduras) and draws some general lessons for future events. Though the title indicates an emphasis on post-disaster reconstruction, a case studies annex includes post-conflict efforts as well.

Welcome to the new ICGFM Blog

Posted by Bill Dorotinsky

This week, the International Consortium on Government Financial Management holds their  22nd conference in Miami, Florida. (See our December 12, 2007, blog post on the ICGFM fall Washington, D.C. Conference on IFMIS.) The focus of this year's Miami Conference is on accountability, and is entitled “Joining Forces for Responsible Leadership to Enhance Good Governance:  Citizens, Public Officials, Private Sector and the Press”.

As part of this years event, ICGFM has introduced a blog spot, with daily coverage of presentations, including access to the presentation material and YouTube video's. Well worth a visit!

Performance, the Upper Level in Management as Part of an MTEF

"Our work will be judged on the access and quality of education services" – "performance is not only about more resources, it s is about their effective use"

Posted by Mr Genc Pollo, Albania Minister of Education and Science

Since the introduction of an MTEF in Albania, the Ministry of Education and Science (MoECS) has linked budget resources to its policy priorities through a three-year, rolling programme review process.

Public Finance: Why Do Countries Decentralize?

Posted by Mario Pessoa and Bill Dorotinsky

Decentralization is a popular reform, with implications for public financial management, fiscal policy, as well as governance and political economy. Recent events in Bolivia are an example of the continuation of the trend. Despite all of the rhetoric, how far is decentralization proceeding? And what can we say about the reasons countries pursue decentralization?

In a 2005 article entitled "Public Financing in Developing and Transition Countries" (Public Budgeting & Finance, Silver Anniversary Edition 2005, pages 83-98), Roy Bahl and Sally Wallace, explore the reasons why countries decentralize, including data on the share of subnational public spending.

Keeping up-to-date with civil society budget work

The International Budget Project Newsletter

Posted by Bill Dorotinsky

In a March 24, 2008, post by Duncan Last, we blogged about the International Budget Project's (IBP)new budget briefs series, as well as their numerous other initiatives and information resources.

Last week, the IBP released its most recent bimonthly newsletter -- a good way of keeping-up with some of the developments in the public financial management field. The recent issue, for example, includes articles on

• district-level budget information service in India
• social auditing in Rajasthan, and
• civil society efforts to improve education funding transparency in Argentina.

The current and previous issues of the newsletter (and e-subscription arrangements) are available at:

http://www.internationalbudget.org/resources/newsletter.htm

France’s Révision Générale des Politiques Publiques (RGPP)

Posted by François Michel

President Sarkozy’s Révision Générale des Politiques Publiques (RGPP) (General Review of Public Policies) undoubtedly marks France’s most comprehensive, structured and spelled out effort to modernize its public management and deliver the structural reforms needed for a long-lasting fiscal adjustment. The objective of the year-old initiative is not so much to yield short-term budgetary savings than it is to review underlying government policies, coverage of activities by the public sector, and delivery modes of public services.

Improving Government Financial Management Systems -- Lessons from a U.S. GAO Report

Posted by Bill Dorotinsky

Countries around the world are working to improve their public financial management (PFM) systems, and the U.S. is no exception. While for many countries the U.S. example may seem remote --- too unique in the authority of the Congress or too economically developed --- the similarities and lessons are more relevant than might appear at first glance. A recent GAO report, Highlights of a Forum: Improving The Federal Government's Financial Management Systems (GAO-08-447SP, April 2008), provides some fascinating insights into the state of PFM in the U.S.

The Importance of Transparency and Accountability in Public Management

Posted by Michel Lazare

Fiscal policy makers, academia, and public financial management practitioners in general agree on the positive impact of transparency and accountability on economic performance and on public confidence and trust in government. Proving this positive impact to the general public in a convincing and accessible manner is, however, often a challenge--a challenge that Maurice P. McTigue, Vice President of the Mercatus Center at George Mason University and former Minister in New Zealand in the early 1990s, seems to successfully meet. Two speeches he pronounced in Louisiana over the last few months attest of his success in this area.

Bridging HIPC and PEFA: Progress in PFM Reforms in 15 Countries, 2001-2006

Posted by Paolo de Renzio

In two previous blog posts of December 10, 2007 and April 21, 2008, Bill Dorotinsky explored the background, rationale and results of the joint World Bank-IMF HIPC AAP (Assessment and Action Plan) instrument, and provided a brief history of the origins of the Public Expenditure and Financial Accountability (PEFA) approach.

The two approaches are clearly linked to each other (the PEFA Performance Measurement Framework draws and builds on many of the HIPC AAP indicators), and share the common objective of providing a reference framework for assessing the quality of PFM systems in developing countries. While the PEFA framework has now come to be generally accepted as the overall assessment tool for this purpose, therefore replacing the HIPC AAP instrument, comparing the two and bringing together their complementary information can shed light on progress in PFM reforms across countries while the PEFA framework is still being rolled out.

A recent paper, "Tracking Progress in the Quality of PFM Systems in HIPCs: An update on past assessments using PEFA data", supported by the PEFA Secretariat has attempted to do just that, bridging the two approaches in order to track progress in the quality of PFM systems in poor countries. Using the original HIPC indicators as a basis, information contained in PEFA assessment reports was "retro-fitted" onto 11 of the 16 indicators, for the 15 countries for which both HIPC AAP assessments in 2001 and 2004 were carried out, followed by a PEFA assessment in the period between 2005 and 2007 (Benin, Burkina Faso, Ghana, Guinea, Guyana, Honduras, Madagascar, Malawi, Mali, Mozambique, Nicaragua, Sao Tome and Principe, Tanzania, Uganda and Zambia). The results are provided by country either in terms of benchmarks met or of underlying raw scores, which permit a more detailed analysis.

United Kingdom Concludes Its Fifth Multi-Annual Spending Round

2007 Comprehensive Spending Review

Posted By Richard Hughes

In October of last year, the UK Treasury published the conclusions of its latest multi-annual expenditure planning exercise.  The 2007 Comprehensive Spending Review (CSR07) set out how the UK Government plans to spend its £600bn (US$1.2 trillion) annual budget over the years 2008-09, 2009-10 and 2010-11 and the key outcomes it is looking to buy with taxpayers’ money over the period. 

While the UK’s fiscal and budgetary architecture has been stable for over a decade and biennial Spending Reviews have become a routine feature of the British political calendar, there were are number of noteworthy developments and innovations in this fifth multi-year spending round.  In particular, CSR07:

• took place within a more challenging macro-fiscal context than previous spending rounds and was a test of the capacity of the UK’s Spending Review process to deliver an expenditure-based fiscal consolidation;
• saw a major expansion in the length, breadth and depth of budgetary certainty that the UK system provides to frontline managers; and
• included a major streamlining of the UK’s performance management regime for public services.

Exchanging experiences and learning from others: PEM PAL approach

Posted by Urska Zrinski, CEF PEMPAL Secretariat

PEM PAL, the Public Expenditure Management - Peer-Assisted Learning (PEM-PAL) network, is a network of public expenditure management professionals from countries in Central and Eastern Europe (CEE), and Central Asia. The initiative, which was conceptualized in 2005 by the World Bank and the United Kingdom’s Department for International Development, represents an effort to develop capacity and share reform experiences among countries in CEE and Central Asia. At the beginning of 2008, the PEM PAL secretariat has been moved from the World Bank’s headquarters in Washington DC to the Center of Excellence in Finance, Slovenia, thus bringing the network closer to the region. (See a January 25, 2008 blog post for more on the Center.)