Public Financial Management Concepts

Public Financial Management:
Basic Concepts
A process of effectively handling the
public purse
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
Accounting, recording
and reporting
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
Budget Formulation:
Deciding Budgetary ceiling
Circulation of ceiling
Preparation of budget by line agencies
Accumulation : expenditures and revenues
Presentation before parliament
Parliamentary Approval
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
Timely budget: budget law?
Treasury management : core TSA
Procurement practices reforms
Accounting Reforms: NPSAS ,commitment acc.
Internal Audit Reforms and focus on
performance audit
• Parliament and people voice
• Greater Transparency
Discussion Session
Thank You

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