Tracking Progress and Controlling Funds Concepts.ppt

Tracking Progress and Controlling Funds: Concepts Bill Dorotinsky, PRMPS Budget Management Course March 1-2, 2004 The HIPC Expenditure Tracking work illustrated that PEM systems remain weak in basic areas. Post Budget Stages Release of Authority to Spend or Funds Notification of budget Commitment authority issued (if done) Financial plans Warrants issued (cash draw) Cash transfer (if done) In-year modifications Transfer authority – across accounts Virements – across ministries Supplemental Budgets Financial commitment stages Encumbrance/pre-commitment/reservation Commitment/obligation Receipt of goods and services Invoice Verification Paid Cashed/cleared Commitments, agency activity, and cash outflow: time lags Budget classifications Administrative Economic/object class/’inputs’ Functional Program Fund Line Item Classification Matrices:frequently used to control Control Approaches Central control versus Managerial Flexibility Tensions between needs of center to Control cash flow Control policy And agency need to manage programs Larger, less detailed allocations Longer time horizon Greater transfer authority/flexible application of resources General Tensions Essentials of Good FM Timely, accurate in-year reporting Internal controls, audit External audit Sufficient detail to identify sources of overspending Sufficiently regular reporting to allow timely management intervention Comprehensive system Accountability framework, control environment To manage well requires: Monitoring/managing Cash balances Cash flow Inflow outflow Commitments Arrears Contingent liabilities New legislation/mandates Off-budget activity * The World Bank Source: “Actions to Strengthen the Tracking of Poverty Related Public Spending in Heavily Indebted Poor Countries (HIPCs), World Bank and IMF, March 22, 2002. See /hipc/hipc-review/tracking.pdf 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 (Percent of countries not meeting each benchmark) Benchmark numbe