The importance of strong Public Financial Management Systems
At its most basic, Public Financial Management (PFM) is the management of resources and expenditure within the public sector. In most countries this expenditure exceeds more than one third of GDP, meaning that public funds must be managed to the highest standards using established standards and systems. These systems are used to allocate public funds, account for all public expenditure and income, plan the cost of delivering services and audit the results.
Why is it so important that a strong PFM strategy is in place?
- More effective delivery of public services
If the finances of a public body are managed efficiently, we see a close linked to poverty reduction as services are delivered more effectively and markets can be regulated more fairly. Poor PFM encourages the spread of corruption and allows waste which has a negative impact on the services offered to the public;
- Boosts public confidence
If the system is transparent and well managed the general public tend to have increased trust and confidence in the government;
- Helps economic stability
If public services are delivered effectively, a related improvement in economic growth and equality can be tracked.
- Demonstrate that services provided are good value
Citizens and stakeholders want evidence that public expenditure is being spent in a way that represents good value for money.
What are the key requirements for successful PFM system?
- Strong leadership
Communication is key and leaders who manage and integrate the viewpoints and expectations of various stakeholders have the greatest chance of success. By co-ordinating and feeding back, the system will be stronger;
- Good governance
Healthy internal scrutiny leads to improves decision making over time. This in turn leads to more effective use of resources and improved accountability;
- Transparency in reporting
Not only does transparent reporting lead to greater accountability, clear and well communicated data can increase the confidence of the general public in the services.
IASeminars is running a this September in London. Starting on Monday 16th September and running for 8 days, this important training event will cover 10 modules vital to the public sector finance professional.
- Financial accounting
- Management accounting
- Revenue management
- Cost reduction and assessing value for money
- Internal auditing
- Investment appraisal
- Financial control
- Financial governance
- Contract Management
The course will provide attendees with much of the knowledge and many of the skills to help them to move into senior Public Sector roles.
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