Transcript
GoAP‟s Vision & Public Financial Management Reforms
• Governments commitment to continue reforms in PFM beyond SFAA; • Implementing the SFAA recommendations along with the associated institutional and capacity building initiatives at different levels; • Empower the Heads of the line departments to be partners in PFM to assure accountability; • Modernize the Financial Management System by streamlining financial regulations along with use of ICTs;
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List of PFM Projects
• State Financial Accountability Assessment • Hand Book on Financial Accountability • Fiduciary Risk Assessment of Health Dept. • Financial Management & Accountability Processes in Health Department • Asset Register Framework • Internal Audit Manual • Modernization of Bihar Treasury and Financial Rules for Government of Bihar
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Assessment of Existing Financial Accountability
A study has been conducted on Financial Accountability by CGG with the following objectives: identify strength and weaknesses of the existing Public Financial Management arrangements, contribute to design a sound financial system, enhance capacity building for implementation of improved Public Financial Management, bring out an action plan for implementation at various levels.
Areas covered by PFM
• Public Financial management (PFM) institutional and legal framework • Budget formulation • Budget execution • Monitoring • Accounting • Reporting • • • • • • • Asset management Internal controls Debt management Contingent liabilities External audit Legislative scrutiny Public access to information on public finances
Legal and Institutional Framework
• • • • Committee formed to review the existing codes and manuals and updation process is in progress. User-friendly Handbook on financial accountability of CCOs, SCOs, DDOs has been prepared and released by the Hon‟ble Finance Minister; This handbook is a synoptic version of different codes and manuals of financial management for use of the officials at the cutting edge and higher levels; G.O. 451 issued on Financial Accountability Norms to be followed by CCOs/SCOs and G.O. 507 issued on Financial Accountability Norms to be followed by DDOs, a significant step on financial accountability; Capacity building programmes for CCOs, SCOs, DDOs to be initiated; Updation process of the codes and manuals is in progress.
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Budget Formulation: Action Taken
Simplification of Budget formulation processes
– Merged similar schemes into generic programs to give greater flexibility;
– Reduced 3800 heads of accounts to 2700 and pages from 5200 to 3000 pages;
– Budget demands reorganised in 2001-02 and 2002-03 to bring each Secretariat Department and concerned HODs together; – Budget Detailed/Sub-detailed Heads of Account rationalised from 139 to 91.
Budget Execution: Action Taken
• G.O. 451 issued on Financial Accountability Norms to be followed by CCOs/SCOs and G.O. 507 issued on Financial Accountability Norms to be followed by DDOs, a significant step on financial accountability; • Suo moto Budget Release Orders by Finance Dept; • Overall quarterly restriction adjusted for seasonality; • Delegation to HODs to re-appropriate within norms.
Budget Execution: Action Taken
• Budget Monitoring
– Electronic Management Information System
• All 300 treasuries computerised and networked (IFIS) • „REINS‟ (Resource & Expenditure Information System ) – Daily Receipts and Expenditure monitoring • Monthly Accounts Preparation • Treasury - Bank - Accountant General Reconciliation.
– Periodic review of revenue receipts: • Monthly review of central and state taxes • Comparison with benchmarks • Inter-district comparisons – Timing of borrowings • Review of Macro-economic and monetary conditions • Quantum and cost of borrowing tranches
Budget Execution: Action Taken
• Cash Management
– Quarterly treasury authorizations – Liberalized reappropriation powers – Balancing the monthly cycle of cash inflow/outflow • Salaries / O&M etc. / Contractors‟ bills – Electronic Clearance facilities from banks – Restricted drawals on Abstract Contingent Bills – Simplified procedures to adjust Detailed Contingent Bills against Abstract Contingent Bills – Resumption of funds parked in PD / Bank Accounts.
Budget Execution: Action Taken
• Cash Management
– Releases under Centrally Sponsored Schemes linked with Utilisation Certificates sent and reimbursement received; – Advance releases under Externally Aided Projects and close monitoring of reimbursements; – Revised Budget Estimates in last quarter in tune with available resources; – Computerised payroll system introduced
– Number of days of overdraft with Reserve Bank of India reduced from 172 in 2001-02 to 33 in 2002-03 to 31 in 2003-04
Accounting: Action Taken
Treasury Reforms
• Integrated Finance Information System (IFIS) captures daily information pertaining to head wise receipts & expenditure • “e-Khazana”, a Relational Database Management System (RDBMS) software implemented at district treasuries
• Conversion of nonbanking sub-treasuries into banking subtreasuries
• Enforcing accountability on the DDOs through GO 507 • Reconciliation – improvements at DDO/CO(GO 507)
Reporting: Action Taken
• Improved financial accountability on DDOs
– Treasury officers to release funds to DDOs on
• • • • Submission of utilisation certificates for earlier releases Submission of monthly reconciliation of accounts Settlement of advance contingent bills Completion of statutory audit of local bodies/grant-in aid institutions • Substantial response to pending audit objections
– Treasury officers mandated to submit
• Daily & Monthly reconciliation with treasury banks • Monthly report on defaulting DDOs
Asset Management: Action Taken
• GO 667 was issued by the Finance Department for management of assets by various line departments for recording, verification and reporting of assets across departments, state PSUs, rural and urban local bodies/corporations, autonomous bodies, grant-in-aid institutions etc • Fourth quarter budget release orders is contingent on the reporting of asset inventory information of calendar year
• Internal Audit Wing
Internal Controls: Action Taken
Internal Audit Wing has been set-up in Finance Department. • State Level Internal Audit Committee & District Level Internal Audit Committee has been constituted. • SFAA Committee constituted under Principal Finance Secretary • Financial Accountability Norms G.O. 451 issued on Financial Accountability Norms to be followed by CCOs/SCOs, G.O. 507 issued on Financial Accountability Norms to be followed by DDOs.
Internal Controls: Action Taken
Sensitization and Training Programme conducted for TOs / PAOs. Objectives of Training Programme To facilitate a common understanding of financial management and accountability arrangements, To suggest the changes where ever required and bring modifications in the existing codes and government orders etc., To chalk out a further plan of action to train CCOs, SCOs and DDOs, To workout monitoring mechanisms to ensure a sound accountable financial system.
Outcome of Programme: Simple hand-book on accountability norms to be maintained by CCOs, SCOs & DDOs.
Public Debt Management: Action Taken
• Public Debt • Certain PSEs debts brought on to the Budget • Debt Swapping for reduction of debt service • Set-up of Consolidated Sinking Fund
Government Guarantee: Action Taken
• GO 446 issued prescribing guidelines for issuing Government guarantees • Guidelines are based on report submitted in July 2002 by Committee of State Finance Secretaries constituted by RBI • Line departments to do the risk evaluation of the proposal • Guidelines on monitoring, disclosure and assessment of fiscal risk of outstanding guarantees • Guarantee Redemption Fund created
• Pensions Study completed to design new scheme for setting up Pension Fund
External Audit: Key Findings
• Independent from GoAP • Dual role divergences from good principles/ practice • Generally adequate audit approach but lack of physical verification and relatively low application of risk based audit • Improving responsiveness to audit paras (GO 507) • Valuable work reflected in high quality audit report
External Audit and Legislative Scrutiny: Action Taken
• State level Audit Committees reactivated • Quarterly meetings with AG AP • Frequent Audit Committees meeting to resolve inspection reports and audit paras • Suggestion to establish sub committees under PAC for speedy clearance in key areas • Focus attention of PAC on the unregularised expenditure in recent years
Key Benefits of SFAA
• Increase comprehensiveness, accessibility and transparency of budgetary and financial information; • Built capacity of line departments to develop realistic expenditure estimates; • Pro-active within-year expenditure management; • Increase accountability for asset management along with efficient and effective management of assets; • Build capacity to effectively undertake Debt Management; • Monitor and maintain an early warning mechanism through Internal Audit • Strengthen overall accountability of GoAP in accounting and financial reporting;
Thank You