The Distinction Between Public Financial Management and Internal Control (PFM/IC) and Public Financial Administration and Internal Control (PFA/IC)

Abstract

AbstractAll countries will have in place before they introduce PFM/IC some form of internal control arrangements designed to ensure that budgetary and financial control exists. These arrangements can be summarised in the term public financial administration and internal control (PFA/IC). The quality of these arrangements varies considerably between countries. Before introducing PFM/IC an appreciation of the differences between PFM/IC and PFA/IC needs to be fully recognised and not least the difference in the managerial implications. In addition, the quality of the existing PFA/IC should be assessed because that quality provides the foundation for the implementation of PFM/IC. If that quality is poor, as evidenced by weak financial and budgetary control and often with extensive corruption, introducing PFM/IC is the wrong reform and what should occur is the strengthening of PFA/IC. This chapter explains in detail the differences between PFA/IC and PFM/IC.