Public Financial Management Reforms Research Articles

Public financial management reform: an ongoing journey towards good governance

Purpose This paper aims to provide a better understanding of the influence of contextual factors on public financial management reform (PFMR) process. It provides a comprehensive analytical view of PFMR in the UAE over the period (2003-2016). Design/methodology/approach The paper is based on a case study approach as a research methodology. It draws on archival data as well as interviews with key staff of the Ministry of Finance (MoF). A contingency model is used as conceptual framework to examine PFMR in the UAE. Findings Finding of this study show that the PFMR process cannot be viewed as an isolated initiative, rather, as part of a set of broader NPM reforms to strengthen public accountability for performance. The transition process creates major organisational changes; strategy, structure (new rules and roles), culture (core values about organisational vision, mission, and objectives). Benchmarks and milestones have been set in the accompanying monitoring matrix, though in practice, delays have typically occurred in the implementation of reforms. Challenges ahead facing the MoF are addressed. Research limitations/implications The findings should be understood in the economic, social and historical contexts of the UAE. Given the narrow scope of this paper, a single case study was conducted. Crucial themes for future research including how public sector executives employ effective independent measures of outcomes. The impact of basic supporting subsystems in translating strategic priorities and integrating them into the federal budget. Practical implications Research on PFMR is inherently practical. Essential factors for successful implantation of PFMR include government strategy, regulatory framework, information communication technology, technical experience, strong leadership, long-term political and administrative commitments, strategic pre-decision control mechanisms and accurate performance measurement. Originality/value This paper contributes to the limited studies on PFMR in Middle East and North Africa (MENA) countries. Lessons of this study may be valid for other countries considering similar developments in their PFMR.

Pushing on a String? Public Financial Management Reform and Institutional Transmission in Fragile States

‘Institutions matter because they structure the incentives and constraints facing individuals. However...the same institutions work differently in different circumstances, particularly in the absence or presence of open access systems’ (North et al. 2010, p. 256). Development agencies typically recommend that fragile states adopt a range of standardised public financial management (PFM) ‘good practices’ that reflect the forms and functions of PFM systems utilised in advanced economy settings where strong democratic institutions prevail. Rules are established that limit discretion in decision-making and systems are put in place that generate better information to government officials and the public, with the expectation that this will lead directly to improved outcomes. In fragile states, however, PFM systems work in a very different institutional context to that which is present in advanced economies. The state does not exert a monopoly over violence, the rule of law is weak or contested, and political order is maintained through systems of patronage. In this context ‘good practice’ PFM rules, laws, and practices may be only inconsistently implemented or ignored wholesale. Further, even when such laws are followed, increased transparency and information provision may have only a limited impact on outcomes because the incentives of public servants and policymakers are shaped by patrimonial relationships rather than by performance accountability or policy-based electoral pressures. In this paper I present a conceptual framework showing how the institutional transmission mechanisms linking PFM ‘good practices’ to improved outcomes are typically missing in fragile states. I illustrate the framework through application to the extreme-case fragile state of Afghanistan, where there is an apparent contradiction between strong adoption of ‘good practice’ PFM systems and deteriorating outcomes. I conclude with some implications for the future design of PFM reform efforts in fragile states.

Leadership and public financial management reforms in Jamaica

PurposeThe purpose of this paper is to assess the utility of complex adaptive leadership to public financial management reforms in Jamaica and provide insights to advance theoretical perspectives on leadership in public organizations.Design/methodology/approachThe study is qualitative and adopts a case study approach with data collected using document analyses and interviews.FindingsThe study highlights that leaders need to both drive and respond to directional forces and environmental pressures, which require them to balance or oscillate between leader and follower roles, and even demonstrate both simultaneously in order to achieve change successfully.Practical implicationsIn developing states faced with technical and adaptive challenges, the inputs of followers assume greater importance as they are integral to innovation and flexibility needed for problem solving. Communication, negotiation, bargaining and teamwork are critical skills that must be included in the repertoire of leadership and followership training.Originality/valueThe study connects leadership to pubic finance, fiscal decision-making, and reforms to public fiscal systems in a small developing state, Jamaica. The paper highlights that increased attention to the context is necessary, especially in participatory democracies, which demand responsiveness to powerful or influential interests, reduce autonomy and give rise to unclear organizational boundaries and hierarchies. It establishes a nexus between adaptive leadership and social identity theories, which demonstrate the emergence, contribution, and importance of group identities to distributed leadership. The roles of leadership and followership can interchange, which increases the fluidity and dynamism of the leadership process.

Public financial management reforms and fiscal policy-a qualitative content analysis of the impact of PFM reforms on country budget income in Sub-Sahara Africa

Public Financial Management (PFM) reform is a central fiscal policy feature. However, previous studies and reforms in developing countries have been mixed, with literature mainly taking two broad approaches: Descriptive studies seeking to explain the types of reforms undertaken, modelled along governments' establishment of new institutions; enactment of fiscal legislation; budgeting and accounting processes re-engineering; and adoption of information technology. The second approach by researchers has been along comparative assessments, limited to cross-country comparisons of PFM performance ratings. This research assumed an impact based qualitative content analysis to establish the necessary PFM reform policy factors that supports country PFM reforms that could contribute towards budget income in Kenya and Rwanda. We find that Political will and government stance on corruption: unique country context and clarity on reform areas; including the adoption of the measurable results framework are critical. Others such as Reforms visibility; Processes and institutionalisation of reforms; as well as Performance standards, rewards and sanctions were all necessary policy factors for PFM reforms to potentially contribute towards budget impact as evidenced in our case for Rwanda. In contrast, limitation of such policy factors in PFM value chain undermines the fiscal impact of reforms as found in Kenya. Keywords: Public Financial Management, Kenya, Rwanda, PEFA, budget

Getting added value out of accruals reforms

After three decades of public financial management reforms, around three quarters of OECD countries are using accrual accounting with some adopting accrual budgeting as well (OECD Accruals 2016 Survey). This is however a sensitive time: questions are increasingly being raised on the cost and usefulness of accrual reforms, whose impacts on public management and performance are not obvious to many stakeholders. Against this background, this study brings together the experience of eleven countries that have introduced accrual accounting and/or accrual budgeting into their public sector. It aims at summarizing initial objectives of accrual reforms, countries’ own assessment of how well these objectives have been achieved and propose recommendations on how finance ministries should go about achieving maximum outcomes from their transition to accrual accounting. JEL code : H50, H60, H83 Keywords : accrual accounting, accrual reform, budgeting, transparency, performance

Opening Adaptation Windows Onto Public Financial Management Reform Gaps in Mozambique

Governments across the world regularly pursue reforms that achieve less than was originally expected or is needed to make the state function better. The limits to reform success are often obvious in even the early days of reform, where gaps and weaknesses manifest. Many governments have no mechanisms built into their reform processes to see these gaps and weaknesses, however, and persist with predefined reform plans instead of adapting designs to close the gaps and address weaknesses. One antidote to this challenge is to create reflection points where reformers scrutinize their progress to identify weaknesses, reflect on these weaknesses, and adapt their next steps to address the weaknesses. In the spirit of John Kingdon’s work on ‘policy windows’, we call these reflection points ‘adaptation windows’—moments where reformers acknowledge problems in their reforms, adapt reforms to address such, and mobilize support for this adaptation. This paper discusses an effort to open an adaptation window for reformers to ‘see’ and then respond to public financial management (PFM) reform gaps and weaknesses in Mozambique. The paper details why and how this work was pursued, and also reflects on results of the government’s reflection at the adaptation window.

The role of the Troika on the Greek central government accounting reforms

PurposeThe purpose of this paper is to explore the role of the Troika’s advent played in the progress of the budgeting and the financial reporting systems reform at the Greek central government level.Design/methodology/approachThe approach of an extreme country case study is adopted. The data used in the paper have been identified through document analysis performed on the relevant documents produced by the Troika, the Greek Ministry of Finance, and other relevant sources. The reform process is seen through the lens of the neo-institutional theory and the resource dependency theory.FindingsAlthough both reforms targeted the introduction of best international practices – particularly useful in periods of financial distress and scarce resources – the advent of the Troika affected their progress and changed the priorities. As a result, the reform was redirected toward strengthening the cash budgeting system.Research limitations/implicationsThe study is subject to the limitations of an extreme case study research.Practical implicationsThis is a case where resource dependency changes political priorities and directions and affects the evolvement of state budget and accounting reforms under way.Originality/valueThe role of external fund providers in public sector financial management reform priority-setting, in the case of a developed Eurozone country, is analyzed. The study contributes to the research agenda on accounting practices in times of austerity.

Public Financial Management Reforms in Nigeria (Presentation Slides)

The Federal Government of Nigeria began public finance management reforms to address the challenges of transparency, accountability, corruption, and poor service delivery. There was a recognition that the country had not made much progress in its economic development efforts due to these challenges. Consequently in 2004, the country embarked on Economic Reforms and Governance Project (ERGP) sponsored by the World Bank to address the challenges. This has led to the introduction of Integrated Payroll and Personnel Information System (IPPIS), Government Integrated Financial Management Information System (GIFMIS), Treasury Single Account (TSA), E-Payment, and International Public Sector Accounting Standards (IPSAS). Some legislation has also been enacted in the areas of fiscal responsibility and public procurements. The implementation of these reforms is beginning to yield results. It, however, requires sustained political will, commitments, capacity enhancement, and funding for the county to reap the full benefits of these reforms.

Influence of Public Financial Management Reforms on Budget Implementation by Kenyan City Counties

The pursuit of Public Financial Management Reforms (PFMR) is centered on, among other functions, enhancing transparency in governance, increasing prudential allocation of financial capital, accountability in financial management, separating policy and management functions. The PFMRs seek to address gaps identified in the devolved systems of government and public organizations to remedy inadequate strategy orientation and lapsed strategy as well as to build on institutional transformation. In Kenya, the PFMRs seek to ensure fiscal efficiency and discipline in the use of public finances by enhancing public service efficiency and safeguarding available resources to be used in the best interest of the people. This study sought to examine the influence public financial management reforms on budget implementation by Kenyan city counties. The PFMRs studies included IFMIS Re-Engineering and fiscal decentralization. The study was based on modern portfolio theory, resource-based theory and stakeholder theory and relied on an expost-facto descriptive research design with a survey method to determine the relationships between the study variables. Structured questionnaires, data collection sheets and interview schedules were used to collect data which was then cleaned, coded and scrutinized thoroughly for completeness. The study relied on primary data collected from the treasuries, directorates of economic planning, budget offices, IFMIS departments and sectoral departments of Nairobi city county, Mombasa city county and Kisumu city county respectively. Secondary data was obtained from the annual county governmets’ budget implementation reports. The data was analyzed using SPSS version 24. Statistical measures such as means, percentages and standard deviation were used to interpret the data. The researcher also performed both a linear regression analysis and a Spearman correlation analysis to show the relationships between the study variables. The study revealed strong positive and statistically significant correlation between fiscal decentralization and budget implementation while IFMIS re-engineering had a negative and statistically insignificant correlation with budget execution. The results of the study were considered pivotal to the national government, the legislature, national treasury, county governments and respective sectoral departments, the Commission for Revenue Allocation, the office of the controller of budget, the public, budget implementation oversight agencies and county chiefs as it highlights important correlates of effective budget execution.

A Growth-Friendly Path for Building Fiscal Buffers in the Caucuses and Central Asia

Since 2014, large and persistent external shocks have hit the CCA region, particularly a slump in global commodity prices and slower growth in its key economic partners. Fiscal accommodation, along with currency adjustment, has helped the CCA mitigate the impact of the external shocks. However, amid weakening revenues, increased public spending has widened budget deficits, weakened external balances, and increased public debts. Fiscal policy and strengthening fiscal frameworks must play a central role in helping build buffers and ensuring debt sustainability while supporting growth. This requires (1) tightening fiscal policies to reduce deficits to help restore external balance and fiscal sustainability, (2) strengthening tax systems and tax collection and tilting expenditure toward a more productive and growth-enhancing composition, and (3) implementing public financial management reforms and strengthening fiscal institutions, including through fiscal rules.

Accounting, auditing and accountability research in Africa

PurposeThe purpose of this paper is to discuss developments in governance in Africa and the opportunities this offers to accounting, auditing and accountability researchers. The paper also provides an overview of the other contributions in this accounting, auditing and accountability special issue.Design/methodology/approachThis paper provides a contemporary literature review on governance and accountability in Africa, identifying the key developments in public sector reform and the research gaps that still need to be filled. While the paper focuses on Sub-Saharan Africa, the authors draw on examples from Ghana, Kenya, and South Africa – geographically representing east, west, and south of the continent.FindingsThe paper finds that governance has emerged as a crucial issue that has a significant effect on the economic development of African countries. This has been associated with a myriad of reforms which range from anti-corruption measures to public financial management reforms. The authors find that the implementation and effects of these reforms have not been adequately researched by accounting scholars.Research limitations/implicationsThis is a review of a limited literature. Empirical research and a more comprehensive review of the literature from public administration and other disciplines might provide other new insights for research on governance in Africa. A further limitation is that the study has focused on a review of the most recent reforms while earlier reforms should be of particular interest to accounting historians.Originality/valueThis paper and other contributions to this special issue of AAAJ provide a basis and an agenda for accounting scholars seeking to undertake interdisciplinary research on Africa.

Strategic Management Accounting Research of Insurance Companies under the Internet Background

With the development of information technology, public financial management reform deepening, accounting focus Universities facing the management accounting change, the financial sector as a core sector universities, data centers will become a big school and participate in school management, decision-making, analysis and forecasting. We analyzed the development of university management accounting brings opportunities and challenges, and puts forward some countermeasures. The arrival of the era of big data, data important asset cause rapid Insurance sector is concerned. This paper describes the development of the insurance status of the Internet, combined with the opportunities and challenges facing the era of big data Insurance is proposed under the era of big data Insurance Development Strategy in order to provide reference for the healthy and rapid development of the insurance. For the Internet +, Big Data applications in other industries to produce value-added effect polymerization, and the lack of coal mine large data mining the potential value of the use of problems in the research of coal mine production safety monitoring enterprise warning, large-scale mining and material handling equipment safety standard remote control of the whole life cycle, coal mining enterprises at all levels of production safety data sharing cloud services platform, cross-dimensional aspects of supply and demand and price forecasting perspective platform for big data application mode analysis, data mining by large technical team unified programming model and set standards in the interface protocol, security co-ordination and so do the pre-proposals. He pointed out that Internet +, the comprehensive application of big data will become an important means and ways to improve mine safety and production, to achieve lower costs, increase efficiency role.

Brazil: Technical Assistance Report-Supporting Implementation of the Expenditure Rule Through Public Financial Management Reforms

Brazil: Technical Assistance Report-Supporting Implementation of the Expenditure Rule Through Public Financial Management Reforms

Sierra Leone: Request for a Three-Year Arrangement Under the Extended Credit Facility-Press Release; Staff Report; and Statement by the Executive Director for Sierra Leone

This paper discusses Sierra Leone’s Request for a Three-Year Arrangement under the Extended Credit Facility (ECF). In the near term, this ECF is expected to support important but difficult policies: ending routine foreign exchange auctions and eliminating numerous tax and duty exemptions while increasing infrastructure spending and bolstering the social safety net. The ECF will also catalyze maintenance of external support. In the medium term, the proposed arrangement will provide the framework for structural progress on revenue mobilization, public financial management and financial sector reforms, and increased reserves. The IMF staff supports the authorities’ request for the new ECF.

Public Financial Management Reform in South African Provincial Basic Education Departments

SUMMARY Since the transition to democracy in 1994, the South African government has engaged in a sustained programme of public financial management (PFM) reform across the national, provincial and local spheres of government. This study evaluates the progress of the nine provincial education departments (PEDs) in implementing the Public Finance Management Act of 1999 and explores the factors that facilitated or impeded reform. A PFM progress (PFMP) index is constructed to track each PED's performance from 1997/1998 to 2013/2014 and then used to benchmark its progress over time and relative to the education sector as a whole. The indicators comprising the PFMP index assess key PFM functions (budgeting, accounting, financial auditing and audits of performance information), financial leadership and the effectiveness of governance institutions such as audit committees. While there has been considerable progress in PFM, distinct differences in the quality and effectiveness of PFM practices across the nine PEDs remain. Stable top administrative leadership, availability of PFM skills, varying degrees of accountability and departmental capacity to establish PFM systems that conform to new accounting standards drive variances in reform outcomes. Copyright © 2016 John Wiley & Sons, Ltd.

The Effectiveness of Reforms in Public Sector Accounting and Financial Management: The Case of Spain, 2010-2015

This paper interprets through theoretical lenses the public sector financial management reforms adopted in Spain between 2010 and 2015. In this period, coping with intense external pressure, the country passed many fiscally-oriented reforms to escape the 2008 crisis including a change in the constitution. We study the changes that have been adopted in three key public accounting and financial management areas: budgeting, reporting and auditing. Our main research question is whether this series of reforms are likely to have had both a disruptive and positive impact in the Spanish public sector management model. We approach the question in the light of three theoretical contexts: the resource dependence model, the logic of discipline and the leadership-task perspective. Our analysis does not support a strong affirmative answer to the question. The fiscal crisis has been averted but it appears that it is more because of discretionary consolidation efforts rather than the result of adopting structural policies. Our work also highlights some dimensions in which Spain is lagging behind leading practices in the EU. Value for money auditing and accountability standards are still low and the independence of certain critical bodies is not sufficiently protected.

Public finance management reforms in Somalia: a case study on Somalia's finance professionals

There is an unprecedented and pressing need for a major legislative public financial management reform in Somalia to bolster the technical and professional efforts of implementing a modern system of public financial management across the country. Currently, there is no independent auditing authority to enable citizens to access information on the use of public resources. However, the success of any reform depends on establishing strong public budgeting systems as well as developing strong public finance training programs and policy linkage on financial management policies and procedures.

The Impact of Corruption on Economic Development: Case Study Romania

In the last decade, Romania implemented a strong legislation and a comprehensive program of public financial management reform in order to improve the national fiscal transparency and to reduce corruption. Corruption is a growing phenomenon all over the world, affecting economic development and aggravated by the legacy of the global economic crisis. The global risks are different from the past due to notably cyber attacks, new economic realities and geopolitical risks. Most of the time, corruption is associated with financial crime, fraud and bribery. Corruption is a major factor of reducing economic development and the governments must increase of macroeconomic and fiscal forecasts in order to facilitate access to the public funds.

Choosing Basics Firstt Over Best Practices? An Overview of the Troika's Role on the Greek Central Government Accounting Reforms

Purpose: This paper explores the role of the Troika’s advent in the progress of two vital accounting reforms at the Greek central government level: (1) the budgeting system reform and (2) the financial reporting system reform. While they were both initiated in 2006, their progress happened to coincide with Greece entering the financial support mechanism of the Troika in 2010.Design/methodology/approach: The analysis is conducted through the prism of the Resource Dependency Theory. The theoretical framework is informed by the relevant archival data.Findings: Although both reforms targeted to the introduction of best international practices -particularly useful in a period of fiscal stress and scarce resources- the advent of the Troika changed the priorities. Under the new circumstances, the emphasis was placed on strengthening the existing cash budgeting system, while the introduction of program budgeting albeit scheduled was abandoned and the move to accrual accounting was downgraded.Originality/value: The present study analyses the role of external fund providers in setting priorities in public sector financial management reforms in the case of a developed European Union (EU) member state. Greece provides a dynamic setting to explore the choice of public sector accounting policies during periods of financial crises.

Budget reform in China: Progress and prospects in the Xi Jinping era

Fiscal reforms were central to the comprehensive programme of reforms announced at the Third Plenum of the 18th Party Congress in November 2013, during the first year of the Xi Jinping administration. One of the significant reforms on focus is public financial management (PFM). The urgency of PFM reform can be traced, paradoxically, to the extraordinary growth experienced by the Chinese economy during the first decade of this century, when easy money and weak accountability gave rise to unprecedented waste, corruption, and a mountain of local government debt.