Question 1
Do you think that the present monitoring and control systems are adequate for a sound "Public Financial Management" in Sri Lanka? If so state reasons, if not state your recommendations.
Even though the current control and monitoring systems noted in the regulations and rules are adequate for a better Public Financial Management, still, it is in a position to be implemented in an active manner. If we consider about the country’s laws and regulations, public officers could be facilitated by a number of rules and regulations for their public finance management.
Constitution of the Domestic Socialist Republic of Sri Lanka
Constitution of Sri Lanka, which has been utilized in the country from 1978, is the supreme law of the country. Specially, 17th chapter of the constitution provides guidelines of a legal framework for Public Finance Management. According to that, the parliament shall have full control over the public finance (Article 148). Under that basic rule, following articles posses the law of each public financial matter i.e., Article 149 and 150 are related to the Consolidated Fund while the article 151, refers a Contingencies Fund and the article 152 says about the special provisions for bills affected to the public revenue. Auditor General, who is the key role of the government’s auditing system, is interpreted in the article 153 and 154.
No. 03 of 2003 Act on Fiscal Management (Responsibility)
This particular act has been passed in the parliament for transparent and accountable public financial management. Because the public has a right to see what the government does for their betterment. The compulsory reports, which should be submitted to the treasury under the provisions of this Act, i.e., Fiscal Strategy Statement, Mid-year Financial Position, Final Budget Statement and pre-election budgetary position are the very best examples to the adequacy of the current monitoring and controlling systems for Public Finance Management.
Parliamentary Committees on Public Finance, COPA and COPE
To strengthen the parliament’s full control over the public finance, there are two parliamentary committees, i.e., Committee on Public Accounts (COPA) and Committee on Public Enterprises (COPE).
According to the Standing Order 125, COPA stands for examining the appropriation accounts, any other account for the committee, auditor general's reports relating to these accounts as well as other Public Finance Management matters.
Also, according to the Standing Order 126, COPE examines the final accounts of public enterprises such as statutory boards, corporations, etc. as well as auditor general's reports, estimates, budgets, financial procedures and other matters related to public enterprises and vested undertakings. The COPA as well as the COPE possess the powers to summon any person for examination, to enter any premises and to obtain any book or document required by the committee. The committees present with a report to the parliament based on their investigations and further recommendations after examining such financial and other performance reports.
Auditor General
Auditor General is an independent character to audit financial, development activities and their operations of public organizations. Auditor General is powered not only by the constitution, because he is also given the powers of auditing by very many statutes such as Financial Act, Municipality Ordinance, Urban Council Ordinance and Pradeshiya Saba Act. Auditor General delegates his powers to the staff officers of the Auditor General's Department. The term “Auditor General”, thus, refers to any of such officers in this regard. These officers, too, have almost all the rights of Auditor General in case of auditing. Auditor General’s Department gathers evidences through documentary reviews, interviews with summoned people, questionnaires and analyzing data and through in-situ observations. Any person is needed to reply an audit quarry without any delay. Auditor General submits his Final Audit Report to government institutions under the provisions of Article 154(6) of the constitution and he submits such reports to the statutory boards according the Section 13(7)a and Section 14(2)c of the Financial Act.
Audit and Management Committee Meetings
The Department of Public Finance of the Treasury, issued following two circulars giving advices to establish Audit Committee and Management Committee in government institutions respectively.
- 19 November 1999 : PF/PE 3
- 11 January 2000 : PF/PE 4
By a Public Financial Circular No.PF/PE 7 of 15 March 2000 these two committees, however, amalgamated as “Audit and Management Committee”.
Internal Controls and Internal Audit
Since an effective internal control provides a reasonable assurance to the organization, all Chief Accounting Officers and Accounting Officers are responsible for establishing such control environments in their organizations. Financial Regulations 133, 134 and treasury circulars (IAI/2001/1 of 25 January 2001 and DMA/2009(1) of 09 June 2009) provide with necessary guidelines for establishing internal controlling system. The risk of the government audit may reduce with the soundness of the internal audit. Being a modal implementation of strong internal control and audit system, Ministry of Finance established its Management Audit Department in 2008.
Financial Regulations
Financial Regulations, which is very much popular in the public sector as FR, stand to ensure Public Finance Management. According to FR 127, Chief Accounting Officer has to be responsible to the Ministry of Finance on the financial administration of all the departments of his ministry. Head of the Department as Accounting Officer is responsible to Chief Accounting Officer (FR 128). As mentioned in FR 135, 143 there should be a proper delegation of authority for revenue.
Institutional Meetings
“Progress Review Meetings” are the meetings that review organization’s physical and financial progress periodically. These are not only to compare the progress with institution’s targets, but also remedial actions are taken into consideration for matters. In public sector organizations, there are monthly and weekly meetings, addition to progress review meetings, to discuss issues related to the accounts, administrations and other issues in the organizations. Likewise, staff meetings, in which the management of an organization discusses their work plans, achievements, staff grievances and other matters related to the working environment, would also help in accelerating the public financial management.
Question 2
Assume that you are working as an Assistant Secretary to a ministry which is responsible for large scale development activities in Sri Lanka.
(a) Briefly discuss the stages involved in the preparation of the National Budget.
(b) What information you will gather to prepare the necessary documents in respect of recurrent and capital budget of your ministry for the year 2012.
The national budget of a country explains the government’s financial strategies for a particular financial year of that particular country. On the other hand, it is the main document to achieve the country’s development objectives.
The steps to be taken for preparing a national budget can be summarized as follows.
- Preparation of the macro economic framework
- Issuing the budget circular, which gives guidelines and expenditure ceilings
- Preparation of estimates and budget proposals by the line ministries accordingly
- Budget negotiation between the line ministries and Ministry of Finance and Planning
- Finalizing the draft national budget
- Submission to the parliament
The drafts of estimation are prepared and submitted by ministries and departments after collecting data of the divisions of them. The draft contains the progress of the organizations as well as the activities to be implemented in the coming financial year. Secretary of the ministry and Heads of the departments are responsible for preparing documents for the institutions of each ministry.
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