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Tracking Progress and Controlling Funds

Tracking Progress and Controlling Funds. Bill Dorotinsky, PRMPS Budget Execution Course January 16-17, 2003. Post Budget Stages. Release of Funds Notification of budget Commitment authority issued (if done) Financial plans Warrants issued (cash draw) Cash transfer (if done)

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Tracking Progress and Controlling Funds

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  1. Tracking Progress and Controlling Funds Bill Dorotinsky, PRMPS Budget Execution Course January 16-17, 2003

  2. Post Budget Stages • Release of Funds • Notification of budget • Commitment authority issued (if done) • Financial plans • Warrants issued (cash draw) • Cash transfer (if done) • In-year modifications • Transfer authority – across accounts • Virements – across ministries • Supplemental Budgets

  3. Financial commitment stages • Encumbrance/pre-commitment/reservation • Commitment/obligation • Receipt of goods and services • Invoice • Verification • Paid • Cashed/cleared

  4. Commitments, agency activity, and cash outflow: time lags

  5. Budget classifications • Administrative • Economic/object class/’inputs’ • Functional • Program • Fund • Line Item

  6. Budget classification - program • Program/organizational objectives • Ministry of Health • Children’s Health • Women’s Health • HIV/AIDS • Vaccination

  7. Budget classification -administrative • Organization/administrative • Ministry of Culture • Ministry of Health • Ministry of Social Welfare • Ministry of Defense • Ministry of Justice • Parliament/legislature • Chancellory/Prime Minister….

  8. Budget classification - functional • Functional • Health • Education • Public Order and Safety • Defense • Foreign Affairs • …………

  9. Budget classification - economic • Economic/object class/’inputs’ • Personnel/personal services • Salaries • Benefits • Non-personal services • Supplies • Contracts • Utilities • Equipment • Printing • Travel • Capital

  10. Classification Matrices

  11. Dimensions of Control • Time • Control (allocations) versus • Reporting & monitoring • Detail – classification matrix • Policy – time, detail • Executive • Legislative • Civil society

  12. Control Approaches

  13. Central control versus Managerial Flexibility • Tensions between needs of center to • Control cash flow • Control policy • And agency need to manage programs • Larger, less detailed allocations • Longer time horizon • Greater transfer authority

  14. General Tensions

  15. Essentials of Good FM • Timely, accurate in-year reporting • Internal controls, audit • External audit • Sufficient detail to identify sources of overspending • Sufficiently regular reporting to allow timely management intervention • Comprehensive system • Accountability framework, control environment

  16. To manage well requires: • Monitoring/managing • Cash balances • Cash flow • Inflow • outflow • Commitments • Arrears • Contingent liabilities • New legislation/mandates • Off-budget activity

  17. Core Functions - internal control - program management - spending (commitments) - recording & reporting - payment orders - verification of receipt of goods/services - program/cash plans Financial Management is Everyone’s Responsibility

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