28.10.2008 Juha Majanen, Ministry of Finance, Finland Matti Väisänen, Ministry of Education, Finland. Session 5: Aligning accounting systems and performance information. Aligning accounting systems and performance information. Key elements Accountability
Juha Majanen, Ministry of Finance, Finland
Matti Väisänen, Ministry of Education, Finland
Agency --> Ministry/Government --> Parliament
True and fair information
Agency <--> Ministry
Agreement on resources and performance targets
Information for managerial purposes
Performance management is an agreement-based interactive control model.
Its operational core is in the ability of the agreement parties (ministry and agency) to find the appropriate balance between the available resources and the results to be attained with them.
The basic idea of performance management is to balance resources and targets on the one hand and efficiency and quality on the other as well as possible and to ensure that the desired effects are cost-efficiently achieved.
Performance management problems and development needs have mainly been identified, and they have been taken into consideration in the performance management and accountability reform and in changes to the budget legislation in 2004.
The main aim has been to enhance performance management by emphasising the contolling task and accountability of ministries.
The content of control has been diversified, and a clear distinction has been made between strategic outcome targets and operational performance targets.
Different level of targets are set and reported:
social policy targets: changes in the state of society and the conditions of its members and the extent to which the set targets have been achieved (social effectiveness);
costs of achieving the social policy targets (cost effectiveness);
outputs, service capacity and the quality of outputs and processes (outputs and quality management)
economy, productivity and the cost effectiveness and profitability of charged and jointly financed operations (operational efficiency)
personnel and job satisfaction, and information, expertise and renewal.
at the level of Government and ministries
at the level of
The ministries are responsible for the functionality of performance management and for control development within their respective operational branches.
The basic tasks of ministries are emphasized: preparation for political decision-making, strategic control of their operational branches and international influence.
Proper performance management includes the ministries ensuring that proper performance targets are set (also regarding their own operations) and the agencies presenting true and fair information on their operations in their annual accounts.
Social impacts and outcome targets are amphasized in the performanace targets of ministries (policy effectiveness).
Operational performance targets are emphasized in the perfromance targets of agencies and institutions.
The targets should be connected with operations and resources as closely as possible, whereby their attainment depends direcly on what the agency does and how it is managed.
Alongside positive performance targets and outcome targets, targets conserning unintended effects or side effects should also be set.
Performance targets are set primarily as indicators and only secondarily as verbal targets.
connected with and derived from the basic tasks of a government agency
strategic, essential from the point of view of operations
clear, understandable to everybody
concrete and operational
evaluable, measurable and tíme-dependent
such that the government agency itself can influence them
ambitious and challenging, but attainable and realistic
acceptable, jointly outlined and agreed
such that they cover as large a part of the operations as possible while on the other hand determining priorities
Policy effectiveness: outcomes
How operations and finances have affected policy effectiveness
Operational results: outputs (which can be influenced through management)
Outputs and quality management
-goods and services
Human resource management
Preliminary performance targets are agreed (between Agencies and corresponding ministries) and set during the preparation of spending limits (medium term fiscal framework)
Preliminary performance targets (operational targets and outcome targets) are represented to the Parliament in the budget proposal together with the appropriations.
At the same time the Financial Statements and the achievement (or non-achievement) of the Performance targets of previuos year is reported to the Parliament
An important budget development point is the presentation of outcome targets in the justifications for classes within the main title for each ministry --> reflects the accountability of ministry concerned.
Budget classes need to be collated into larger entities constituting an administrative sector or policy sector for which an outcome target can be set.
1) an estimate of performance and the trend therein and of the outturn of the performance targets set;
2) a statement as to whether the grounds for reporting performance are appropriate with respect to steering and accountability and the ministry´s position on development needs;
3) the measures that should be taken by the agency due to the final accounts and to improve performance;
4) the measures to be taken by the ministry because of the final accounts and to improve performance.
The Ministry has to formulate an opinion on performance, (achievements and non-achievements) and take its position
Opinion is published
Netra Reporting System
Operational since 2004
Internet-based tool which includes
Tool for performance management --> providing information for decision making and reporting in all levels
Ready-defined reports and user-defined reports
Public --> enhances transparency
Available at www.netra.fi
On-going reform of budget preparation system and some other systems
Started 2007, operational at 2010
Common tool for preparation process of Budget proposals, Spending Limits (medium term fiscal framework) and Financial Statemens
Will be in use in Agencies, line Ministries and MoF
Enables more coherent approach
Reduces manual work