28 10 2008 juha majanen ministry of finance finland matti v is nen ministry of education finland
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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

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Session 5: Aligning accounting systems and performance information

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28 10 2008 juha majanen ministry of finance finland matti v is nen ministry of education finland

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

Aligning accounting systems and performance information

Key elements

Accountability

Agency --> Ministry/Government --> Parliament

Performace targets

True and fair information

Performance management

Agency <--> Ministry

Agreement on resources and performance targets

Information for managerial purposes


What is performance management

What is performance management ?

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 development

Performance management development

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.


Use of performance information in budgeting

Use of performance information in budgeting

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);

operating performance

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.

Mainly

at the level of Government and ministries

Mainly

at the level of

agencies


Outcome targets and social impact targets at the level of ministries

Outcome targets and social impact targets at the level of ministries

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 performace targets at level of agencies and institutions

Operational performace targets at level of Agencies and Institutions

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.


Good performance targets

Good performance targets

Targets are:

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

preferably comparable

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


Basic performance criteria true and fair information

Basic performance criteria (true and fair information)

Outcome targets

Policy effectiveness: outcomes

Policy

effectiveness

How operations and finances have affected policy effectiveness

ACCOUNTABILITY

PERFORMANCE MANAGEMENT

Operational

performance

targets

Operational results: outputs (which can be influenced through management)

Operational efficiency

  • economy

  • productivity

  • profitability

  • cost-equivalence

Outputs and quality management

-goods and services

  • service capacity and quality

Human resource management


Performance information in budgeting

Performance information in budgeting

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.


Public statement of the ministry central government budget decree section 66i

Public statement of the ministry(Central Government Budget Decree section 66i§)

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


Accounting and performance information i

Accounting and Performance information I

Netra Reporting System

Operational since 2004

Internet-based tool which includes

Accounting data

Performance data

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


Accounting and performance information ii

Accounting and Performance information II

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


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