Public Financial Management and Internal Control: The Importance of Managerial Capability for Successful Reform in Developing and Transition Economies

Noel Hepworth

Springer Nature, Sep 27, 2023 - Business & Economics - 579 pages

This open access book focuses on the ‘downstream’ element of PFM, that is how public organisations utilise public resources. It argues that improvements in PFM/IC will only flow from a recognition that what really matters is the quality of management. Management reform is an essential precondition to the successful implementation of many new techniques. Only when a managerial capacity exists willing to take advantage of the opportunities created by such technical developments, is it beneficial to pursue them. The benefits of PFM/IC flow from an improved quality of management.

Despite enormous efforts, reform of public financial management and internal control (PFM/IC) in developing and transition economy countries has not been particularly successful in improving the quality of public service delivery and the use of public resources. This book outlines why this is and suggests a new approach. The analysis set out in this book is particularly relevant especially given limited national budgets and squeezed international aid budgets.

These management changes include to the political/official relationships, to management structures, to budgetary and accounting arrangements and to the relationships between, particularly, the ministry of finance and other ministries. They require the delegation of operational management, developments in financial management and in accountability arrangements and a reconsideration of personnel policies, penalty and sanction arrangements. Managerial training for the civil service will be a key requirement. Reform may impact upon traditional cultural practices. These changes are all inter-related and should be coordinated.

Contents

• Changing from Financial Control to Financial Management in the Public Sector An Introduction to the Changes That Will Be Required: 1
• Implementing Public Financial Management and Internal Control PFMIC: 47
• The Distinction Between Public Financial Management and Internal Control PFMIC and Public Financial Administration and Internal Control PFAIC: 85
• The Practical Steps for Initiating a Successful PFMIC Reform: 118
• The Responsibilities of the Minister of Finance the State Secretary and the Ministry in the Development of a PFMIC Policy: 159
• Risks and Unintended Consequences of the Reform: 203
• The Responsibilities of the Top Operational Management Official in Public Organisations for the Implementation and Quality Control of PFMIC: 233
• The Role of the Head of Finance and the Finance Department in Line Ministries and Other Public Organisations with the Application of PFMIC: 257
• The Role of the Department Responsible for Advising on and Securing the Application of PFMIC: 302
• Achieving the Benefits That Introducing PFMIC Can Generate and Accounting for the Costs: 339
• International Standards of Internal Control Relevant to the Application of PFMIC: 365
• Managing and Controlling SecondLevel Organisations The Responsibilities of the FirstLevel Organisation: 433
• Monitoring the Change from Administration to Management Demonstrating This Through the Utilisation of a Statement of Internal Control: 482
• Public Sector Reform Delegation and PFMIC: 519
• Index: 567

About the author

Noel Hepworth was the Chief Executive of CIPFA from 1980-1996. He is a qualified public finance accountant and was the initial Chairman of Accountancy of Europe’s Public Sector Committee and a technical adviser to IFAC’s Public Sector Accounting Standards Board for a period of years. More recently, he has worked extensively with OECD/SIGMA in many countries. Earlier in his career he worked in local government. He was an original member of the UK Audit Commission.

He holds a post graduate diploma in public administration from the University of London. He has been awarded honorary doctorates by the Universities of Hull, Brighton and London City. He is a Fellow of the Center of Excellence in Finance, Slovenia and was awarded an OBE by Her Majesty the Queen in 1980.

Bibliographic information

• Title: Public Financial Management and Internal Control: The Importance of Managerial Capability for Successful Reform in Developing and Transition Economies
• Author: Noel Hepworth
• Publisher: Springer Nature, 2023
• ISBN: 3031350669, 9783031350665
• Length: 579 pages
• Subjects: Business & Economics / Accounting / Financial; Business & Economics / Development / Economic Development; Business & Economics / Economics / General; Business & Economics / Public Finance