Philippine PFM Reform Roadmap PFM Reform Roadmap and Developments 1 1 (A Presentation for the 27 th DepEd National Seminar/Workshop on the Preparation

Philippine PFM Reform Roadmap

PFM Reform Roadmap and Developments

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(A Presentation for the 27th DepEd National Seminar/Workshop on the Preparation and

Reconciliation of the CY 2012 Mid-Year Financial Reports)

July 23, 2012, Tagaytay City

By: Assistant Secretary Luz M. Cantor


Presentation Outline

PART I: PFM System Gaps/Weaknesses

A. What is PFM?

B. What ails the Philippine PFM system?

PART II: PFM Roadmap and Developments

C. Executive Order No. 55

D. PFM Reform Roadmap

E. PFM Governance Structure

F. PFM Reform Projects

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PFM GAPSPART I

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Philippine PFM Reform Roadmap 4

What is PFM?

Public Financial Management (PFM) is a system of rules, procedures and practices for government to manage public finances in the areas of:

budgeting accounting auditing cash management management of public debt revenue generation public reporting on public sector financial

operations

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Benchmarks of a Good PFM

• Credibility of the budget

• Comprehensiveness and transparency

• Policy-based budgeting

• Predictability and control in budget execution

• Accounting, recording and reporting

• External scrutiny and audit

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budget not results based

lack of funding predictability

weak oversight of Congress and public

lack of efficient cash management

messy traffic of documents

weak monitoring of contingent liabilities

lack of budget credibility

PFM Gaps in the Budget Process

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Messy Traffic of Documents

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This is now…In the long run, Philippine PFM

needs this kind of information system


GAP/WEAKNESS

Lack of credibility of the budget

Budget supports targets in the Plan

More efficient, transparent and accountable budget execution

Real time reporting on budget utilization by agencies and the Government.

Pro-active CSO support for budget transparency

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GAP/WEAKNESS

Budget not yet results-based

Budget decisions based more and more on physical and financial performance

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GAP/WEAKNESS

Lack of a common classification system for budgeting, accounting, auditing and cash management

Revise New Government Accounting System (NGAS) Manual and chart of accounts

Consolidated FM reporting requirements based on harmonized classification of all accounts

Real-time reports, access to financial data and control of obligations and disbursements for more effective financial control and accountability

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Harmonize budgetary and accounting classifications and reporting

Codify PFM rules and complete PFM Rules Manual for capacity building

Identify common reporting requirements of oversight agencies and line departments


DBM and DBCC to approve allotment and cash release program at start of year and update midyear

GAP/WEAKNESS

Lack of funding predictability

Predictable and streamlined allotment and cash release programs throughout the year to support agency operations based on DOFs reliable revenue forecasting and programming.

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GAP/WEAKNESS

Weak oversight role of Congress and the public over the budget process

Oversight Committees in Congress and the public use DBM and COA reports more extensively

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GAP/WEAKNESS

Lack of efficient cashmanagement

Improved Cash Programming by BTr and DBM

Predictable and stable revenue inflows and cash disbursements

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Compel agencies to disclose their contingent liabilities

GAP/WEAKNESS

Lack of accurate database on contingent liability

Make DOF the authority on issuance of policy on contingent liabilities (for GOCCs and NGAs)

Monitor and report regularly contingent liabilities

Develop database on contingent liabilities

Improved system for capturing and reporting all liabilities of government entities; real and contingent

National Government able to manage all its financial exposure

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Where are we now? (PFM Gaps and weaknesses)

Where are we going?

How are we going to achieve the reforms?

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PFM ROADMAP AND DEVELOPMENTS

PART II

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PFM Reform Roadmap

Master plan for improving the financial management system of the government

Jointly formulated and approved by fiscal oversight agencies (COA, DBM, DOF, BTr) from 2009 to 2011

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PFM reforms support Aquino Administration priorities

Good Governance

PFM Goal

Societal Goal

5 Priority Areas

Sector Goal Fiscal Discipline

Inclusive Growth and Poverty Reduction

Improve efficiency, accountability and transparency of public fund use to ensure direct, immediate and substantial delivery

of public services specially to the poor.

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Executive Order 55

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Directing the Integration and Automation of Government Financial Management System

(signed by President Benigno S. Aquino on 6 September 2011)

1. Installation of PFM systems: Government Integrated Financial Management

Information System (GIFMIS)

Treasury Single Account (TSA)

Efficient Budget Release System

Systematic Financial and Physical Reporting and Auditing


EO 55

2. Created the PFM Committee (formerly the GIFMIS Committee) Devise a 5-year plan for the development and

installation of GIFMIS Oversee the implementation of the PFM Reform

Roadmap Shepherd and champion the passage of

supporting legislation needed in Congress Coordinate budgetary and donor funding

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PFM Governance Structure

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PRINCIPALS(COA Chair, DBM and DOF Secretary)

PFM COMMITTEE

PROJECT MANAGEMENT OFFICE

PROCUREMENT UNIT

PIU GIFMIS

DEVT PROJECT

PIU BUDGET

REPORTING & PERFORMANCE

STANDARDS PROJECT

PIU IMPROVEMENT OF TREASURY

CASH MANAGEMENT

PROJECT

PIU LIABILITY

MANAGEMENT PROJECT

PIU CAPACITY BUILDING PROJECT

TRACK 2 TRACK 1

PIU ACCOUNTING

AND AUDITING REFORMS PROJECT


Funding Support

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GOP

P978.5 (2012 Budget eGov Fund)

GOP

P978.5 (2012 Budget eGov Fund)

AusAID

A$30M (P1.2B) Facility Grant

AusAID

A$30M (P1.2B) Facility Grant

WB-IDF

Intl Devt Fund

WB-IDF

Intl Devt Fund

EU

LGU PFM

EU

LGU PFM

ADBADB


Outputs and Results

Outputs

Major Strategies

PFM REFORMS ROADMAP


Initial PFM Reform Projects

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Project Lead Agency

1. Improvement of Treasury Cash Management Operations

BTr

2. Budget Reporting and Performance Standards

DBM

3. GIFMIS Development DBM, DoF/BTr, COA

4. Liability Management DoF

5. Capacity Building DBM, DoF/BTr, COA

6. Accounting and Auditing Reforms

COA


Improvement of Treasury Cash Management Operations Project

Objective• to increase operational efficiency of implementing

agencies while minimizing cost of treasury operations

Output and Timeframe• a system of cash management that can keep daily

cash balances of government at appropriate levels• Treasury Single Account (TSA) in place by 2014

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Budget Reporting and Performance

Standards Project

Objective

• to produce quarterly reports within 2 weeks of next quarter

(short term)

• to generate real-time reports on budget utilization and financial

performance through GIFMIS (long term)

Output and Timeframe

• Consolidated and agency level budget execution and budget

utilization reports published in COA and DBM website

• Harmonized forms by Dec 2012

• Unified Account Code Structure

• Framework on Performance Standards implemented by March

2014

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GIFMIS Development Project

Objective• to facilitate physical development of a working GIFMIS

that can collect and organize financial information in a central database

Output and Timeframe• Web-based GIFMIS Version 1 – initially for national

government agencies (for completion in 8 months)• Web-based GIFMIS Version 2 – for all government

agencies (operational by 2016)

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Liability Management Project

Objective• to put in place a system for managing government's

exposure to contingent and other liabilities

Output and Timeframe• a complete list of liabilities of the national government,

real and contingent (immediate)• LM system established by 2013

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Accounting and Auditing Reform Project

Objective

• continue to enhance government accounting systems and strengthen external audit capacity

Outputs and Timeframe

• Harmonized PGAS with IFRS and IPSAS by June 2012

• Enhanced NGAS for GIFMIS Track 2 by Dec 2012

• Guidelines on the audit of multi-sectoral programs/projects

• Revised guidelines on participatory audit

• Intensified conduct of IT/ information systems audit (2012-15)

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Capacity Building Project

Objective• develop skills of personnel of oversight and

implementing agencies on PFM competencies• build stakeholder support for the reforms

Target Participants• personnel of the oversight and implementing agencies • legislators• civil society organizations • other stakeholders

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PFM Reform Roadmap

Leading the way to the right path

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Improved efficiency,

accountability and transparency of public fund use

• Direct

• Immediate

• Substantial

The Filipino People especially the poor

Improved Public Service Beneficiary


‘…it is incumbent on all of us to confidently assert that governments that do things right should have no problem keeping our fellow citizens informed and engaged, and are thus, partners of government in its fundamental task of addressing the needs of the people.

The result is an empowered citizenry, which is the essential aspiration at the heart of the digital revolution sweeping the globe...’

President Benigno S. Aquino IIISpeech at "The Power of Open: A Global Discussion"

Google New York, 75th Ave., New York 19 September 2011