Download ADB Grant 0133-CAM: Public Financial Management in

ADB Grant 0133-CAM: Public Financial
Management in Rural Development
Ministries (Component 1)
Effective Budget Delegation
February 08, 2010
1
Feb-8-2010
Day 1: Content of Session 1
1. Definition of Segregation of Duties
2. General Principles of Delegation
3. Delegation in Cambodia
–
–
Delegation of Power
Governors
4. Public Accountants
– International Accounting Standard
– Different Types of Public Accountants
– Common Problem
ADB Grant 0133-CAM: Component 1
2
1-Definition of Segregation of duties
• Having adequate separation of duties, also
known as “segregation of duties,” in a financial
process means properly assigning the
handling of financial process control
procedures among two or more competent
and qualified individuals in a way that
provides reasonable assurance that
transactions processed will comply with
process control standards
ADB Grant 0133-CAM: Component 1
3
1-Definition of Segregation of duties
• In a financial process having good separation
of duties, it is expected that at least one
individual involved in the process will identify
and/or prevent a transaction processing error,
misappropriation, or fraud from occurring.
• The individuals performing process control
duties must be provided with adequate
training, support, and authority in order to be
successful.
ADB Grant 0133-CAM: Component 1
4
2-General Principles of Delegation
Principles of Delegation and Accountability
• Administrative officials are charged with
efficiently managing resources and risks to
attain Government objectives while
maintaining a sound financial condition and
compliance with applicable laws and
regulations.
ADB Grant 0133-CAM: Component 1
5
2-General Principles of Delegation
Principles of Delegation and Accountability
• While administrative officials may delegate
many responsibilities, they retain
accountability for:
– Compliance with applicable laws and regulations,
government policies, terms and conditions of
gifts, contracts, and grants;
ADB Grant 0133-CAM: Component 1
6
2-General Principles of Delegation
Principles of Delegation and Accountability
– Sound financial condition and good business
practices;
– A system of internal controls that identifies and
manages risks;
ADB Grant 0133-CAM: Component 1
7
2-General Principles of Delegation
Principles of Delegation and Accountability
– Employee relations practices that ensure due
process, nondiscrimination, and freedom from
harassment and retaliation; and
– The integrity of data and the administrative
environment needed to support these
accountabilities
ADB Grant 0133-CAM: Component 1
8
2-General Principles of Delegation
Principles of Delegation and Accountability
• Government officials may be given the authority to redelegate their decision-making authority and financial,
administrative, and management responsibilities further,
however: officials cannot delegate greater responsibility and
decision-making authority than they have been delegated;
and officials who delegate responsibilities and decisionmaking authority must do so in writing and ensure that the
employees to whom they delegate are qualified and are
properly fulfilling their responsibilities.
ADB Grant 0133-CAM: Component 1
9
3-Delegation in Cambodia
SEGREGATION OF DUTIES
• This session will provide information about
the important role good separation of duties
plays in helping to establish a strong, effective
financial control in the Cambodian
government environment, and how to
implement good separation of duties in
financial processes.
ADB Grant 0133-CAM: Component 1
10
3-Delegation in Cambodia
SEGREGATION OF DUTIES
• Ensuring that the positions involved in
performing departmental financial processes
do not have conflicting duties is critical to
reducing the risk of errors, misappropriations,
fraud, and maintaining a strong financial
transaction control environment.
ADB Grant 0133-CAM: Component 1
11
3-Delegation in Cambodia
SEGREGATION OF DUTIES
• We will give you an overview and
understanding of effective budget delegation.
• Part of the PFMRP indicates that budget
entities and budget holders will need to be
identified in the line ministries – this training
session will provide a back ground for
implementing such requests from MEF should
it eventuate.
ADB Grant 0133-CAM: Component 1
12
Sihanoukeville: Five reform areas that are ‘catalysts’
for change
CAP2
Activity
1 21.3 and  Define and identify budget entities and
21.5
budget entity managers.
Outcomes
• Will create a framework for delegation within which
line ministries can work.
• Will force a view on the extent of deconcentration that
is acceptable now and in the future.
13
Sihanoukeville: Five reform areas that are ‘catalysts’
for change
CAP2
Activity
1 21.3 and  Define and identify budget entities and
21.5
budget entity managers.
Detailed work for line ministries:
21.3,  Identify full schedule of existing budget entities and
21.5
budget managers
 Receive manual and training from MEF on
empowerment and responsibilities of budget entities
and budget managers
 Propose new schedule of budget entities and budget
managers, new budget flows and new accountability
arrangements, based on MEF guideline
14
3-Delegation in Cambodia
•
•
•
•
•
•
•
SEGREGATION OF DUTIES
Fundamental Principles in Cambodia
Delegation of power
Governors
Segregation of duties
Commitments
Public Accountants
Accountants of financial administration
8/3/2017
ADB Grant 0133-CAM: Component 1
15
Situation in Cambodia
Delegation of Power
• Fundamental Principles in Cambodia
– Law on Public Finance System May, 2008
• King [His Majesty Norodom Sihanmoni]
• Prime Minister [His Excellency Hun Sen]
• Minister of Economy and Finance [His Excellency Keat
Chhon]
{Sub-decree No 82 of Council of Ministers
November 16, 1995}.
8/3/2017
ADB Grant 0133-CAM: Component 1
16
Situation in Cambodia
Budget Law May 2008: Article 63
8/3/2017
ADB Grant 0133-CAM: Component 1
17
Situation in Cambodia
DELEGATION NOTE:
• An officer who delegates his power does not
exercise it any longer, whereas one who has
delegated his signature may continue to
exercise his power in parallel to the delegated
person.
• In Cambodia Government Officers are
responsible and personally liable for their own
actions – delegation is no defence!!!
8/3/2017
ADB Grant 0133-CAM: Component 1
18
Situation in Cambodia
Sub-national Level: the Governor [2 hats]
• First, representative of the government in his
constituency and has financial authority over
provincial departments of ministries – thus he is
the authorizing officer by delegation over the
budgets of the central government
• Second, he is the Chief authorizing officer for the
provincial governor’s budget for his constituency
• {The mayor is the same!}
8/3/2017
ADB Grant 0133-CAM: Component 1
19
4-Public Accountants
Role of Public Accountants
• Financial Operations and public accounting at
both the national and sub-national levels of
administration shall be centralized at the
national treasury and undertaken by public
accountants (Budget Law 2008, chapter 5,
article 73)
8/3/2017
ADB Grant 0133-CAM: Component 1
20
4-Public Accountants
Role of Public Accountants
• The Public accounting system shall be
consistent with international accounting
standards (MEF Prakas determines accounting
system)
8/3/2017
ADB Grant 0133-CAM: Component 1
21
4-Public Accountants
-What are international accounting standards?
• The International Public Sector Accounting
Standards Board (IPSASB) focuses on the
accounting and financial reporting needs of
national, regional and local governments,
related governmental agencies, and the
constituencies they serve.
8/3/2017
ADB Grant 0133-CAM: Component 1
22
4-Public Accountants
What are international accounting standards?
• The International Public Sector Accounting
Standard (IPSAS) Financial Reporting under
the Cash Basis of Accounting is currently being
reviewed.
• There are no International Accounting
Standards that can be applied to Cambodia
right now!
• Cambodia has a cash based system!!!
8/3/2017
ADB Grant 0133-CAM: Component 1
23
-Different types of Public Accountants
Cambodian Situation
• Senior accountant – one who implements
orders for payment from a senior authorizing
officer
• Treasury Accountant – same status as Senior
Accountant and consolidates the information
from Provincial Treasury Accountants
• Reporting Accountant – implements orders
from authorizing officer by delegation
8/3/2017
ADB Grant 0133-CAM: Component 1
24
-Common Problems
Cambodian Situation
• Requisition
• Accountant refuses to pay on requisition from
Authorizing Officer
• …accountant reports to Minister of Finance
• …Minister of Finance refers requisition to National Audit
Authority
• Accountant can refuse payment when:
•
•
•
•
8/3/2017
Unavailability of Budget
Absence of Financial Controllers approval
Absence of supporting documents
Settlement not in full discharge
ADB Grant 0133-CAM: Component 1
25
Common Problems
Cambodian Situation
• Petty Cash
• Petty Cash management officers operate under
the Authorizing Officer (Public accountants
operate under Minister of Finance) who has
authority to disburse and make payments.
• Thus the Public Accountant has little control over
Petty Cash…
8/3/2017
ADB Grant 0133-CAM: Component 1
26