Finance:Public Financial Management

Public Financial Management (PFM), provides a framework for parliamentary authorisation and scrutiny of the Government's expenditure proposals and the Government's management of its assets and liabilities, including:

• establish lines of responsibility for effective and efficient management and use of public financial resources
• specify the principles for responsible fiscal management in the conduct of fiscal policy and require regular reporting on the extent to which the Government's fiscal policy is consistent with those principles
• specify the minimum financial and non-financial reporting obligations of Ministers, departments, Offices of Parliament and certain other agencies
• provide for the application of financial management incentives and for the accountability of specified central government organisations
• safeguard public assets by providing statutory authority and control for the borrowing of money, issuing of securities, use of derivative transactions, investment of funds, operation of bank accounts and giving of guarantees and indemnities

Public sector performance management approach emphasises, among other things, clear objectives and clear lines of responsibility, greater freedom to manage, and a corresponding expectation of greater accountability for results. Such a system requires good measures of performance that interested external parties can trust. This requires that public sector entities to prepare financial information that:

• uses accrual accounting concepts and statements
• is in accordance with financial reporting standards approved by an independent standard setter, and
• in the case of annual financial statements, complies with generally accepted accounting practice (IPSASB) and is audited by an independent auditor.