Public Financial Management

It is an interesting time to be studying public finance for several reasons. First, there are changes in the way that the public sector does its business. In some cases there is a movement towards decentralisation and delegation of authority so that managers and professionals at relatively junior levels now have to take decisions based on the best information, including financial information, available to them. Consequently, more people are having to understand costs, budgets, financial statements about cash flows and expenditures, even when they are not in accountancy. In professions across the public sector, people are making choices about investments, about how to achieve efficiency, how to stay within budget and how to improve performance. Second, there are changes in what people are being held to account for. It is no longer sufficient to have accounts that show that money has been spent how governments intended. Politicians and the public want to know how well it has been spent, whether it has been used efficiently and whether it has achieved the purposes for which it was allocated. This course focuses almost entirely on the expenditure side of public financial management and looks at budgeting, accountability and the changes in financial management.

Aims & Objectives

By the end of this course, you should be able to:

understand how public budgeting fits into the macroeconomic framework

apply ideas about accountability to the production of various forms of account for public services and public money

understand how changes in public management require different forms of public accounting

read a budget and a set of national accounts in different jurisdictions

understand costs and different ways of measuring them and how costs are used in budgets

understand the budget process at national and sub-national levels and the techniques appropriate at different levels

apply budgetary control methods

appreciate how public financial management interfaces with politics and political choices

use financial management to enhance the performance of public organisations

Resources

Students receive a looseleaf binder containing eight 'course units'; these texts are carefully structured to provide the main teaching and are equivalent to traditional course lectures, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the further assigned readings. Two assignments (to be marked by your CeFiMS tutors), and a specimen examination paper are also included within the student pack, along with the following:

Textbooks:

H.M. Coombes and D.E. Jenkins, Public Sector Financial Management, Third edition, Thomson Learning, ISBN186152675X.

S. Schaivo-Campo and D. Tommasi, Managing Government Expenditure, 1999, Asian Development Bank, ISBN9715611974 (a very practical and rigorous book, rooted in a wide variety of country experiences).

Readings:

Your Readings in the course consist of articles contributing to current debates in PFM. In addition, you will also use case studies and exercises in PFM in a variety of contexts. The Online Study Centre also has supplementary readings and useful links to academic and other resources for this course.

Course Timetable:

This shows the linkage between the various components of the course and indicates the schedule for reading the texts, submitting assignments, etc.

Course Content

PPM102 covers:

Unit 1 The Context of Financial Management

Introduction
What is a budget?
The macroeconomic framework
Accountability
'New Public Management' and financial management
Conclusion

Unit 2 Budget Classification and Structure

Introduction
Classification of the Budget
Budget Composition
The Line Item System vs Programme Systems

Unit 3 Costs

Some definitions of costs
Costing Systems
Cost-Volume-Profit Model
Absorption or Full cost recovery
Activity Based Costing (ABC)
Managing Costs
Price-based costing
Conclusions

Unit 4 Accounting and Budgeting: National Level

Introduction: approaches to public accounting and budgeting
Cash Accounting vs Accruals Accounting
Planning: the macroeconomic, fiscal framework and the medium-term expenditure framework
The role of the Ministry of Finance
Budget Timetable
Conclusions

Unit 5 Accounting and Budgeting: Sub-national Level

Translating the national budget into operational budgets
Structure, Performance, Discretion, Block Grants and Contracts
Fund Accounting
Resource Accounting and Budgeting
Which techniques at which stage?
Budget timetable at sub-national level
Accounting for services provided by third parties
Conclusion

Unit 6 The management and control of budgets

Intoduction: Budgetary Control
Controlling Operations
Evaluation of Budgets
Taking Action
Summary

Unit 7 Budgeting and Democracy

Introduction
National Legislatures and the Budget Process
Case Study 1: Politics and Budget Making in the USA - Executive or Legislature?
Case Study 2: Politicians and Output-orientated Performance Evaluation in Municipalities in the Netherlands

Unit 8 Financial Management and Performance

Introduction: Accruals Accounting and Output and Outcome Budgeting
Defining and Measuring Non-Financial Items, especially Outputs and Outcomes
Case Study 1: Output and Outcome Definitions
Output and Input Budgets
Organisational Issues about the possibility of Integration
Case Study 2: Budgeting in Australia from 1996 to 1999
Case Study 3: Management By Objectives in Sweden
Conclusions 1: Will Performance Management and Budgeting ever be Fully Implemented?
Conclusions 2: Is there a single best method of financial management?
The journey from Bureaucracy to NPM as it affects Public Financial Management

Tuition & Assessment

There are two Assignments which will be marked by your tutor. The assignments are due after Units 4 and 8, that is, in weeks 4 and 8 of the study calendar.

To assist with revision and preparation for the final examination, review questions and a specimen examination paper are contained in the course file. The assignments count for 30% of the final mark and the examination 70%. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Online Study Centre.

Individual Professional Courses – IPC

Public Financial Management: Planning & Performance [PPM102]

Introduction