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ICAG COLLEGE
Public Sector Accounting and
Finance (Paper 2.5)

Redeemer Krah (Ph.Ds, FCA)

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6 Broad Syllabus Areas

• Overview of PFM cycle in Ghana (20%)
• Regulatory and conceptual framework for public sector accounting in
Ghana (10%)
• Application of IPSAS to financial transactions by public sector entities
(20%)
• Preparation of financial statements for public sector entities (20%)
• Evaluation of financial position, performance and prospects of public
sector entities (20%)
• Governance in the public sector (10%)

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1. Overview of PFM cycle in Ghana

• Explain the public financial management cycle in Ghana, including the
following elements:
• Planning
• Budget preparation
• Budget execution, including revenue management, expenditure control, cash
management (emphasizing the treasury single account), debt management
and assets management
• Record keeping, accounting and financial reporting
• Review and audit processes, including monitoring and evaluation, internal
audit, external audit and parliamentary oversight.
• Assess the performance of public financial management systems
using the public expenditure and financial accountability framework
(PEFA)

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2. Explain and apply the conceptual framework for general purpose

financial reporting by public sector entities
• Explain and apply the conceptual framework for general purpose
financial reporting in the public sector entities, paying attention to
the following:
• Objectives and users of general-purpose financial reporting
• Qualitative characteristics of financial reporting in the public sector
• The characteristics of the reporting entity
• Elements of public sector financial statements
• Recognition of the elements of financial statements of public sector entities
Measurement of assets and liabilities and their presentation

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Cont
• Explain the role of the International Public Sector Accounting
Standards Board (IPSASB)
• Describe, explain and apply public sector financial laws and
administrative rules, focusing on the following:
• the 1992 Constitution
• the Public Financial Management Act 2016 (Act 921) and its conse quential
regulations
• Audit Service Act 2000 (Act 584)
• Public Procurement Act 2003 (Act 663), its amendments (Act 914) and
consequential regulations
• Internal Audit Agency Act 2003 (Act 658)
• Local Governance Act 2016, (Act 936) and
• other related public financial management enactments

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Topic 2 Cont
• The nature and purpose of assets and liabilities in the public sector
• The regulatory roles of public sector entities
• Assess ethical issues in public sector accounting in respect of
functions and powers (offences and penalties) of the following
bodies:
• Economic & Organised Crime Office
• Office of the Special Prosecutor
• Public Accounts Committee
• Financial Intelligence Centre
• Demonstrate professional scepticism and judgement when reviewing ethical
issues
• Explain the impact of developments in technology on public sector
accounting, in particular the function and operation of the GIFMIS platform

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3. Explain and apply appropriate IPSASs in relation to financial

transactions of non-commercial public sector entities
• Inventories
• Accounting policies and changes in accounting estimates and errors
• Events after the reporting period
• Effects of changes in foreign exchange rates
• Borrowing costs
• Financial instruments; recognition, presentation and measurement of financial
assets and liabilities (excluding derivatives and hedge accounting)
• Construction contracts
• Leases
• Investment property
• Property, plant and equipment

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Cont
• Provisions, contingent liabilities and assets
• Related party disclosures
• Impairment of non-cash-generating assets
• Impairment of cash-generating assets
• Revenue for exchange transactions
• Revenue from non-exchange transactions
• Budget information in the financial statements
• Employee benefits
• Agriculture

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Cont
• Intangible assets
• Service concession arrangements
• Public sector combinations
• Social benefits
• Cash flow statements
• Non-current assets held for sale and discontinued operations
• Measurement
• Transfer expenses

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4:Identify and explain appropriate accounting policies and prepare financial

statements and notes for public sector entities in accordance with IPSAS

• Explain the financial reporting structure of the Government of Ghana:

• Central government (budgetary government, extra budgetary government)
• Local government (Metropolitan, Municipal and District Assemblies)
• State owned enterprises (commercial state owned enterprises and non-commercial state
owned enterprises)
• General government (central government and local government)
• Whole-of-Government (general government and state owned enterprises)
• Explain and apply appropriate accounting policies in the presentation of accrual
basis public sector financial reports
• Explain the features and application of Government Chart of Accounts
• Explain how alternative choices of revenue recognition, asset and liability
recognition and measurement can affect the understanding of the
performance, position and prospects of public sector entity, or when
presenting consolidated or separate entity financial statements in accordance
with IPSAS
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Cont..
• Prepare financial statements for Central Government entities (Ministries,
Departments and Agencies including key public sector entities such as health
and education authorities), local government entities (Metropolitan, Municipal
and District Assemblies) and non-commercial state-owned enterprises in
compliance with IPSAS.
• Prepare financial statements of a single entity undertaking a variety of transactions on
the basis of chosen accounting policies and in accordance with IPSAS and local
regulations Identify from a given scenario a controlled entity, associate or joint venture
according to IPSAS and public financial management laws
• Prepare consolidated financial statements arising for controlled entities, associates or
joint ventures in accordance with IPSAS and public financial management laws
• Prepare extracts from financial statements of an entity preparing financial statements
undertaking a variety of transactions on the basis of chosen accounting policies and in
accordance with IPSAS and public financial management laws.
• Explain with examples the additional information that may be disclosed bout the general
government sector under IPSAS 22 and Disclosure of Budget Information under IPSAS 24
• Discuss the requirements for public sector entities to observe sustainability
reporting and ESG requirements
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5.Evaluate the financial position, performance and prospects of public

sector entities using financial and other information
• Identify the users of public sector financial statements and their needs, including
environmental, social and governance needs
• Recognise the limitations of published financial information in meeting users’ needs
• Explain the scope of financial statement analysis in providing decision-useful information
regarding financial position, financial performance and cash flow
• Prepare ratio analyses, appropriate to public sector users, covering the following
categories of ratios:
• Efficiency
• Short term solvency and liquidity
• Long term solvency and stability
• Borrowing to assets
• Working capital ratios
• Compare the role, strengths and weaknesses and practical uses of accounting ratios, key
performance indicators and benchmarking exercises in the public sector
• Demonstrate the importance of exercising professional scepticism and judgement in
analysing and interpreting financial information
• Perform common size statement analysis and budget analysis
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6. Explain the role of governance in the public sector and how it differs from
corporate governance in the private sector

• Explain the regulatory roles of public sector entities, focusing on the following:
• Ministry of Finance
• Controller and Accountant General’s Department
• Internal Audit Agency
• State Interest and Governance Authority
• Bank of Ghana
• Identify the key stakeholders in a public sector organization and explain how their needs and
expectations are different from those in the private sector
• Consider the impact of different sources of funding on public sector governance
• Explain the importance of the seven principles of public life in public sector governance
• Explain the role of internal audit and external audit in public sector governance
• Compare the key elements of social responsibility and sustainability in the public sector with
those in the private sector
• Illustrate how public sector organisations achieve social responsibility and sustainability

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Course Outline
1. Public financial management cycle and Assessment
2. Information technology in the public financial management
3. Ethics and sustainability in the public sector
4. Public sector governance
5. PFM Laws and conceptual framework of public sector financial
reporting
6. Preparation of financial statements
7. Discussion and analysis of financial statements
8. Application of IPSAS.

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AXIOM LEARNING MATERIALS

PUBLIC SECTOR ACCOUNTING AND FINANCE (PAPER 2.5)

Topic 1:
Public Financial Management Cycle and Assessment
Redeemer Krah
(FCA,Ph.Ds,Mphil, BSc. Admin)
@Axiom Institute Nov 2024
[email protected]
0243340420
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Topic 1:PFM cycle and Assessment in Ghana (20%)

• Topic covers:
• What is PFM and its elements?
• PFM cycle
• Planning
• Budget preparation and approval
• Budget execution
• Recording, Accounting and Reporting
• Audit and review
• Corruption risks in PFM cycle
• Assessment of PFM systems
• PEFA framework
• Sources of information, Benefits, and limitations
• PEFA methodology .

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What is PFM?
Definitions Goal or objective of PFM
• PFM is the connection between resource • PFM exist to achieve the following
availability, service delivery and
accomplishment of government and its objectives:
agencies. • Aggregate fiscal disciple. It aims at
• PFM is the system by which financial ensuring the government achieves
resources are planned, directed and fiscal discipline in all critical aspects.
controlled to enable and influence the • Strategic allocation of resources.
efficient and effective delivery of public PFM aims at ensuring the resources
service goals (CIPFA, 2010). are used strategically in the
• PFM means legal and administrative attainment of public goals.
procedures established to permit covered • Efficient service delivery. PFM aims
entities to conduct activities in a manner at linking resource to provision of
that ensures correct usage of public funds public services in an efficient manner.
to meet defined standards of probity, • All these lead to enhance of
regularity, efficiency and effectiveness
(PFMA 2016,S. 102) government performance

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PFM Cycle
Planning Phase
• It describes the interrelated
• It involves setting financial objectives
phases of PFM. and priorities for the government or
• Five main phases in the cycles are: public entity.
• Planning • It includes the assessment of revenue
• Budget preparation and approval sources, expenditure needs, and fiscal
• Budget execution/implementation policies.
• Recording, accounting and reporting • Key activities may include economic
• Audit and Review forecasting, revenue estimation, and
setting budgetary targets.

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Phase 1: Planning (cont)

• PFMA makes provision on fiscal Principles for fiscal policies
policy S.12 -18) covering
• We have general principles and
• Principles for fiscal policies,
guiding principles
• Fiscal policy objectives
• Fiscal strategy document • General principles of fiscal policy
• Fiscal Policy Indicators are:
• Cabinet adherence to Fiscal Strategy • Accountability of responsible public
Document officers
• Suspension of Fiscal Strategy Document • Consideration on the welfare of the
current population and future
generations.
• Prudence management of funds,
assets, liabilities, revenues
expenditure and fiscal risk

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Planning cont
Principles guiding formulation and Fiscal Policy Indicators
implementation of fiscal policy: • These are key pointers to fiscal
• Revenue: Ensure sufficiency of revenue performance of government and they
• Expenditure: Ensure sustainable fiscal include:
balance • the non-oil primary balance or
• Debt: Ensure debt are sustainable • non-oil fiscal balance, as a percentage of
gross domestic product; and
• Fiscal risk: Ensure that it is managed • public debt as a percentage of gross
prudently domestic product;
• Overall: ensure value for money • capital spending as a percentage of total
expenditure;
Fiscal policy objectives • revenue as a percentage of gross domestic
• The prime Fiscal Policy objective of product; or wage bill as a percentage of
Government is to ensure the macroeconomic tax revenue.
stability of the country within the • The Ministry of Finance shall review
macroeconomic and fiscal framework.
these fiscal policy indicators specified
• Other fiscal objectives which are consistent every five years.
with the prime objectives

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Planning (cont)
Cabinet Adherence to Fiscal Strategy Suspension of Rules or Targets
Document
• A fiscal targets or rules may be suspended with the
• Subject to article 76(2) of the prior written approval of Cabinet where any of the
Constitution, Cabinet shall, adhere to the
targets set out in the Fiscal Strategy following events occur:
Document when: • a natural disaster, public health epidemic, or war as a
• making decisions with implications for result of which a state of emergency has been declared
public finances,
by the President under article 31 of the Constitution;
• determining, formulating and implementing
the policies of the Government, • an unanticipated severe economic shock, including
• performing any function conferred on it by commodity and oil price shocks; and
the Constitution, this Act or any other
enactment.
• Minister of Finance should be of the opinion that
the implementation of any of the fiscal targets or
rules would be unduly harmful to the fiscal and
macroeconomic or financial stability of the country.

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Planning (cont)
Suspension (cont) Trial Question
• Minister of Finance shall submit a COVID 19 has brought about fiscal crisis and
memorandum to Cabinet to request for misalignment to many countries, including
approval to suspend any of the rules or Ghana. Whilst, may believed that the impact of
targets in the Fiscal Strategy Document, pandemic is not sufficient to warrant the
providing the following information: suspension of the fiscal targets in the 2020 fiscal
• the reasons why the implementation of strategy document.
the fiscal rule or target would be Required:
harmful to the finances and
macroeconomic or financial stability of (a) Discuss the provision of the PFMA on
the country; compliance with fiscal strategy document.
(6 marks)
• the period within which the fiscal rule
or target is to be suspended; and (b) Explain the conditions under which fiscal
targets could be suspended.
• a fiscal adjustment plan setting out the
measures to return to a position of (8 marks)
compliance with the fiscal rule or target (a) Outline the set of information that MOF
within a period of not more than five should provide in accompany of the
years. decision to suspend fiscal targets. (6 marks)

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Phase 2: Budget Preparation and Approval

Budget preparation and approval Relevant stakeholders include (PFMA,
• Second phase of the PFM cycle s21-8)
• It involves putting together budget • Ministry of Finance,
estimates in alignment of the economic • Bank of Ghana,
policies, seeking authorisation from the
executive and approval from parliament. • Ghana Statistical Service,
• Several stakeholders are involved in the • Civil society organisations,
budget preparation process. • Ministries, Departments and
• These stakeholders participated in the Agencies,
budgeting space and make input into the • Ghana Revenue Authority,
budget.
• Controller and Accountant-General’s
Department,
NB: You are required to understand the role • National Development Planning
of each of the stakeholder in the budgeting Commission and
space.
• Local government authority.

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Budget preparation & Approval (cont)

• The specific activities involved include: Budget Guidelines
• Issuance of budget guidelines • Set of requirements, guidelines and
• Preparation and submission of budget formats that provide direction for the
estimates budget preparation process.
• Conduct budget hearing • Minister shall subject to Cabinet approval,
• Executive review and authorisation issue guidelines for the preparation of the
• Submission of appropriation bill to budget for each financial year.
parliament • Minister shall circulate copies of the
guidelines to each covered entity not later
than the 30th of June of every year.

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Budget preparation and Approval Cont

• Content of the budget guidelines • Content (cont)
includes (S.13): • reconciliation of any change to the previous
• economic outlook for the country; Medium- Term Expenditure Framework
• revenue forecasts; arising from the discretionary policy
changes, baseline parameters, and re-
• fiscal targets in relation to the fiscal allocation of expenditure items;
principles, particularly, the need to
achieve sustainable levels of public debt • selection criteria for investment projects,
and fiscal balance; including provision for linking forward
recurrent expenditure estimates to
• medium-term fiscal framework including investments;
key assumptions;
• ceilings for the preparation of the budget
• multiple year ceilings for each covered estimates of local government authorities;
entity in line with
• details of expenditure under statutory funds
• Fiscal Strategy Document; and alignment and co-ordination of
• ceilings on the required number of staff statutory funds with fiscal objectives, targets
for each covered entity and the cost of and other aspects of the budget; and
appropriation for the relevant year for the • any other information required from a
public service; covered entity
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Budget preparation and Approval (cont)

Preparation and Submission of Budget hearing
estimates • MOF through the budget office
• Upon receipt of guidelines, Principal conduct budget hearing to
Spending officers of covered entities ascertain that:
convene budget committee meeting • The budget is prepared in
compliance with the policy directives
• Strategic plans and budget estimates of the Ministry
are prepared in line with the • The budget ceiling and resource
requirements of the guidelines constraints are adhered to
• Plans and estimates are finalised • That plans of the covered entities are
and submitted to the MOF through fit and estimates are reasonable.
the SM.

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Budget preparation and Approval (cont)

Executive Review and Authorisation Parliamentary Approval
• The draft policies and budget estimates • Budget is laid and presented as
are submitted to cabinet Appropriation Bill and Appropriation Act.
• Cabinet reviews and make • Examination/scrutiny of the economic
recommendation for changes policy and budget statement by select
• Final budget prepared and authorised by committees of parliament
the President for submission to Parliament • Debates on the economic policy and
for approval budget
• Approval (Pass appropriation Act and
Finance Act) or otherwise.

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Phase3:Budget Execution/Implementation
Budget execution • Monitoring, evaluation and control
• It entails the implementation of • It also entails continuous process of
monitoring, evaluating and controlling the
economic policies, projects, budget throughout the execution stage.
programmes and activities in the • This requires regular reporting of the
approved budget. budget out turns to the vote controllers
• It is usually initiated by warrants and and implementers
approvals issued by Minister of finance • The actual results are compared with the
planned outcome and the variance are
for commitment of funds and investigated and corrective action taken.
subsequent releases of funds to • The MOF is responsible for monitoring,
projects, programmes and activities. evaluating and controlling the national
• This is a critical stage of the budgeting budget.
process in that failure at this point is • Principal spending officers are responsible
the failure of the entire programmes for MEC their respective budgets and
report to the MOF through the SMs.
and policies of government
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Phase3:Budget Execution cont

Cash management in execution • TSA for central government agencies includes:
• How efficiently cash resources are managed in • Treasury main account (TMA)
the execution process is critical. • Revenue transit accounts for tax and non-tax
(balance transferred to revenue holding account
• PFMA provides for the use of Treasury Single close every day)
Account • Revenue holding accounts (balance transferred
to TMA)
• Treasury Single Account serves as a unified • Operational accounts of covered entities (for
structure of Government accounts to give a security deposit)
consolidated view of Government cash • Donor fund bank accounts
resources. • Third party deposits and other deposits
• All Government cash including moneys • Foreign missions bank accounts, and
received by covered entities shall be • Any other accounts designated by the CAG
deposited into and all expenditure of
Government and covered entities shall be
made from the TSA. • TSA should be managed on the GIFMIS
• TSA exist for central government agencies at NB: Read on the merits and demerits of TSA
BOG, local government authorities at
Commercial banks.

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Phase 4- Recording, Accounting and Reporting

Recording, Accounting and Reporting • In achieving these results:
• This phase is very critical in the provision of • Professional accountants are
reliable and credible financial information for needed to take charge of the
monitoring and evaluation purposes, as well processes
as accountability and transparency. • Robust accounting information
• It involves: system (such as the GFMIS) is
• Accurate capture of financial transactions required.
and events such revenues received, • Adoption and implementation of
expenditures made, assets acquired, and International Public Sector
obligation contracted. Accounting Standards (IPSAS)
• Proper accounting for transaction and
events and
• Communication (reporting) financial
information derived from the records and
accounts to the users

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Phase5: Review and Audit

Review and Audit
• This phase covers internal and external • The exercise of Parliamentary oversight
audits and Parliamentary oversight. through Public Accounts Committees
• Internal audit is a monitoring mechanism allows the representatives of the citizens
helping public sector organisations to to interrogate and examine improper
continuously identify and manage risks financial transactions of public sector
and ensure the attainment of corporate organisations.
goals. • Also ctitical at this phase is the
• The external audit report provides an prosecutorial role of the Attorney General
objective assessment on how public sector in prosecuting and bringing to justice
organisations have applied and accounted people who are found to have breached
for public resources financial discipline.

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Corruption Risk in PFM Cycle

What is corruption risk in PFM? Manifest of corruption risk in PFM
Phase Corruption Risk Manifest
• It is the possibility that the PFM cycle Planning  Planning the allocation of resources according to
biased criteria
will be abused for personal gain.  discretionary budgetary powers to allocate budget
resources to projects

• Every phase of the PFM cycle is Budget preparation & approval  Amendment of the budget proposal to set funds
aside for later misuse
susceptible to corruption risk.  Risk of lobbying to unduly influence
parliamentarians
• Thus the scrutiny and examination of Budget execution  Distortion of public investment projects for rent
seeking
the PFM should pay extra attention to  Bribery and kickbacks in public procurement, bid
rigging etc
the potential areas of manifestation of  Rent seeking behaviours in tax administration and
custom processes
corruption  Embezzlement of money

Recording, accounting and reporting  Weak, flawed or opaque reporting and accounting
practices
 Creative accounting” to cover corruption schemes
Review and Audit  Lack of scrutiny over extra-government accounts
 Limited legislative scrutiny, lack of resources,
capacity and leverage, and poor executive follow up

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Assessment of PFM System Using PEFA

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Assessment of PFM
PEFA Assessment
Objectives of PEFA project
• PEFA framework was developed to  Standardization of framework. It aims at establishing a standardized
evaluate the state of public financial methodology and reference tool for conducting diagnostic assessments of PFM
systems.
management at both central and local
government levels.  Harmonization: To align the needs of governments and their development
partners by providing a common analytical framework and shared data for
•A PEFA assessment offers a evaluating PFM performance.

comprehensive, consistent, and  Capacity Building: To enhance the capacity of governments and stakeholders in
evidence-based analysis of PFM conducting comprehensive assessments of PFM systems and interpreting
assessment results.
performance at a specific juncture.
 Monitoring and Evaluation: To facilitate the monitoring and evaluation of PFM
• Assessing the effectiveness of a public reforms and initiatives over time by providing a consistent and reliable
financial management system holds assessment framework.

immense significance for governments,  Knowledge Sharing: To promote knowledge sharing and best practices in PFM
assessment and reform efforts among countries and international development
international organizations, and various partners.
stakeholders

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Assessment of PFM
Usefulness (benefits) of PEFA Assessment Reports
PFM CONSTRUCTS PEFA ASSESSMENT

• Diagnostic Analysis of PFM performance

An open and orderly PFM system

• Serves as foundation for developing and contributes to desirable outcomes:

Assessment of the extent to which
the existing PFM system supports
 Aggregate fiscal discipline
implementing reforms  Strategic allocation of the achievement of aggregate
fiscal discipline, strategic
resources
 allocation of resources, and
• Serves as referencing for monitoring progress
Efficient service delivery
efficient service delivery.
The key pillars of an open and

• Facilitate international benchmarking of orderly PFM system are:

 Budget reliability
performance  Transparency of public
finances Assessment of the extent to which

• Provides basis for seeking external assistance and Management of assets and
liabilities
PFM systems, processes and
institutions meet performance
 Policy-based fiscal strategy
support from development partners and budgeting
standards within the PFM pillars.

 Predictability and control in

• Serves as advocacy of strengthening PFM 
budget execution
Accounting and reporting
 External scrutiny and audit
• Pointer to capacity building
The indicators measure the
The crucial elements of the PFM system
• Promotion of accountability and transparency provide a measure of PFM performance
operational performance of key
elements of the PFM system
 31 indicators of PFM within the pillars of PFM
performance

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Assessment of PFM
Outcome of open and orderly PFM Seven Pillars of PFM
• Aggregate Fiscal Discipline • Budget reliability. The government budget is realistic
• Strategic resource allocation and is implemented as intended. This is measured by
comparing actual revenues and expenditures (the
• Efficient Service Delivery immediate results of the PFM system) with the original
approved budget.
• Transparency of public finances. Information on PFM is
comprehensive, consistent, and accessible to users. This
is achieved through comprehensive budget
classification, transparency of all government revenue
and expenditure including intergovernmental transfers,
published information on service delivery performance
and ready access to fiscal and budget documentation.
• Management of assets and liabilities. Effective
management of assets and liabilities ensures that public
investments provide value for money, assets are
recorded and managed, fiscal risks are identified, and
debts and guarantees are prudently planned, approved,
and monitored.

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Assessment of PFM
Seven Pillars Cont Indicators and Dimensions
• Policy-based fiscal strategy and budgeting. The fiscal • The pillars are further measured by 31 indicators
strategy and the budget are prepared with due regard to • The indicators are the reporting unit of PEFA. Meaning
government fiscal policies, strategic plans, and adequate that the scores are reported on indicator basis rather
macroeconomic and fiscal projections. than pillars.
• Predictability and control in budget execution. The • Dimension are specific questions or items that measures
budget is implemented within a system of effective (when put together) are particular indicator.
standards, processes, and internal controls, ensuring
that resources are obtained and used as intended • There may be:
• Accounting and reporting. Accurate and reliable records • One dimension measuring one indicator
are maintained, and information is produced and • Two dimensions measuring one indicator
disseminated at appropriate times to meet decision- • Three dimensions measuring one indicator
making, management, and reporting needs.
• Four dimensions measuring one indicator
• External scrutiny and audit. Public finances are
independently reviewed and there is external follow-up • Scoring of indicators and dimensions is on the scale
on the implementation of recommendations for • A+
improvement by the executive. • A = 4 (Very good)
• B+
• B=3 (Good)
• C+
• C=2 (Average)
• D+
• D, D* = 1 (Poor)
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Assessment of PFM
Multiple Dimension to Indicators Weakest Link method
• Where there are 2, 3 and 4 dimensions • This method is used for
for an indicator, there is the need to multidimensional indicators where
pool the scores. poor performance on one dimension
is likely to undermine the impact of
• Two methods of pooling Dimension to good performance on other
Indicator dimensions of the same indicator.
• Method 1 (M1)- Weakest Link Method • The aggregate score for the indicator
• Method (M2)- Average Method is the lowest score given for any
dimension.
• Where any of the other dimensions
score higher, a “+” is added to the
indicator score.
• For example A, B D will be D+

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Assessment of PFM
Average Method Example: A and reporting is critical in public
financial management. In recent PEFA Assessment
• The aggregate indicator score awarded using the following scores were obtained:
this method is based on an approximate
average of the scores for the individual Indicator 1 Financial data integrity = A, B D C
dimensions of an indicator, Indicator 2 In-year reporting B,C, C
• The overall score is the simple average of Indicator 3 Annual Reporting C C D
the indicators
NB: M1 is used for indicator 2&3 and M2 for
• For example, A, B,C under M1 will be B indicator 1
(which is 4+3+2/3) Required:
a) Compute the score of each indicator (4 marks)
b) Suggest thre ways of improving the
performance of the worse indicator you have
calculated in question (a) above ( 6 marks

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Assessment of PFM
Sources of Information for PEFA Limitations of PEFA Assessment Process
• legislation, • Limited consideration of unique socio-
• government policy papers, political and economic contexts of
different countries
• budget documents, • Effectiveness and progress of reforms
• reports and statistics, are not considered
• recent surveys and • Overly emphasis on Processes rather
• analytical work at national, regional or than outcomes
international level. • Complexity and Resource Intensity
• Limited Scope
• Accuracy of data
• Inadequate Follow-Up
• Window dressing practices

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Assessment of PFM
Internal Controls in PEFA Assessment COSO internal control framework
• Four control objectives: • It has five components or elements:
• operations are executed in an orderly, • Control environment
ethical, economical, efficient, and • Risk assessment
effective manner; • Control activities
• Information and Communication
• accountability obligations are
• Monitoring and evaluation
fulfilled;
• applicable laws and regulations
are complied with; and
• resources are safeguarded
against loss, misuse and damage.

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Trial Question
Assessment of PFM
The following observations were made regarding public financial
management in Ghana:
i) Over the years, governments have included superfluous
projects and programs in the annual budget, which were not
intended to be achieved. Consequently, these projects and
programs were not delivered to the people.
ii) In Ghana, the annual budget is presented to the entire
parliament and broadcast live on radio and television for all
Ghanaians to hear and see. Subsequently, the entire budget is
published in newspapers and finally gazette when approved.
***End of topic***
iii) It is becoming difficult to access the financial reports of many
covered entities, and these entities also fail to post the
financial reports on their websites for public access.
Thank you.
iv) In recent years, the government has invested significant For any further clarification
resources into implementing the International Public Sector
Accounting Standards (IPSAS), resulting in over 90%
contact Redeemer at
implementation of the standards across the public sector. [email protected] or
Required: 0243340420
Map out each observation (i-iv) to PEFA’s pillars of public
financial management and discuss how each affects the
related pillar. (10 marks)

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