Definition of ACCOUNTABILITY:

Definition of ACCOUNTABILITY: the quality or state of being accountable; especially: an obligation or willingness to accept responsibility or to account for one's actions <public officials lacking accountability>

Term stability Definition: Limiting macroeconomic fluctuations in prices, employment, and production. This is one of the five economic goals, specifically one of the three macro goals (the other two are economic growth and full employment). One primary focus of this stability goal is to keep inflation in check. High or unpredictable inflation rates can cause uncertainty and haphazardly redistribute income and wealth.

Accountability

Accountability is fundamental to good governance.  Accountability is the process that allows people to measure and verify the performance of government.  Financial accountability is a critical component of accountable government.  It involves legislative control of the executive through budgets and accounts.  Weaknesses in financial accountability are generally linked to weaknesses in public accounting, expenditure control, cash management, auditing and the management of financial records.  An enhanced level of control over financial management is vital for all governments to maintain their commitment to their citizens.

Aims and Outcomes

Aims

This module has seven primary aims.  These are

1.     To explain the importance of good record keeping for efficient and effective financial management

2.     To outline the role and importance of stakeholders in financial records management

3.     To explain the business functions and processes of financial management, in relation to the records generated

4.     To examine the information systems and records created by financial management

5.     To outline how to manage financial records in a mixed paper/electronic records environment

6.     To introduce the concepts involved with integrated financial management systems

7.     To explain where to go for more information.

Outcomes

When you have completed this module, you will be able to

8.     understand the importance of good record keeping for efficient and effective financial management

9.     appreciate the role and importance of stakeholders in financial records management

10.            understand the business functions and processes of financial management, in relation to the records generated

11.            understand the information systems and records created by financial management

12.            know how to manage financial records in a mixed paper/electronic records environment

13.            understand the basic concepts involved with integrated financial management systems

14.            know where to go for more information.

Ensuring Resources are matched to Objectives

Financial management ensures that money is allocated in accordance with the government’s strategic priorities.  This is achieved by controlling the budget approved by the legislature and is reinforced by the publication of audited accounts of what was actually spent.

Efficiency

Public sector financial management has been the focus of increasing attention in recent years.  Reductions in public expenditure have pressured public authorities to maintain services with less money.  To achieve cuts, financial managers have had to improve their financial analysis as a basis for improving efficiency and value for money.

Traditionally, financial management in government has focused on controlling expenditure; the main emphasis has been on keeping public spending down in order to minimize borrowing.  However, private sector financial management techniques have increasingly been imported into the public sector.  For example the National Audit Office may carry out ‘value for money’ audits, which look beyond whether the money was spent according to the government’s financial regulations to whether the public is getting an economic, efficient and effective service.  In other words, financial systems in government are changing from systems designed to keep the government from spending too much to systems that ensure the government makes the best use of resources.

Economic Stability

Every modern government needs to define an economic policy and then manage its economy according to that policy.  Much of a country’s economy depends upon the private sector, but it can also be influenced by the government’s fiscal policies, interest rates and regulatory environment.

Government itself is a major component of a nation’s economy.  Public sector borrowing and expenditure have an impact on the stability of the overall economy.  Governments can improve their capacity to manage the economy by introducing reforms of the treasury, budget preparation and approval procedures.  Reforms can also be made in tax administration, accounting and audit mechanisms, central bank operations and the preparation of official statistics.  These reforms will help ensure the government manages its finances well and contributes to the overall stability of the nation.

Changing approaches to financial management

Records managers need to stay abreast of changing trends in financial management.  Changes to financial management processes will inevitably affect the information systems needed to support them and the records generated by them.  Each country will have different experiences with financial management, as the country’s own financial circumstances and political and cultural factors will create different requirements.  The most successful systems are those that have been tailored to meet specific country needs.

Various approaches to financial management have been designed and tested in recent years.  The recent trend is to move the focus away from measuring inputs toward measuring outputs: that is, to focus less on how much money has been spent on what product and more on whether the work performed has been useful.  Public sector financial management is increasingly seen as a tool to enable management to discharge its responsibilities more efficiently and effectively.  These trends are revolutionising government accounting practices, standards and reporting systems.

For example, the changing perspective in financial management has led to changes in the process of budgeting.  There are now several different methods of budgeting, including the following.

·        Line item budgeting lists expenditures for the coming year according to objects of expenditure, or ‘line’ items.  These budgets specify how much money a particular agency is permitted to spend on personnel, fringe benefits, travel, equipment, and so on.

·        Performance budgeting divides proposed expenditures into activities and relates the activity to cost.  This method allows the budget to be built on the basis of anticipated workload rather than incrementally, as in traditional line-item budgeting.

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