Public Sector Governance and Accountability Series: Budgeting and ...

290 Daniel Tommasi
the budget department of the ministry of finance, which is responsible for
budget preparation, and the treasury, which is primarily responsible for
budget execution, is often insufficient. The budget department should be
responsible not only for preparing the budget but also preparing budget revisions
and reallocating resources among sectors. The treasury should provide
the department with all the information it needs related to budget execution.
Problems may arise concerning the allocation of responsibilities
between the central departments of the line ministries and their subordinate
agencies. In some countries, continuous interference by the central departments
in the management of projects and programs impedes the effective
implementation of these programs. In other countries, powerful agencies
implement programs without reporting to their parent ministries. The distribution
of responsibilities within line ministries needs to be clarified to
ensure that the central departments are fully responsible for coordinating
sector policy and that subordinate agencies carry out their activities under
the supervision of these departments but without unnecessary interference
in day-to-day administration.
The principle of separation of duties
The principle of separation of duties is a powerful internal control device. It
states that duties (roles) should be assigned to individuals in such a manner
that no one individual can control a process from start to finish. Everyone
occasionally makes mistakes. Separation of duties provides a complementary
check by another individual. It allows an opportunity for someone to
catch an error before a transaction is fully executed or before a decision
is made on the basis of potentially erroneous data. In addition, having
adequate separation of duties reduces the opportunity factor that might
encourage an employee to commit fraud or to embezzle.
Thus, according to this principle, the implementation of the budget
rests on the existence of three different functions, which must be performed
separately by the authorizing officer, accountant, 6 and financial controller.
The authorizing officer administers the appropriations. He or she has the
power to commit the expenditure and to authorize the payment. The
authorizing officer is subject to disciplinary action and may be held
financially liable if he or she fails to comply with financial regulations or
neglects tasks relating to his or her function.
The accountant makes the payments. He or she is the only person empowered
to handle moneys and other assets and is also responsible for their
safekeeping. The accountant is subject to disciplinary action and may be
held financially liable for payments in which a procedural error is detected.