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

What Would an Ideal Public Finance Management System Look Like? 371
There are relational dimensions of the PFM system that should be noted
and that introduce (necessarily) even more complexity into the discussion
of developing a PFM code. These dimensions relate to the fact that PFM
issues can be raised in regard to central entities in national governments
(such as ministries of finance, treasuries, and supreme audit institutions), as
well as in implementing agencies in national governments (ministries,
departments, and agencies) and even in noncommercial organizations
(quasi-governmental organizations, state-owned enterprises, and so forth)
and civil society and multinational organizations that work in the PFM area
to assist in budgetary planning, monitoring, and so on. PFM issues also
matter in deconcentrated and decentralized governments, including
regional and local governments (where PFM processes exist in parallel in
different levels of government). This role-player multiplicity is shown in
stylized form in figure 11.3, where the relational complexities across and
within the system are apparent.
Figure 11.3 shows that PFM processes all involve role players from
different domains and cut across different levels of government. Unfortunately,
this role-player multiplicity is not typically acknowledged in PFM
assessments, models, or reforms. These products are systematically biased to
work in the core PFM entities such as the ministry of finance, supreme audit
institution, or parliament. These entities create and administer the rules of
the PFM system and thus attract significant attention. However, they are not
the ones that actually spend money (spending entities such as line ministries)
nor the ones that contribute the funds to be spent and that ultimately receive
services (civil society, which pays taxes and fees and sits at the receiving end of
the process by which institutions of basic governance and service provision
are funded).
The PEFA measures are also biased toward analyzing processes relevant
to the activities of core PFM entities and processes at the center of government.
Some of the indicators reflect coverage across noncore spending
entities (for example, the planning indicator shown in table 11.1), but
these indicators are presented from a defined ministry of finance perspective
(rather than a managerial perspective relevant to spending ministries). 13
Failing to acknowledge the fact that the population of PFM role players
extends beyond core agencies leads to specific weaknesses in the PEFA
framework. For example, the indicators ask whether the government completes
its accounts and reports on the basis of international standards. 14
Many treasuries score highly on this indicator because they produce
reports that suggest compliance with international accounting and reporting
standards. But the accounting and reporting in line ministries in many
governments are way below international standards. An approach is