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

410 Salvatore Schiavo-Campo
Accounting, Reporting, and Audit
Financial accountability requires independent scrutiny, which, in turn,
depends on timely and reliable accounting and financial reporting. The
emphasis should be on strengthening cash accounting, ensuring simple and
regular financial reports, building reliable management controls, and ensuring
the effectiveness of the external audit function—in all cases, improving
as much as possible the existing procedures before jumping to more
complex systems.
Accounting and reporting
In a majority of developing countries, the basic priorities include the
following:
The cash-based accounts must be clear and prepared on a timely basis.
In countries that monitor only payments, a commitment register and an
ancillary book for outstanding payments should be implemented.
A debt-accrual accounting system should be developed if none exists, and
reports on debt should be prepared regularly.
Operations of extrabudgetary funds should be consolidated, and all
government entities should be made to follow the same classification in
their reporting.
Contingent liabilities, especially loan guarantees, should be individually
recorded, and statements should be prepared and published, including
amounts and beneficiaries.
Basic financial statements should be published, in a form accessible to
the public or at least the media. (In most countries, substantial assistance
to the media is likely to be needed to raise their capacity, integrity, and
professionalism.)
Subsequently, the following measures can be considered:
Recognition of all liabilities (including pensions and other entitlements)
Systematic registration and publication of contingent liabilities
Introduction of modified accrual accounting by also recognizing all
financial assets (but not all physical assets)
Construction of selective physical asset registers, focusing on categories
of assets that are both valuable and at risk of wastage or theft, and thereafter
monitoring of their use, including in the context of the dialogue on
preparation of the next budget.