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BUREAU OF LOCAL GOVERNMENT FINANCE DEPARTMENT OF FINANCE

BUREAU OF LOCAL GOVERNMENT FINANCE DEPARTMENT OF FINANCE. Financial Management and Accountability for Sustainable Local Governance. PUBLIC FINANCIAL MANAGEMENT The Framework. Effective and Accountable PFM . PLAN. PUBLIC FINANCIAL MANAGEMENT The Framework. Revenue Generation.

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BUREAU OF LOCAL GOVERNMENT FINANCE DEPARTMENT OF FINANCE

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  1. BUREAU OF LOCAL GOVERNMENT FINANCE DEPARTMENT OF FINANCE Financial Management and Accountability for Sustainable Local Governance

  2. PUBLIC FINANCIAL MANAGEMENT The Framework Effective and Accountable PFM PLAN

  3. PUBLIC FINANCIAL MANAGEMENT The Framework • Revenue Generation • Public Reporting on Financial Operations Effective and Accountable PFM • Auditing • Budgeting (Expenditure Management) PFM PLAN • Accounting • Cash Management • Debt Management

  4. 1. THE LGU PFM REFORM ROADMAP 2. THE PFM REFORM IMPLEMENTATION STRATEGY

  5. Outline of Presentation • 2 Ws and 1 H of the LGU PFM Reform Roadmap Why, What and How…. • LGU PFM Reform Implementation Strategy

  6. Why develop the LGU PFM Reform Roadmap? BASIC CONSIDERATIONS: CAPACITY TO HANDLE FUNDS CAPABILITY TO IMPLEMENT PROJECTS OPERATIONAL ACCOUNTABILITY MECHANISMS

  7. Why develop the LGU PFM Reform Roadmap? Need for a Single and Comprehensive Guide to address Weak PFM Effective and Accountable Public Financial Management • Lack of fiscal sustainability and poor expenditure management • Inadequate accountability mechanisms • Weak coordination among Oversight Agencies (OAs) and between OAs and LGUs

  8. What is the LGU PFM Reform Roadmap? • A strategic guide on what we (LGUs) want to do and achieve with our PFM in the immediate, medium and long term periods to attain our desired end-state (goal) • complemented by a well-designed action program that details the activities and timeframe on how and when we could reach our PFM goal and vision.

  9. Impact of the Roadmap • Provide LGUs with strategic directions to strengthen their PFM system towards improved revenue generation and expenditure management Two very crucial systems in the efficient and effective delivery of services!

  10. Impact of the Roadmap • Assist the OAs to strengthen their coordination in better supporting PFM reforms identified, designed and being implemented by the LGUs • Guide Development Partners in identifying possible entry points for financial support and other interventions

  11. How was the LGU PFM Reform Roadmap developed?

  12. How was the LGU PFM Reform Roadmap developed? 1 2

  13. How was the LGU PFM Reform Roadmap developed? 1 2 Took stock of the current directions and initiatives undertaken by government and development partners SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  14. How was the LGU PFM Reform Roadmap developed? 1 PFMAT is a self-assessment, evidence-based instrument which describes the characteristics of an open and orderly PFM system. It is a diagnostic tool which will help LGUs identify the strengths and weaknesses of their PFM system as basis for improvement measures. 2 SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  15. PFMAT Results • FY 2013 Bottom-up Budgeting (BuB) focus LGUs earned a total mean rating of 2.34 • Indicates thatelementsof an open and orderly PFM system are not complete but what exist are already fully operational SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  16. PFMAT Results • Lowest ratings indicate the elements not yet in place: • Internal and External Audit • Policy-based Budgeting • Accounting, Recording and Reporting SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  17. PFMAT Results SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  18. PFMAT Results SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  19. PFMAT Results SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  20. How was the LGU PFM Reform Roadmap developed? 1 2 Validated in nationwide Consultation Workshops with OAs and LGUs (October 2013 – March 2014) 3 SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  21. Validation of PFMAT Results SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  22. Participants to the Consultations: SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  23. Participants to the Consultations: TOTAL LGUS = 93 TOTAL PARTICIPANTS = 115 SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  24. Participants to the Consultations: SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  25. How was the LGU PFM Reform Roadmap developed? GOAL VISION STAKEHOLDERS’ VOICE “An LGU service delivery system that lowers the cost of doing business, stimulates private investments, generates employment and income opportunities, improves welfare levels for LGU constituents and accelerates local economic growth.” • Strong linkage of long term plans with Annual Budget • Budget requirements understood by all and stirs public involvement in the budget process • Sufficient funds for programs and projects anchored on long term plans • Self-reliant LGUs that generate sufficient local revenues to support budget expenditures • Simplified financial systems that yield timely, accurate and credible financial information • Functional and operational Internal Audit Service which leads to zero COA disallowances • Quality participation of CSOs in the planning and budgeting process “An open and transparent LGU PFM System that is stable and sustainable, renders financial compliance, underpins efficient and effective delivery of services, ensures the highest level of accountability and provides genuine citizens’ participation.” SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  26. How was the LGU PFM Reform Roadmap developed? POLICY AGENDA ISSUE Strengthen the linkage between PDPFP/ CDP –LDIP – AIP and Budget Link between PDPFP / CDP –LDIP – AIP and Budget SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  27. SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT) This project is funded by the European Union and implemented by the Government of the Philippines IMPLEMENTATION STRATEGY The LGU PFM REFORM ROADMAP

  28. The LGU PFM Reform Implementation Strategy • Lays down the specific actions to be done to carry out the policy agenda that will result to the outcomes • Anticipates the implementation risks and identifies mitigating measures • Operationalizes the LGU PFM Reform Roadmap SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  29. The LGU PFM Reform Implementation Strategy Matrix SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  30. Immediate Outputs from the Oversight Agencies SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  31. Immediate Outputs from the Oversight Agencies SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  32. Core Approaches to Implementation of PFM Reforms 1. Multiply sponsorship in the implementation of the LGU PFM Reform • Expand the engagement of all stakeholders in the implementation of LGU PFM Reforms to ensure attainment of: • Improved Capacities of OAs and LGUs • Improved LGU PFM systems • Improved service delivery by LGUs SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  33. Proposed Structure LGU PFM Reform Roadmap Transition Set-up SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  34. Core Approaches to Implementation of PFM Reforms 2. Empower LGUs to customize their PFM Improvement Plan (PFMIP) LGU stakeholders and sponsors will be enabled to assess their PFM system, designand actualize their PFMIPs based on their own level of readiness SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  35. Core Approaches to Implementation of PFM Reforms 3. Harmonize and coordinate Oversight Agencies’ technical support to LGUs LGU PFM Reforms seeks to institutionalize convergence of the OAs in providing technical assistance to LGUs SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  36. Core Approaches to Implementation of PFM Reforms 4. Capacitate Oversight Agencies and LGUs to Manage the Reform OA and LGU Stakeholders and Sponsors/Champions will be capacitated on change management SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  37. SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT) This project is funded by the European Union and implemented by the Government of the Philippines WHAT IS THE CONNECTION AMONG THE ROADMAP, IMPLEMENTATION STRATEGY AND PFMIP?

  38. The Roadmap, Implementation Strategy & PFMIP Prepared jointly by LGUs and OAs to serve as their overall strategic guide Prepared by LGUs to implement PFM reforms SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  39. The LGU PFM Reform Roadmap Issues to be Addressed (1) Policy Agenda (2) Outcomes (3) Responsible Units (5) Indicators (4) 2019 2022 2016 All LGUs capacita-ted to prepare and update their CDPs and matching LDIPs from which AIP is culled Strengthen the linkage between PDPFP/CDP –LDIP – AIP and Budget Link between PDPFP/CDP –LDIP – AIP and Budget DILG NEDA DBM BLGF LGUs 2016 ·Proportion of LGUs with enacted or draft PDPFPs/CDPs and LDIPs prepared and harmonized according with DILG/NEDA Guidelines LGUs prepare and update their CDPs and matching LDIPs from which AIP is culled Strong linkage between PDPFP/ CDP - LDIP-AIP and Budget ensured SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  40. The Implementation Strategy Issues to be Addressed (1) Implementation Strategies (3) Risk Register (5) Outcomes (4) Policy Agenda (2) LGUs OAs 2016 2019 2022 Mitigation Risks • Capacity of ROs’ technical personnel to provide TA to LGUs All LGUs capacita-ted to prepare and update their CDPs and matching LDIPs from which AIP is culled Strong linkage between PDPFP/ CDP - LDIP-AIP and Budget ensured • CapDevfor ROs on PFM tools LGUs prepare and update their CDPs and matching LDIPs from which AIP is culled Strengthen the linkage between PDPFP/ CDP –LDIP – AIP and Budget Enhance CDP/LDIP Manual including incorpora-tion of GPBP principles and alignment with PDPFP / PDIP at provincial level Link between PDPFP/CDP –LDIP – AIP and Budget Issue policy reiterating compliance with updated CDP / LDIP Manual SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  41. The PFM Improvement Plan (PFMIP) LGU: Municipality of San Julian For Fiscal Year 2015 Issues to be Addressed (1) Implemen-tation Strategies (3) Policy Agenda (2) Responsible Unit (6) Budget (8) Outputs (5) Activities (4) Schedule (7) Strengthen the linkage between PDPFP/ CDP –LDIP – AIP and Budget Link between PDPFP / CDP –LDIP – AIP and Budget Conduct orientation on the updated CDP / LDIP Manual LPDO January 2015 P20,000.00 Issue policy reiterating compliance with updated CDP / LDIP Manual Executive Order / Sanggunian Resolution February 2015 Issue Executive Order / Sanggunian Resolution LCE / Sanggunian SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  42. Prioritizing the Specific Activities for the PFMIP SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  43. Prioritizing the Specific Activities for the PFMIP SUPPORT TO THE LOCAL GOVERNMENT UNITS FOR MORE EFFECTIVE AND ACCOUNTABLE PUBLIC FINANCIAL MANAGEMENT (LGU PFM 2 PROJECT)

  44. FY2009 FY2010 FY2011 FY2012 Ano’ng Iskor ng ‘yong Bayan? LGU Fiscal Sustainability Scorecard Financial Management Performance Review for Local Government Units

  45. Declining, <1% locally sourced income to GDP 0.91% 0.89% 0.86% 0.80% 2009 2010 2011 2012

  46. Perspective “Supervision of revenue operations of all LGUs” “Monitor and support the implementation of policies and measures on local revenue administration” Assessment of fiscal indicators necessary for exercise of mandate Agency has to have a systematic, not sporadic, process for regular assessment of fiscal performance of LGUs

  47. Directives of the Secretary of Finance Protection of revenue integrity, data analytics and metrics Closer, thorough monitoring of revenue performance of LGUs Evidence- and policy-based performance assessment of local treasurers and assessors General housekeeping of reports Visit in BIR revenue regions / BOC ports /LGUs

  48. ? DOF Department Order No. 08-2011: Statement of Receipts and Expenditures Treasurer: eSRE System in the LGUs Assessor: Quarterly Reports on Real Property Assessments LGU Fiscal Performance Monitoring System BLGF’s Local Revenue Targets SMV Profile and Ordinances of LGUs Basis for Evaluation

  49. Local Government Unit Fiscal Sustainability S C O R E C A R D Directive of the Secretary Baselining the LGU performance from FY2009 to FY2012 Validating the LGU data and testing the integrity of BLGF reports Compliance monitoring on DOF directives and other relevant regulations Publication of LGU performance Policy setting purposes

  50. Indicators Pass • Financial (Quantitative) - 90% • KRA 1 - Revenue Generation Capacity • KRA 2 - Local Collection Growth • KRA 3 - Expenditure Management • Non-Financial (Qualitative) - 10% • KRA 4 - 6 - Reportorial Compliance Fail 100%

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