How We Partner With Donors To Implement The Enablers Of Good Public Financial Management (PFM)

Recognizing that successful implementation of a constitutional budget amendment and fiscal rules in developing countries hinges on the state of that country’s PFM infrastructure and political will to enforce the limit, Result Associates works with its partners to achieve goals through credible medium-term planning. Essentially, we focus on gaining incremental outcomes over time. See our chart below.

The logic of BFO is that governments should:

a) live within available means so future generations are not burdened.

b) use available resources to purchase the outcomes most valuable to citizens at the lowest cost possible.

We partner with donors to implement BFO within a medium term context (such as 5-7 years) in developing countries that have strong political will to embark on this journey. The scope of our advisory services would include:

Integrated Financial Management System (IFMS)

Effectively managing fiscal risk and getting value for taxpayers’ money are dependent on quality data. In turn, this data relies on the availability of an Integrated Financial Management System (IFMS) that communicates the following with officials, donors, and citizens:

  1. The country’s net worth, noting the extent to which its assets exceeds its liabilities.
  2. Real financial positions and operational results including balance sheet, income statement, and cash flow, all prepared using conservative accrual based and internationally recognized accounting standards.
  3. Cost of public services to enable pricing with minimum subsidies.
  4. Hidden fiscal risks including any asset and liability mismatch, contingent liabilities such as pensions, guarantees, etc. and unproductive public-sector investments.

Defining Internal Controls

To drive our IFMS implementation process, Results Associates uses the COSO Internal Control Framework (CICF) which defines internal controls as a process affected by an entity’s board of directors, management, and other personnel. It is designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance through the five components of internal controls: Control Environment, Risk Assessment, Control Activities, Information & Communication, and Monitoring Activities.

When evaluating a system, we assess the extent to which these five components meet the reporting objective as it pertains to internal and external financial and nonfinancial information. Our analysis encompasses reliability, timeliness, and transparency, as well as other terms set by donors, regulators, or standard setters. The associated evaluation consists of:

This includes any code of ethics, staff competence, measurable objectives, Individual oversight, and compensation system.

We gauge if risks have been adequately assessed.

We calculate if these mitigate the identified risks.

We ascertain if effective communication exists among personnel, management, the board, and external stakeholders.

We evaluate mechanisms for gauging progress through periodic meetings and adoption of remedial actions when necessary.

Our breadth of solutions solve many challenges.

We assist clients in the following areas of expertise:

We develop and implement budget and accounting transaction classifications that comply with cash and accrual basis, international accounting standards, as well as Government Finance Statistics (GFS) and internal management reporting requirements.

We suggest ways of strengthening financial and accounting systems to ensure government transactions are recorded and reported accurately and transparently.

We detail your accounting organizations including staffing components and job descriptions.

We design and implement processes for both manual and automated financial systems that feature strong internal controls, including modules such as payroll, fixed assets, procurement, cost allocation, and general ledgers.

We formulate these to mitigate any risks identified through the risk assessment process.

We implement new finance and accounting laws, regulations, standards and manuals applicable to your accounting policies and procedures.

We develop macroeconomic and financial targets as well as the formulating, executing, and monitoring results within the budget framework.

We enable financial planning, analysis, and simulations including a cash flow projection, what if analysis, and scenario planning along with financial and management reports for improved communication of financial information, such as:

  • Income statement, balance sheet, statements of cash flow.
  • Sources of revenue and expenses including subsidies, tariffs, and related beneficiaries.
  • Variances from the budget and related causes.
  • Relationship between recurrent revenue and recurrent expenses; recovery ratio of the cost of public services;
  • Risk adjusted return on investments.
  • 10 years financial projection reflecting anticipated inflows, outflows to fund existing policy commitments, and gaps in funding.

We organize and perform on-the-job and classroom training in financial management and accounting.