- 10 Marks
Question
Accounting and reporting constitute a key pillar of an organised and transparent public financial management system in the public sector. The effectiveness of accounting and reporting reflects the integrity of financial data, the accuracy of in-year budget reports, and the quality of annual financial statements. In a recent Public Expenditure and Financial Accountability (PEFA) assessment, a local government had the following results:
- Annual financial reporting: D
- In-year budget report: D+
- Financial data integrity: C
Required:
i) Explain the assessment performance to the Municipal Chief Executive of the local government.
ii) Recommend two strategies for improving the performance of the local government in each of the assessed areas.
Answer
i) Explanation of assessment performance:
The PEFA assessment evaluates key public financial management areas. The ratings indicate the following:
- Annual financial reporting (D): This shows the local government’s financial statements are not timely, lack comprehensiveness, or fail to comply with financial reporting standards.
- In-year budget report (D+): A poor rating indicates weak mechanisms for producing periodic budget reports, resulting in a lack of fiscal control.
- Financial data integrity (C): This indicates a moderate level of reliability, where some inconsistencies in financial data exist but are not highly critical.
ii) Recommendations for improvement:
Annual financial reporting:
- Implement IPSAS (International Public Sector Accounting Standards) for better financial statement preparation.
- Ensure timely submission of financial statements within two months after the financial year-end.
In-year budget reporting:
- Establish sound budgetary control systems to facilitate periodic reporting.
- Implement the Ghana Integrated Financial Management Information System (GIFMIS) to enhance budget monitoring and reporting.
Financial data integrity:
- Adopt GIFMIS for better financial transaction tracking.
- Improve ethical and technical training for accounting officers to enhance financial data accuracy.
- Tags: Budget Reporting, Data Integrity, EFA, financial assessment, Financial Reporting, Local Government
- Level: Level 2
- Uploader: Salamat Hamid