ACFI3210- International Public sector Accounting and Finance Assessment 2

ACFI3210- International Public sector Accounting and Finance Assessment 2

The aspect of aid effectiveness is among the complex international reforms that involve several stakeholders; the primary focus is to achieve sufficient transparency as well as accountability in initiatives. Assessing the implementation of the sustainable development goals needs an evaluation of the role of development actors to ascertain the compliance to the SDGs principles specifically 16.4 to 16.6. The Busan Partnership (2011) was set to review the Paris declaration to assess the progress regarding its implementation as well as discuss how the agenda of aid effectiveness could be maintained in the context of a dynamic development landscape. The signing of this agreement led to a fundamental transformation of the governance of public finance for increased development and aid utilization. The improvement in the management of public investment in the member states like Rwanda is attributed to proper implementation and tracking of the Busan principles. It has a led to increased high-level political responsibility and accountability globally through the gathering of evidence according to the consensual monitoring paradigm. The Busan partnership is based on critical principles aimed at helping in the transformation of development cooperation relationships among the partners and donors.

There are critical aspects associated with the progress witnessed in the country’s strong development co-operation. They include: encouraging local ownership, aligning the country’s development programs to the set strategy, harmonizing practices that lower transaction costs, creating a results framework, and avoidance of the separated efforts. The benefits of these principles are evident in the Rwandan development roadmap which attributed to good public finance governance. The fact that the deed emphasizes on local ownership of projects ensures that there are goodwill and access to a relatively larger pool of knowledge and expertise concerning public participation efforts. Another important aspect is the capacity to mobilize a diverse source of funding for projects as a result of the assured accountability as well as the broad and dynamic partnerships embodied by the agreement. The other instance is the nation’s ability to achieve their short-term development goals and record significant progress for the long-term visions since they attained the commitment to align the plans to the country’s development strategy. Synchronization of commercial practices has been crucial for the growth requirements of the developing nations such as the case study because it eased the cooperation between the partners and the involved donors. The issue of evaluating results is essential in ensuring that proper feedback regarding the development projects is provided to the effect of the necessary accountability.

The development partners need to identify system weaknesses in the dependent countries through assessment of their public financial management practices. The diagnostics target critical areas such as the budget preparation and execution process, accounting and finance reporting, external oversight powers, and other cross-cutting issues. The focus is to identify the faults and uncertainties evident in the systems to propose therapeutic interventions as well as facilitate the decision making process and monitoring of development progress. The partners are interested in evaluating the country’s resource utilization systems to establish the credibility of the proposed budget, minimizing technical complexities, and avoiding reliance on politically centered measures. The further evaluate the capacity of the program to improve service delivery as well as ensure that the set goals are realistic and relevant. These concepts are analyzed based on the existing diagnostic tools like the World Bank’s CPAR, and CFAA as well as the institutional and governance reviews. The key PFM reform areas that depict the donor requirements that aid as conditions for support by development partners include the introduction of IPSAS and the performance-based budgeting.

IPSAS refer to a set of accounting standards prescribed by the international IPSAS board to aid the public sector in the process of preparing financial statements like the UNSAS. The primary difference between the two measures is the basis of accounting given the former advocates for total accruals while the later is based on the modified ones which are almost like cash accounting. The main reason for the shift to full accruals accounting was to achieve the implementation of the proposed management practice that is results oriented. It is a pillar for the institutions formed to identify responsibility for performance and enforce accountability at both the political and managerial level. The performance-based budgeting approach has been introduced chiefly since it is results-based hence perceived to be the primary means of improving reallocation of expenditure especially towards social context which contribute to poverty reduction as evident in Rwanda. The proposal creates links between the program performance and the budget allocation since the level of funding would be based on the detailed information regarding the anticipated results and rationale of the policies guiding budget spending termed by OECD as budgetary governance. It has proved to be a reliable mechanism of ensuring that developing countries improve service delivery as well as realize value for public money in expenditure allocation and reallocation.

The diagnostics of system weakness is based on the donor requirements set out in the relevant development agreements. It is meant to identify the capacity of a government to manage public funds well to the expectations of the public as well as the governing accounting principles. The other factor that has to be considered is the financial status of the country according to the value of its assets against the current liabilities as well as the returns reflected in the program results. It is also of great concern to the development partners that the country’s systems work under robust legal frameworks that facilitate transparency as well as adherence to the rule of engagement in the budgetary process. The current PFM reforms have brought on board critical strategies like the IPSAS standards and the PBB approach. The introduction of IPSAS was informed by the need for independent and proper quality accounting of the accruals to attain improvements in the transparency, accountability, governance and financial management. On the other hand, Performance-based Budgeting focuses on budget reforms as the key agenda with the proposals based on the need to utilize PM in the correction of state finances to reveal points of limited public funding.

Implementation of these reforms as an approach to streamlining the state financial management has an impact on the development and economies of the involved nations like for the case study. For instance, incorporation of the IPSAS qualities in the control of public finance would change how the accounting and financial reporting are undertaken. Since the country previously depended on the modified accruals accounting, there would be a shift to the full accrual accounting which has been suggested to be healthier in achieving efficacy. IPSAS would, therefore, result in informed accounting as well as attain a state of financial well-being which is attractive to donors and investors from countries that subscribe to international economic and accounting standards like the World Bank, IMF, OCED, and the EU. The management of public finance would also change its focus from the project process to the results to ascertain accomplishment according to the target outcome. Execution of the PBB technique in Rwanda would mean that the government would assess a program from the budget preparation process to the performance results and link the allocations and reallocations to the achievement of targets. In this case, there would be a reduction of delayed completion of projects as well as the elimination of incompetence since the budget system is regarded as incomplete without evaluated financial outcomes.