Empower Reallocating, Tracking, Auditing through Good Public Finance Practices
The good news: many governments already use program budgeting in Financial Management Information Systems (FMIS).
- Program structures in Charts of Accounts tie government objectives to projects across government Ministries, Departments, and Agencies
- Performance structures (outputs & outcomes) in Charts of Goals integrate with COA structure track results
- Valid Code Combinations in COA structures ensures that program and project spending ties to proper MDAs
How can governments leverage Program Budgeting for pandemic responses?
- Create a COVID-19 program and sub-programs (or projects) in the COA
- Link to fund type and fund source to track spending based on aid and on-budget sources
- Develop Valid Code Combinations tying programs to MDAs
- Reallocate funds based on programs rather than by MDAs for an equitable response
- Track commitments, obligations, goods received, and payments to track spending progress
Example: a Covid-19 program or subprogram shared by 3 ministries
The good news for public finance is the program budgeting supports fiscal shock planning and response.
- Planning through program scenarios in budget formulation
- Response by spending reallocation, controls and tracking
- Compliance and performance audit during and after spending adjustments
What if your government does not use program budgeting?
- That’s complicated….
Reality check: adding segments to the COA easily requires a Multiple Year COA.
- Supported in the FreeBalance Accountability Suite design because governments frequently update the COA and budget classifications a part of PFM reform
- Yet many ERP and custom-developed systems require significant effort to make changes to the COA
Challenges for governments not using program budgeting, and without a multiple year COA could be temporarily overcome through:
- Adapting workflow rules if the FMIS has low-code/no-code business process management (like the FreeBalance Accountability Suite)
- Add identical projects within the COA for each MDA because all FMIS systems should enable adding new account numbers without changing COA structures (but will be difficult to maintain post-crisis because of the need to replicate the same numbering scheme)
- Reallocate budgets using the new account numbers (although will have the problem of assigning program percentages across MDAs, so will have an added burden on budget transfers and virements)
- Develop new reports specifically for the new account numbers to track spending and support approvals
- Publish spending on the web (although it may be difficult to track the entire commitment cycle, or to explain the outputs and outcomes achieved)
Takeaway: program budgeting is a powerful Public Financial Management (PFM) tool to develop contingency plans, manage emergency spending, and provide fiscal transparency
How can FreeBalance help?
- FreeBalance provides remote diagnostics for any government to address this spending challenge