Governments are encouraged to adopt the latest techniques and standards by international and regional bodies, such as the World Bank, the International Monetary Fund, OECD and the European Commission, and by organisations such as CIPFA.
As a result, techniques like risk management, accrual accounting, internal control, performance budgeting, programme budgeting and others have been introduced – or at least attempted – in many countries.
However, will they result in sustainable and worthwhile improvements to the quality of public expenditure, to the benefit of the population? And how will this be assessed?
Quality control
Central to success is the quality of management. There is little point in investing in new substantive technical financial developments if the managerial capacity to implement and use them does not exist or is weak. Similarly, if public administrative arrangements are weak – as evidenced, for example, by a high level of corruption or an inability to control public expenditure effectively – then seeking to introduce advanced techniques is inappropriate.
However, little attention appears to be paid to appropriateness or managerial capacity by the advocates of technical reform. And it is rare for questions to be asked about managerial issues. Indeed, why should they be when the focus is purely on technical issues? Yet technical developments should not be considered in isolation from management questions.
Management organisation and capability, which includes delegation and accountability, are central to effective public financial management, internal control, risk management, programme budgeting and so on.
Reform success is also usually measured in the wrong way. Performance measures usually focus on the quality and observance of technical requirements. At best, success is judged by the existence (or absence) of legal and administrative arrangements associated with the reform, rather than by the impact of the reform on the quality of public expenditure.
Lost in translation
Another problem is that reform requirements are usually prepared and published in English, then translated into other languages. Translation does not usually reflect the unwritten assumptions often implicit in the technical requirements. For example, the international standards of internal control do not specifically refer to the managerial implications of the application of those standards, but effective application depends entirely upon the quality of the management.
Governments generally are concerned about the quality of public expenditure – ie, value for money – rather than technical questions. That’s where the votes are. Value for money is achieved through development of effective policy and then effective and efficient delivery of that policy.
Delivery depends heavily upon quality of management. Technical financial reforms should not be equated, on their own, with improving the quality of public expenditure.
