Public Financial Management (PFM), supervised by government, tries to bridge the aspirations of a society with that of the resources available to an economy. These are basically managed through the operations and fiscal policy of the government.
The basic objectives of PFM are :
1. Setting of goals, viability assessment, allocation of resources and fund generation for the proposed project
2. Modernization of the financial management system of the public sector entities
3. Increasing the accountability of the managers of public sectors
4. Ensuring timely disposal of quality projects
5. Elimination of corruption
Broadly, Public Financial Management includes :
Financial Planning
Formulation of budget
Implementation of budget
Reporting about the financial matters
Evaluation of the internal works
Accounting
Making and receiving of payments from public bodies
Public Financial Management (PFM) generally deals with :
Accounting Rules
Legal Compliance
Managerial Control
Public Financial Management has particular importance for the financial managers who manage the public bodies. This helps them to effectively and efficiently run the organization without any hiccups.
Certain pecuniary and non-pecuniary costs are associated with Public Financial Management are
Ordering, holding and outage costs associated with inventory
Costs related with managing of cash, debt, pensions, investments, purchase, etc.
Managing of Public or Government finance includes :
Procurement Control
Management Control
A normal occurrence in Public Finance Management or in government projects is the price-adjustment in the post contractual phase. This inefficiency arises due to the commitment failure by the concerned organization.
One of the most significant part of PFM is Expenditure management which is done in the following way:
i.Objective, resource and policy determination
ii.Allocation of the required resources
iii.Assessment of viability of project
After the formulation of objectives, resource allocation and assessment of viability of project the budgetary bureau makes all the arrangements for fund allocation to the specified project to the concerned spending agencies.
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