Free Essay: Public Financial Management
Q1. Objectives of public –sector management of cash in addition to the basic cash management strategies
The failure or success of an institution is largely pre-determined by how it manages its cash and finances. This makes proper management of cash necessary for both public and private institutions as it enhances protection, regeneration and liquidity of their finances. The fact that public finances have largely been embezzled and squandered by corrupt government officials and employees cannot be ignored. This has led to poor and inadequate service delivery in the public sector.
My objectives as the City of Prosperity finance director shall be to change this aspect of public service by focusing on regular and systematic preparation of accurate financial records as well as effectively using public funds to meet pre-set budgets. I shall also ensure that all funds are accounted for in a timely manner and public funds from my office are repatriated to the government treasury as soon as they are collected or generated. To achieve these important objectives, it would be imperative to put in place effective control systems so as to protect the office and public funds at large. Some of the measures that I shall undertake will include identifying and hiring the right personnel who have unquestionable integrity and are highly educated and experienced to oversee product and service delivery within the institution. Measures to enhance effective control systems shall also entail identifying different types of securities that the institution should purchase or discard to enlarge its portfolio.
In order to raise adequate revenues for the institution, assessment of diverse investment opportunities shall be carried out and discounted returns shall also be calculated so as to choose the most profitable investments. Furthermore, it is necessary to maintain an optimal cash balance for the institution to ensure ease of access to liquidity which can help to meet daily needs and sustain the day to day activities of the institution without any interruptions. A sound investment investment policy will be necessary for ensuring that the institution invests in prudent stocks that can further enhance its portfolio. .
In line with the common cash management system, idle funds shall duly be invested in different viable securities and this will help to avoid losses for the institution and also reduce tying up of working capital that can be channeled to other areas and help generate income for the institution. Moreover, the institution will put in place effective means of cash management by giving a team of experienced and trusted employees the responsibility of speeding up the process of collecting funds on behalf of the institution and ensuring that all collected funds are channeled to other areas that can help the institution grow. Authorized individuals shall also be in charge of protecting all public funds from embezzlement and other forms of impunity perpetrated by senior officials.
The overall costs linked to collection of revenues shall also be reduced. This will be done by reducing the bureaucracies that are usually experienced during processing records and also increasing the system and time frames of mailing the collections. This will be done in such a way that the authenticity of the revenue collection process will not be compromised. Ultimately improvements will also be made to ensure that the time used in clearing collections at the taxpayer’s bank is reduced. Prompt billing, hastened remittance processes and proper accounting processes will also be used to accelerate the process of collecting funds. The collected funds will be disbursed through a careful process where the payroll system will be thoroughly analyzed and the funds disbursed to each developmental project closely monitored to avoid any misuse.
I would employ the services of highly qualified and experienced CFA professionals who are experts in handling revenues in large institutions to effectively enforce cash management. Additionally, i would work closely with experienced financial engineers who can help to make clear analysis of financial markets and facilitate wise investments in the right financial securities. These experts would ease the process of planning strategically while taking into consideration the market trends and anticipated returns before making any investment especially those that are risky yet have high returns. .
Cash management techniques such as automation of all departments will also be employed to enhance service delivery especially in terms of record processing. Signatory positions to the bank will also be reserved to a few authorized personnel to prevent any losses and embezzlement. In addition, continuous engagement with the public would help in monitoring and reviewing service delivery by seeking the public opinion. This would enhance transparency and integrity hence boosting public confidence in the institution as well as ensuring its involvement in the management of its resources.
Q2. (A) Importance of ethics relating to public financial management in the local government
Ethics plays a highly important role in making sure that all the personnel conduct themselves professionally within their respective positions. In public financial management, ethics acts as a guide and serves as a regulator of the personnel affairs. Ethics is a tool used to enforce integrity and accountability for people in office and with the rise in public awareness on this matter, there has been more pressure from the public for government officials to deliver better services. To this effect, ethics has been seen to curb system corruption.
Local governments have many a time fallen short of delivering quality services due to deviation from well known ethical standards by many of their employees including the top officials. Ethics instills a culture of good governance in public offices and when rightly followed, can easily be translated into sustainable development because it ensures that public funds are put into good use such as construction of relevant infrastructure. On the other hand malpractices such as embezzlement of funds, corruption, poor public service delivery and other dishonest activities can arise as a result of lack of upholding of ethical standards. Such activities cause more problems and higher taxes for the poorer in society. Essentially, ethical standards help to protect the interests of the public especially with regard to how collected local government revenues are used and this to some extent ensures that the public expectation is met.
(B). A comprehensive ethics strategy for the chief finance officer as well as all employees in the finance department of the local government
- Each member of the finance department will be expected to act in the most honest manner and uphold high integrity at all times and making the deliberate choice to avoid any matters that would create conflicts of interest professionally and personally.
- Finance department members shall always provide timely, fair and accurate reports that divulge detailed information regarding their activities in an objective yet comprehensive manner that enhances fair disclosure. These files and reports will be submitted to the government agencies and the public on a regular basis.
- All the members shall be required to comply with all local and state agencies as well as other regulatory bodies and federal governments.
- Each member is expected to act responsibly, exercising due diligence and care without compromising or jeopardizing their independent positions or giving misrepresented statements.
- All the members of the finance department will be required to respect and uphold confidentiality of every piece of information availed to them during the due course of their undertakings unless permitted or legally obliged to disclose any such information. Any use of sensitive information for personal gain will be acting against the ethical standards of the local government
- Every member will be required to protect the organization’s assets and property
- The finance department members will be expected to share knowledge concerning the shareholders and maintain relevant skills for attending to the needs of these shareholder.
- Further, every employee within the finance department will be required to adhere to the ethical codes of conduct in a responsible manner among other peers both within the working environment and the wider society.
- Insider trading is strongly prohibited in the organization
- Any violations of the set regulations, ethical standards and codes of conduct or any other local government provisions should be immediately reported to the chairperson in charge of either the disclosure committee or auditing committee.
Relevant disciplinary actions and measures shall be undertaken on any employee who violates any of the provisions mentioned above. Such violations may attract personal penalties including terminations of service. It must also be noted that victimization of any employee who report any violation in good faith shall be viewed as contrary to natural justice as well as existing policies and repugnant.
Q3. Internal control, purchasing and audit contribution to the process of financial management
Every institution with assets may require to protect such property, financial and personal information by instituting strong internal control systems. Internal control systems help to carry out vital activities and uphold fundamental standards that are necessary for internal control such as assessment of risk, control of environment, communication as well as information. For the organization to enhance internal control activities it will be necessary to employ qualified personnel to execute these duties. As a matter of fact, the organization will be required to adopt separation of powers where responsibilities are strictly assigned to specific positions and authorized personnel as per the organizational chart. This will enhance order especially in sensitive dockets such as internal control that require securing of local government resources as well as maintenance of tamper proof records. Strong internal control will inevitably help to enhance efficiency in compliance with relevant regulations and execution of certain operations hence ensuring accuracy of financial statements and records. .
Auditing is important for safeguarding public funds are safeguarded and boosting investor confidence as it sends the message that all investments are safe. Through this process, the true and actual state of affairs of the local government can be brought to the fore and inherent risks as well as fraudulent activities within the institution exposed. In the recent past hi-tech auditing has been used in arresting violations such as insider trading and cyber crimes.
Purchasing and supplies is pertinent to effective public finance management because it helps in maintaining low costs as far as stock is concerned and also ensuring that the optimal quantity and quality of products and services are procured. When the local government has efficient flow of resources, it is able to create and maintain cordial relations with suppliers and this can help to enhance the vision of such an entity. The e-procurement platform enables the local government to orders for goods whenever necessary and the suppliers utilize effective supply chain strategies to make sure that they meet such demands and satisfy the utility needs of the local governments on time.
For effective and tight-proof internal control systems to be implemented, it is crucial for the senior personnel to maintain cordial relations with all relevant stakeholders within the local government. Installing CCTV cameras within the local government premises can improve internal security and protection of both institution employees and assets and go a long way in averting pilferage. Additionally, employee involvement in decision making should be embedded within the local government polices as this can help to effectively introduce changes within the institution. For effective employee participation in various activities, rewards and recognition must be offered.
By establishing an audit committee, the local government will improve transparency and boost both the public and investor confidence and trust. The institution will also be able to avert conflicts of interest by hiring auditors who have no affiliations whatsoever to the local government or its employees and stakeholders. Authorization of documents by different individuals in various processes will also help to avert cases of fraud.
Creating a strong supply chain system will help to lower the cost of operational expenses and also enhance efficiency within the local government. By using few intermediaries the local government will be able to streamline the process of procurement and reduce the costs involved. The local government must also make the procurement system highly competitive so as to get the best and most reliable bidders who can supply quality goods and services at lowered costs. The procurement system must also undergo constant evaluation to pinpoint areas that need immediate adjustments so as to prevent any future losses.