1. Somaliland PFM Education and Training Programme
Somaliland PFM Capacity Strengthening
9/7/2018
Somaliland PFM Education and Training Programme
9/7/2018
Prepared by Prof.Abdinasir Ali
Prepared by Prof.Abdinasir Ali

2. Prepared by Prof.Abdinasir Ali
TABLE OF CONTENTS
Goals of PFM
Key elements of the PFM Capacity Strengthening Project
Purpose of Introductory Course
Course Structure
Workbook 1 : Introduction to PFM
The Public Sector
Financial Management
The PFM Cycle
Public sector reforms and impact on PFM
Benefits of good PFM
PFM in Somaliland
FMIS: Financial Management Information Systems
Financial management in the private sector
9/7/2018
Prepared by Prof.Abdinasir Ali

3. Goals of PFM Education and Training Programme In Somaliland
Somaliland PFM Capacity Strengthening
9/7/2018
Goals of PFM Education and Training Programme In Somaliland
To create a professional of government staff with PFM and procurement skills
To support governance reforms
Improve internal and external confidence in GoSL financial management
Enhanced fiscal management
Better use of resources
To create a sustainable capacity for ongoing PFM education and training
9/7/2018
Prepared by Prof.Abdinasir Ali
Prepared by Prof.Abdinasir Ali

4. The Somaliland PFM Capacity Strengthening Project
9/7/2018
The Somaliland PFM Capacity Strengthening Project
9/7/2018
Prepared by Prof.Abdinasir Ali
Prepared by Prof.Abdinasir Ali

5. 2. Key elements of the PFM Capacity Strengthening Project:
Somaliland PFM Capacity Strengthening
9/7/2018
2. Key elements of the PFM Capacity Strengthening Project:
Collaboration between the GoSL, UoH, and international institutions;
Integrating the internationally-recognised CIPFA qualifications with tutors
A web-based open distance learning approach;
Strengthening PFM capacity of institutions, trainers and participants.
9/7/2018
Prepared by Prof.Abdinasir Ali
Prepared by Prof.Abdinasir Ali

6. 3. Purpose of Introductory course
Somaliland PFM Capacity Strengthening
9/7/2018
3. Purpose of Introductory course
This introductory course assumes no prior knowledge of accounting or PFM.
If you have some prior knowledge of these areas then the course will be easier and study time shorter than that indicated below.
This course forms part of the Foundation Level PFM Course.
9/7/2018
Prepared by Prof.Abdinasir Ali
Prepared by Prof.Abdinasir Ali

7. Somaliland PFM Capacity Strengthening
9/7/2018
4. Course Structure No
Title
Study time (hours)
Self-test time (hrs)
Total time (hrs) 1
Introduction to public financial management 5 2 7
Concept of double entry accounting 3
Recording, summarising and posting transactions - ledger accounts 4
Moving from private sector to public sector accounting
Government budgeting and the linkage to accounting
TOTAL 30 12 42
9/7/2018
Prepared by Prof.Abdinasir Ali
Prepared by Prof.Abdinasir Ali

8. 5. WORKBOOK 1 : Introduction to PFM
Somaliland PFM Capacity Strengthening
9/7/2018
5. WORKBOOK 1 : Introduction to PFM
Workbook 1 is an introduction to PFM At the end of this Workbook students should:
Understand the structure of the public sector and its components;
Understand the PFM cycle;
Know the benefits of strong PFM and its application in Somaliland, including computerised systems;
9/7/2018
Prepared by Prof.Abdinasir Ali
Prepared by Prof.Abdinasir Ali

9. Somaliland PFM Capacity Strengthening
6. The Public Sector
9/7/2018
9/7/2018
Prepared by Prof.Abdinasir Ali
Prepared by Prof.Abdinasir Ali

10. Prepared by Prof.Abdinasir Ali
6. The Public Sector
General government sector (GGS) — comprises all government units and non-profit institutions controlled and mainly financed by government
Public financial corporations sector — comprises government-controlled corporations and quasi-corporations mainly engaged in financial intermediation or provision of auxiliary financial services (e.g. Reserve Bank of England and England Reinsurance Pool Corporation)
Public non-financial corporations sector — comprises government-controlled corporations and quasi-corporations mainly engaged in the production of market goods and/or non-financial services (e.g. England Postal Corporation, Air services England ).
9/7/2018
Prepared by Prof.Abdinasir Ali

11. Somaliland PFM Capacity Strengthening
9/7/2018
7. Financial Management
The UN and (System of National Accounts) SNA provides the official definition of financial management of institutional units
“an economic entity that is capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and in transactions with other entities".
In this Workbook 1, the term “entity” will be used to describe institutional units as defined above.
9/7/2018
Prepared by Prof.Abdinasir Ali
Prepared by Prof.Abdinasir Ali

12. Prepared by Prof.Abdinasir Ali
8. The PFM cycle
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Prepared by Prof.Abdinasir Ali

13. Planning and budgeting
Planning and budget includes fiscal resource forecasting, national, regional and sector planning, medium term and annual budgets.
The starting point of the budget process should be the fiscal forecast of available resources - revenues (tax and other), borrowings and grants.
Forecasting fiscal resources can never be exact, but reliable forecasts facilitate better decisions on resource allocation. Simple forecasting tools can often significantly improve the reliability of resource forecasts.
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Prepared by Prof.Abdinasir Ali

14. Planning and budgeting
The budget is a legal document and the end of a process that typically involves:
Sector plans and strategies;
Fiscal resource forecasts;
Initial budget submissions by spending Ministries;
A negotiation process with the budget authority (Ministry of Finance);
A final budget submitted to the legislature;
Enactment as the annual budget.
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Prepared by Prof.Abdinasir Ali

15. Prepared by Prof.Abdinasir Ali
Budget execution
Budget execution embraces the whole process from budget approval through to collection of resources and expenditure of money. The elements of budget execution are considered below.
Revenue management and collection
Fund release
Sub-systems such as payroll and asset management
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Prepared by Prof.Abdinasir Ali

16. Accounting and reporting
Accounting will be integrated with the process for the release of funds. This involves the recording of transactions within an accounting system. The various sub-components are listed below.
Recording of transactions within ( computer based system)
Reporting should flow from the accounting system
Internal management reporting, e.g. expenditures
External reporting - annual financial statements,
External reporting is an important element of transparency and accountability.
9/7/2018
Prepared by Prof.Abdinasir Ali

17. External scrutiny and audit
There are a number of elements external scrutiny and audit.
Transparency and accountability ( from Government)
Internal audit and control (Public Internal Financial Control )
External audit by the Supreme Audit Institution (The Auditor General : responsible for the independent audit of all government activities.)
9/7/2018
Prepared by Prof.Abdinasir Ali

18. 9. Public sector Reforms and Impact on PFM
Public sector financial management has changed significantly over the last 25 years. New Public Management reforms typically include:
Privatisation and outsourcing;
Deregulation; (Reduction or elimination of government power particular industry.)
Commoditisation of public services;
Creation of purchaser/provider splits or creation of agencies
It is important that PFM meets the needs of users. How governments make decisions and how they are held accountable for those decisions will impact on the design and use of accounting and financial management systems. As systems of public management change, then the systems of PFM should also change
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Prepared by Prof.Abdinasir Ali

19. Prepared by Prof.Abdinasir Ali
10. Benefits of good PFM
The benefits of high quality government financial management are substantial for example we assume one area and Its benefits . Such as ;
Enhanced transparency and accountability- Benefits :
Recording, accounting for, analyzing and reporting on the financial transactions, assets and liabilities of government. Published financial statements and other reports in compliance with international reporting standards.
Effective and efficient management of financing : Benefits :Managing borrowing to ensure minimal cost of funding and that loan conditions are met.
9/7/2018
Prepared by Prof.Abdinasir Ali

20. 11. PFM in Somaliland - Overview
In this Subtopic , under Workbook 1 did not mention in details PFM in Somaliland , Therefore it has overviewed and skipped the rest of PFM in Somaliland .
But it has Concluded the following statements Which describes “ The PFM process in Somaliland follows the financial management cycle as described above ”
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Prepared by Prof.Abdinasir Ali

21. 12. FMIS Financial Management Information Systems
The computerisation of budget and accounting has been a transformational tool in the development of PFM.
FMIS is likely to include a number of modules, which may be integrated or stand-alone, such as:
Budget preparation systems;
Accounting systems;
Payroll systems;
Revenue management systems;
Debt management systems.
9/7/2018
Prepared by Prof.Abdinasir Ali

22. FMIS Financial Management Information Systems
The introduction of FMIS has enabled more rapid data entry, analysis and reporting with fewer skilled staff.
Nevertheless, the benefits of computerisation are so substantial that all countries have either implemented, or are in the process of implementing, computerised systems for all of PFM.
The implementation of an FMIS does not change any of the principles of PFM. Such systems simply enable more effective PFM to be implemented with relatively limited resources.
9/7/2018
Prepared by Prof.Abdinasir Ali

23. 13.Financial management in the private sector
Financial management applies to both the private and public sector. Fundamental to financial management is an understanding of accounting.
Many accounting concepts were developed first in the private sector, and then applied to the public sector.
For this reason this introductory course commences with a study of the basic concepts of private sector accounting, before considering how these concepts are applied in the public sector.
9/7/2018
Prepared by Prof.Abdinasir Ali

24. 13.Financial management in the private sector
In a private sector business the owners invest capital into a business in order to make a profit.
Accounting has developed to manage businesses and to measure profit.
Private sector accounting developed to answer four key questions:
How much money can the business pay to its owners?
How much tax should the business pay?
Is the business solvent, i.e. does it have sufficient money to continue?
Is the business being well managed?
9/7/2018
Prepared by Prof.Abdinasir Ali