French Execution budget system

From voted budget to executed budgetFrom voted budget to executed budget

Pierre MessaliPierre Messali

04/0304/03

Some budget principlesFive major rules with…. major exceptions

Unity:Unity: all budget appropriations must be gathered in a all budget appropriations must be gathered in a single budget document. No extra-budget funds single budget document. No extra-budget funds ((but in fact, the budget law is made of many differents types of budget but in fact, the budget law is made of many differents types of budget accounts, so unity outside, but diversity inside)accounts, so unity outside, but diversity inside)

Universality: Universality: receipts must not be contracted with receipts must not be contracted with expenditures expenditures (no exception in France but used in francophone (no exception in France but used in francophone countries)countries)

Non-assignment of receipts: Non-assignment of receipts: receipts must not be receipts must not be assigned to some expenditures (assigned to some expenditures (butbut in fact,in fact, many many processes alllow this affectation such as « fonds de concours » and processes alllow this affectation such as « fonds de concours » and « Budgets annexes » or « comptes spéciaux du trésor »)« Budgets annexes » or « comptes spéciaux du trésor »)

Annuality: Annuality: appropriations are availa-ble during only appropriations are availa-ble during only one fiscal year one fiscal year (but in fact unspent funds can be carried over un-(but in fact unspent funds can be carried over un-der certain conditions and capital expenditu-res are voted in a multi-der certain conditions and capital expenditu-res are voted in a multi-year perspective)year perspective)

Specialization: Specialization: appropriations must be specialized by appropriations must be specialized by nature, destina-tion or service (nature, destina-tion or service (but in fact some chapters but in fact some chapters are non-specialized and very often chapters are globalized) are non-specialized and very often chapters are globalized)

Annuality: Annuality: appropriations are available during appropriations are available during only one fiscal year only one fiscal year (but in fact unspent funds can be (but in fact unspent funds can be carried over under certain conditions and, above all, capital carried over under certain conditions and, above all, capital expenditures are voted in a multi-year perspective , AP and CP)expenditures are voted in a multi-year perspective , AP and CP)

Specialization: Specialization: appropriations must be specia-appropriations must be specia-lized by nature, destination or service (lized by nature, destination or service (but in fact but in fact some chapters are non-specialized and more frequently chapters some chapters are non-specialized and more frequently chapters are globalized) are globalized)

Once the budget is voted, what next ?

Appropriations must be made available for Appropriations must be made available for spending.spending.It seems very simple. Actually, it is far from It seems very simple. Actually, it is far from simple…simple…

Making appropriations availables at spending ministries

First, appropriations must be notified First, appropriations must be notified officially to spending ministries by Ministry of officially to spending ministries by Ministry of Finances Finances (replace the draft-budget bill by the budget bill, decree for (replace the draft-budget bill by the budget bill, decree for appropriations, possible source of conflicts) appropriations, possible source of conflicts)

Next, spending ministries must make appro-Next, spending ministries must make appro-priations avalaible to the right unit, within their priations avalaible to the right unit, within their ministry. This may be difficult.ministry. This may be difficult.

((find the rigth ordonnateurfind the rigth ordonnateur):):At central level: normally easyAt central level: normally easyAt local level: could be uneasyAt local level: could be uneasy

Why so many budgets are so long to start ? Are some people « sleeping » in spending ministries Are some people « sleeping » in spending ministries for being so long ?for being so long ?

Be careful to fiscal year (june to july) : August is full Be careful to fiscal year (june to july) : August is full holiday, September is return of holiday, so nothing happens holiday, September is return of holiday, so nothing happens before October (it is not insignifiant) before October (it is not insignifiant) Ministries are fully charged for ending the previous fiscal Ministries are fully charged for ending the previous fiscal year (extended budget period) year (extended budget period) Expenditures have simply not been programmed before Expenditures have simply not been programmed before (we’ve got appropriations, but we don’t know what to do; (we’ve got appropriations, but we don’t know what to do;

this is not insignifiant, notably for HPIC expenditures)this is not insignifiant, notably for HPIC expenditures) Because many appropriations are not really affected when Because many appropriations are not really affected when

budget is formulated and passed (we’ll see later)budget is formulated and passed (we’ll see later)

Are the appropriations stamped on the Are the appropriations stamped on the classification classification (central or local expenditure) ? (central or local expenditure) ?

Who is competent at local level for Who is competent at local level for managing the funds (managing the funds (local or central ordonnateur)local or central ordonnateur)??

Are appropriations uneasy to distribute at local Are appropriations uneasy to distribute at local level? level?

What is the local level , knowing that we treat of State What is the local level , knowing that we treat of State budget funds?budget funds?Why this matter is problematic in francophone system? Why this matter is problematic in francophone system? What is the role of the ministry in distributing appro-What is the role of the ministry in distributing appro-priations to local representants? priations to local representants?

What is this thing called « déconcentration » ?

State budget gathered funds belonging to State budget gathered funds belonging to State and planned to be spent: State and planned to be spent:

At central levelAt central levelAt local level: At local level: ««déconcentrédéconcentré»»

No confusion with subnational funds spent at No confusion with subnational funds spent at local level : local level : «décentralis黫décentralisé» (no State funds) (no State funds)

State appropriations are spentState appropriations are spent at central level by an « at central level by an « ordonnateurordonnateur principal »principal » at deconcentrated level by an « at deconcentrated level by an « ordonnateur ordonnateur secondaire »secondaire », but not always (be careful) , but not always (be careful)

Central ordonnateurs « dominate » numerous Central ordonnateurs « dominate » numerous local ordonnateurslocal ordonnateurs

by sending them appropriations they decide themselves by sending them appropriations they decide themselves (« (« délégations de créditsdélégations de crédits »)  ») by controlling, more or less, what they are doing and by controlling, more or less, what they are doing and what they are spending what they are spending (« délégations de compétences »)(« délégations de compétences »)

Difficulties between primary and secondary Difficulties between primary and secondary ordonnateurs are not surprising ordonnateurs are not surprising

a primary ordonnateur in a ministry has numerous secondary a primary ordonnateur in a ministry has numerous secondary ordonnateurs in regions or provinces requesting for more funds: ordonnateurs in regions or provinces requesting for more funds: priritozation is uneasy and time-consumingpriritozation is uneasy and time-consuming choosing between them without any global view or perspective of choosing between them without any global view or perspective of action of the ministry for the year to come is difficultaction of the ministry for the year to come is difficult choosing between them witout any view of the profile of previous choosing between them witout any view of the profile of previous year, if the reporting is not of good quality, is difficultyear, if the reporting is not of good quality, is difficultchoosing without any rules indicating exactly what is the competency choosing without any rules indicating exactly what is the competency of the central level and what is the competency of the local level is of the central level and what is the competency of the local level is difficult, indeed difficult, indeed (who will practically mana-ge operations financed by (who will practically mana-ge operations financed by appropriations ?) appropriations ?) choosing when the classification of the budget does not mention the choosing when the classification of the budget does not mention the level of use of appropriations is difficult level of use of appropriations is difficult (is this opération of central or (is this opération of central or deconcentrated level ?) deconcentrated level ?)

Can we solve this headache of «  déconcentration »?

Two main examples and one counter-example

Example of France Example of France (very advanced system of PFM) (very advanced system of PFM)

defining by decree rules of competencies for defining by decree rules of competencies for investmentsinvestments between central and local levelsbetween central and local levels (who makes what?)(who makes what?) registering within the registering within the currentcurrent budget classification budget classification (chapters or articles) what comes under local competency (chapters or articles) what comes under local competency and registering the appropriations at a very early stageand registering the appropriations at a very early stageregionalizing the budget in advance and let the Governor regionalizing the budget in advance and let the Governor make the allocations at local level make the allocations at local level (choose the rigth ordonnateur) (choose the rigth ordonnateur)

allocations of appropriations are made under the monthallocations of appropriations are made under the month

Example of Madagascar Example of Madagascar (not very advanced system)(not very advanced system)

No rules of competencies No rules of competencies (no decrees)(no decrees) Building a budget classification very accurate and detailedBuilding a budget classification very accurate and detailed Inserting in the budget classification the code of the local Inserting in the budget classification the code of the local ordonnateur for each appropriation: ordonnateur for each appropriation: very simple, very ingeniousvery simple, very ingenious

the result is that allocation of appropriations lasts 15 days the result is that allocation of appropriations lasts 15 days at the very beginning of the fiscal yearat the very beginning of the fiscal year Be careful: this does not mean that once the appropriation Be careful: this does not mean that once the appropriation is allocated to the rigth ordonnateur, he will implement the is allocated to the rigth ordonnateur, he will implement the budget quickly and easily. But it is no longer a problem of budget quickly and easily. But it is no longer a problem of allocation, but a problem of implementationallocation, but a problem of implementation The drawback of this classification is that the budget The drawback of this classification is that the budget takes up around 1500 pages…takes up around 1500 pages…

Counter-example of Morocco: (Counter-example of Morocco: (advanced system)advanced system)

No rules of competencies No rules of competencies (no decree)(no decree) Very global classification, notably for current budgetVery global classification, notably for current budget No mention of deconcentrated destination on appro-No mention of deconcentrated destination on appro-priationspriations No mention of the ordonnateurNo mention of the ordonnateur Results: « délégations de crédits » are made very often Results: « délégations de crédits » are made very often months latermonths later the start of fiscal year, depending the ministry: the start of fiscal year, depending the ministry:

things go rather well when there is a global action planthings go rather well when there is a global action plan

or a road-map guiding the action of the ministryor a road-map guiding the action of the ministry things are worse when there is no such documents things are worse when there is no such documents (everything remains to do) (everything remains to do)

What have we learned from the very beginning of the process of

budget execution?lack of lack of reportingreporting is a real factor of that makes allocation is a real factor of that makes allocation more difficult: lack of visibility behindmore difficult: lack of visibility behindlack of programminglack of programming is a key factor of future difficulties for is a key factor of future difficulties for allocating appropriations once voted: lack of visibility aheadallocating appropriations once voted: lack of visibility ahead the typically francophone problem of the typically francophone problem of déconcentrationdéconcentration is a is a possible, but not inevitable, factor of complexity (we know the possible, but not inevitable, factor of complexity (we know the technical solutions). Complexity of déconcentration is not technical solutions). Complexity of déconcentration is not linked to the level of the PFM system (see Madagascar) linked to the level of the PFM system (see Madagascar)

So, now voted approriations are available in spending ministries and in the hands of the rigth ordonnateurs.

What next ?

Sorry, but voted appropriations do not represent all available means in the hands of the ordonnateurs.

The volume of total available means is the The volume of total available means is the only one which allows to assess the profile of only one which allows to assess the profile of the executed budget regarding the initial budgetthe executed budget regarding the initial budget This volume can be largely monitored by This volume can be largely monitored by ministry of financesministry of finances

Voted appropriations.What’s more, what’s less

(* flags actions that are monitorable or adjustable easily by government)

More (+) More (+) Unspent fundsUnspent funds of previous of previous

year carried over *year carried over *

Non-legislative Non-legislative supplementary funds supplementary funds (emergency funds(emergency funds, , estimative estimative funds, « fonds de concours », funds, « fonds de concours », various tranfers and virements various tranfers and virements between chapters *) between chapters *)

Legislative supplements Legislative supplements (additive fiscal law *) (additive fiscal law *)

Less (-)Less (-) Cancelled funds Cancelled funds (non-(non-

legislative or legislative)legislative or legislative) * * Transfers & virements Transfers & virements

**

How assessing the profile of the budget execution on these basis

Measuring the Measuring the gapgap bewteen initial budget appropriations and bewteen initial budget appropriations and total available budget means ? If it is too large, there is total available budget means ? If it is too large, there is probably a problem of monitoring, yet almost all supplement probably a problem of monitoring, yet almost all supplement means are adjustable by MOF.means are adjustable by MOF. Assessing the Assessing the compliancecompliance of all adjustments with the budget of all adjustments with the budget rules ( by-law «  rules ( by-law «  loi-organique »loi-organique »). Especially, verify that ). Especially, verify that ceilings of transfers and virements are obeyed. ceilings of transfers and virements are obeyed. Assessing the degree of Assessing the degree of transparency transparency of all these adjustments of all these adjustments (normally, all acts modifying the budget must be disclosed (normally, all acts modifying the budget must be disclosed publicly) publicly) Keep in mind that theses various movements are planned to Keep in mind that theses various movements are planned to ensure a balance between indispensable ensure a balance between indispensable flexibility flexibility of budget of budget management and necessary management and necessary respectrespect of the legislative authoriza- of the legislative authoriza-tiontion

The example of the French budget total means (euros billions)

FYFY 19991999 20002000 20012001Voted appropria-Voted appropria-tionstions

264.2264.2 262.9262.9 276.2276.2

Carry over (+)Carry over (+) 11.211.2 12.812.8 14.714.7

Fonds de Fonds de concours (+)concours (+)

6.96.9 6.16.1 4.64.6

Additive budget Additive budget law (net + & -) law (net + & -)

1.21.2 1.91.9 -3.1-3.1

Estimative fundsEstimative funds

Total MeansTotal Means

1.81.8

285.3 285.3 (+8%)(+8%)

-1.2-1.2

272.5 272.5 (+3,7%)(+3,7%)

-2.1-2.1

290.3 290.3 (+5,1%)(+5,1%)

Some quick comments

total means never exceed 10% of initial appropriations; the total means never exceed 10% of initial appropriations; the average is around 5%.average is around 5%. the room of manoeuver is mainly made by additive law the room of manoeuver is mainly made by additive law (notably by (notably by cancellation of fundscancellation of funds) ) all theses mouvements are strictly compliant with constitu-all theses mouvements are strictly compliant with constitu-tionnal bylaw and largely disclosed for transparency. tionnal bylaw and largely disclosed for transparency. make no confusionmake no confusion: this figures measure the amount of total : this figures measure the amount of total available means and not the amount of the spending as it will available means and not the amount of the spending as it will be executed laterbe executed later

So now, the ministries get all their budget means. And, finally, the real spending is ready to start…

But, usually in french matters, things are going better than we feared, but worse than we hoped…

So now, the spending needs to be monitored.

The role of monitoring is to ensure that total available budget means will fit with a certain ceiling of spending in order to obey the initial budget result, also depending of the result of tax recovery.

This is the main role of the Budget Directorate. And it’s not an easy role.

Three main methods of monitoring

Cancellation of appropriations Cancellation of appropriations (France)(France)

Quotas of commitments Quotas of commitments (francophone systems)(francophone systems)

Cash-rationing Cash-rationing ( « nigthmare » systems )( « nigthmare » systems )

Cancellation of appropriationsCancellation of appropriations appropriations are first frozen with large advertisementappropriations are first frozen with large advertisement appropriations are later cancelled in an additive bill or simply by appropriations are later cancelled in an additive bill or simply by decreedecree acts of freezing and cancellation are totally transparent and disclosedacts of freezing and cancellation are totally transparent and disclosed the sooner, the better for the managementthe sooner, the better for the management It’s a very clear process and so simpleIt’s a very clear process and so simple of course, ministries complain about theses kind of policy and of course, ministries complain about theses kind of policy and Parliament too…but, above all, the result is efficient and transparent. Parliament too…but, above all, the result is efficient and transparent.

Quotas of commitmentsQuotas of commitments appropriations remain unchanged appropriations remain unchanged marge of commitment is reduced (many methods) marge of commitment is reduced (many methods) So the real spending is reducedSo the real spending is reduced no transparency (who decides what operations are reduced or no transparency (who decides what operations are reduced or cancelled ? Is the Parliament associated to this policy?) cancelled ? Is the Parliament associated to this policy?) be careful: a new budget is frequently issued in executionbe careful: a new budget is frequently issued in execution the monitoring is very difficult to managethe monitoring is very difficult to manage

Cash rationingCash rationing the spending is made as far as the cash is available (allotments) the spending is made as far as the cash is available (allotments) the one who owes the cash in his hands is the key-actor in this gamethe one who owes the cash in his hands is the key-actor in this game it means that the accountant, who knows about the cash available, it means that the accountant, who knows about the cash available, must give the ordonnateur the quota acceptable for spending must give the ordonnateur the quota acceptable for spending but such a system is not adapted to the french system, because the but such a system is not adapted to the french system, because the accountant and the ordonnateur are independant, so they are not used to accountant and the ordonnateur are independant, so they are not used to cooperatingcooperating the awfull results of such a system are: the awfull results of such a system are:

Corruption: who makes the choice of expenditures to be paid ?Corruption: who makes the choice of expenditures to be paid ?Arrears: because of a lack of coordination, expenditures are made Arrears: because of a lack of coordination, expenditures are made by the ordonnateur but not paid by the accountant (because no cash) by the ordonnateur but not paid by the accountant (because no cash)

Some examples of monitoring Most francophone african countries mix quotas of Most francophone african countries mix quotas of commitments at central level and cash rationing at local level commitments at central level and cash rationing at local level (Cameroon, Guinée, ..). The result is not (Cameroon, Guinée, ..). The result is not much goodmuch good

Be careful: some african countries don’t have any problem of Be careful: some african countries don’t have any problem of cash-rationing because their treasury is abundant cash-rationing because their treasury is abundant (ex: Benin, pre-(ex: Benin, pre-sence of numerous donors)sence of numerous donors)

Madagascar has quotas of commitments but without transpa-Madagascar has quotas of commitments but without transpa-rencyrency Cambodia has a system of cash-rationing with corruption, Cambodia has a system of cash-rationing with corruption, inefficiency, etc…inefficiency, etc… Argentina has a very sophisticated system of quotas of com-Argentina has a very sophisticated system of quotas of com-mitments but, at the end of the day, non-transparent mitments but, at the end of the day, non-transparent (in fact, a (in fact, a new budget is issued in execution by the eminent role of the Budget new budget is issued in execution by the eminent role of the Budget directorate) directorate)

Can we have a preference ?

Two criteria :Two criteria :simplicity and transparencysimplicity and transparency No question: the most simple and logical No question: the most simple and logical solution is cancellation of appropriations (solution is cancellation of appropriations (what what has been given is taken back) has been given is taken back) YetYet, , no francophone country applies this no francophone country applies this system. Why?system. Why?

Because it leads to transparencyBecause it leads to transparencyBecause it requires an efficient system of Because it requires an efficient system of re-allocation of appropriations. re-allocation of appropriations. Two things really missing in theses Two things really missing in theses countriescountries

Now, the budget cooking is done.What’s about the cooking of the

spending itself ?

What is this so-called french specificity of the spending

system?(« circuit de la dépense »)

Sorry, but the french system is not as specific as it seems to be

Four steps and three actors

OrdonnateurOrdonnateur ContrôleurContrôleur ComptableComptable

Engagement Engagement

commitmentcommitment** ** --

LiquidationLiquidation

service deliveryservice delivery** -- --

OrdonnancementOrdonnancement

payment orderpayment order** (*)(*) --

PaiementPaiement

paymentpayment-- -- **

• Sign ** indicates which duty each actor fullfils

• color red indicates the french specificity

wb229929:wb229929:wb229929:wb229929:

Some comments The four steps of expense are common to almost all systems, for follo-The four steps of expense are common to almost all systems, for follo-wing a logical and cautious waywing a logical and cautious way

--commitmentcommitment: act by which the State commits itself for buying a good : act by which the State commits itself for buying a good or a service andor a service and for booking a budget fund for booking a budget fund (orders, procurement (orders, procurement matters, ..)matters, ..) --service deliveryservice delivery: : when the service is done and the amount is knownwhen the service is done and the amount is known--payment order: payment order: when the order to pay is issued (no return possible) when the order to pay is issued (no return possible) --paymentpayment: when the payment is effectively made: when the payment is effectively made

The french specificities are based on the existence of a The french specificities are based on the existence of a controllercontroller and of a and of a separate accountant from the ordonnateurseparate accountant from the ordonnateur::

- the controller controls the regularity of the commitment (sometimes - the controller controls the regularity of the commitment (sometimes the payment order) and has the power to refuse his the payment order) and has the power to refuse his visavisa to the to the commitment, if not compliant with the rulescommitment, if not compliant with the rules- the accountant is in charge of payment but he’s also deemed to - the accountant is in charge of payment but he’s also deemed to control the regularity of the whole process by the ordonnateur (if control the regularity of the whole process by the ordonnateur (if something wrong, he will refuse the payment) something wrong, he will refuse the payment)

Indeed, that’s a lot of controls ! French system is built on the principle of separation of French system is built on the principle of separation of powers (actors) but not on the principle of separation of duties powers (actors) but not on the principle of separation of duties (steps of the expense) (steps of the expense)

if different personsif different persons interevene on the chain of expense, each one will interevene on the chain of expense, each one will control each other and this will prevent misuse of public fundscontrol each other and this will prevent misuse of public funds if, at the end of the chain, the one who definitely pays (the accoun-if, at the end of the chain, the one who definitely pays (the accoun-tant) is responsible on his own money, it will be one more assurance tant) is responsible on his own money, it will be one more assurance

In France, the system works well and, in fact, the controller is In France, the system works well and, in fact, the controller is closely implicated in the chain of the expense meanwhile the closely implicated in the chain of the expense meanwhile the accountant is focused on logistical problems of payment and accountant is focused on logistical problems of payment and accounting and reporting. accounting and reporting. In francophone developing countries, this system has not In francophone developing countries, this system has not avoided corruption but probably limits it. Yet, in some coun-avoided corruption but probably limits it. Yet, in some coun-tries highly corrupted, it migth increase corruption because tries highly corrupted, it migth increase corruption because each step of control is becoming highly valuable. each step of control is becoming highly valuable.

Some adaptations of this system in francophone developing countries

Traps to avoidTraps to avoid Create a unit of control of service Create a unit of control of service

delivery (delivery (service faitservice fait) ) ex: Cameroonex: Cameroon

Put two different persons for Put two different persons for commitment and payment ordercommitment and payment orderEx: MadagascarEx: Madagascar

Believe that the control of ordon-Believe that the control of ordon-nancements will improve the control nancements will improve the control Ex: Madagascar Ex: Madagascar

Attach the Control to the Presiden-cy Attach the Control to the Presiden-cy and not to the MOF and not to the MOF

Believe, on principle, that repla-cing Believe, on principle, that repla-cing Control ex ante by ex post control Control ex ante by ex post control will improve thingswill improve things

Believe, on principle, that Control is Believe, on principle, that Control is responsible for long delays of responsible for long delays of spendingspending

Ideas to considerIdeas to consider Define the list of documents to be Define the list of documents to be

produced at each stage of expense produced at each stage of expense for better design the role of each for better design the role of each actoractor

Think about a system of shared Think about a system of shared responsibilities between the three responsibilities between the three actors and not the sole accountantactors and not the sole accountant

Issue manuals of processes for the Issue manuals of processes for the ordonnateurs. Simplify some visas.ordonnateurs. Simplify some visas.

Simplify the circuit and make the Simplify the circuit and make the ordonnateur fully responsible of the ordonnateur fully responsible of the three steps in which he intervenesthree steps in which he intervenes

Move the Controller near the Move the Controller near the ordonnateurordonnateur

Reinforce the Controller at local Reinforce the Controller at local level for funds « déconcentrés »level for funds « déconcentrés »

Make the Controller fully respon-Make the Controller fully respon-sible for reporting of commitmentssible for reporting of commitments

What looks like a french circuit of expense ?

A good or a bad system of payment? It de-A good or a bad system of payment? It de-pends only on the professionalism of accoun-pends only on the professionalism of accoun-tants and the equipment of the systemtants and the equipment of the system

NothingNothing in the french configuration of payment is specific enough in the french configuration of payment is specific enough for improving or deteriorating the system of payment itself.for improving or deteriorating the system of payment itself. No cause of delay is specific to the system (some system are very No cause of delay is specific to the system (some system are very quick, some very long) quick, some very long) No specific cause of reliability in the payment itself is attached to the No specific cause of reliability in the payment itself is attached to the french system french system

A three-heads monster ?A three-heads monster ? Three actors in the chain of expense means three networksThree actors in the chain of expense means three networks

Network of ordonnateur: from commitment to payment orderNetwork of ordonnateur: from commitment to payment order Network of controller: for commitmentsNetwork of controller: for commitments Network of accountant: for payment order received and paymentNetwork of accountant: for payment order received and payment

Three independants actors leads to difficulties of communicationThree independants actors leads to difficulties of communication Each actor must book opérations in financial statementsEach actor must book opérations in financial statements

•Ordonnateur: payment orders issued (ordonnancements)Ordonnateur: payment orders issued (ordonnancements)

•Controller: commitments (engagements visés) Controller: commitments (engagements visés)

•Accountants: payment orders received and payments madeAccountants: payment orders received and payments made Each book needs to be re-conciled with others (ex: payment Each book needs to be re-conciled with others (ex: payment orders issued by ordonnateur need to be reconciled with orders issued by ordonnateur need to be reconciled with accountant’ones) accountant’ones) Is it possible for an Accountant to trust the books of an Is it possible for an Accountant to trust the books of an ordonnateur if the Accountant is responsible on its own money? ordonnateur if the Accountant is responsible on its own money?

The system of reporting: a three-heads The system of reporting: a three-heads monster ?monster ?

Three Three actors actors in the chain of expense means three networksin the chain of expense means three networks Network of ordonnateur: from commitment to payment orderNetwork of ordonnateur: from commitment to payment order Network of controller: for commitmentsNetwork of controller: for commitments Network of accountant: for payment order received and paymentNetwork of accountant: for payment order received and payment

Three Three independants actorsindependants actors with difficulties of communication with difficulties of communication Each actor must book operations in financial statementsEach actor must book operations in financial statements

•Ordonnateur: payment orders issued (ordonnancements)Ordonnateur: payment orders issued (ordonnancements)

•Controller: commitments (engagements visés) Controller: commitments (engagements visés)

•Accountants: payment orders received and payments madeAccountants: payment orders received and payments made Each book needs to be re-conciled with others Each book needs to be re-conciled with others

Three Three very differentvery different actors actors Can the accountant trust the statements of an ordonnateur? Can the accountant trust the statements of an ordonnateur? Excahnge of statements is manual at each stage (by floppy) Excahnge of statements is manual at each stage (by floppy)

A single-head monster is still a monster A single-head monster is still a monster Many claim that an Integrated Financial management Many claim that an Integrated Financial management system is the only solution for facilitating reportingsystem is the only solution for facilitating reporting

the chainthe chain will be unified and each actor will work on it’s own will be unified and each actor will work on it’s own « window » in order to avoid problems of reconciliation« window » in order to avoid problems of reconciliation the making of accounting statements will be facilitatedthe making of accounting statements will be facilitated the reporting would be made fasterthe reporting would be made faster

Such a system is not obvious: Such a system is not obvious: very expensive (setup and maintenance) very expensive (setup and maintenance) requires a stable and reliable system of circuit of expense. requires a stable and reliable system of circuit of expense. some experiences are not really conclusive (Benin: SIGFIP)some experiences are not really conclusive (Benin: SIGFIP) France itself still doesn’t have this integrationFrance itself still doesn’t have this integration do not believe miraculous solutions or technological do not believe miraculous solutions or technological drunkenessesdrunkenesses

The most important action should be to enhance and The most important action should be to enhance and institutionnalize the role of each actor institutionnalize the role of each actor (what is precisely their (what is precisely their

role ?) role ?) and to ensure communication between themand to ensure communication between them. .

In any case, there are a lot of little monsters beside In any case, there are a lot of little monsters beside the main system, notably in Africa.the main system, notably in Africa.

The main process of expenditure (4 steps, 3 actors, network of The main process of expenditure (4 steps, 3 actors, network of expense, ..) is generally not the most usedexpense, ..) is generally not the most used many execeptional processes are applied and would continue to be many execeptional processes are applied and would continue to be used even in the framework of an integrated system (ex Benin)used even in the framework of an integrated system (ex Benin) be very cautious and supsicious with processes as: be very cautious and supsicious with processes as:

-régies d’avances (60 % of expense in Benin) -régies d’avances (60 % of expense in Benin) -paiement sans ordonancement-paiement sans ordonancement-paiement sur réquisistion-paiement sur réquisistion-fonds spéciaux…-fonds spéciaux…

So as, if the IFMS is not exactly adapted to the So as, if the IFMS is not exactly adapted to the French system of the expenditure, it is definitely not French system of the expenditure, it is definitely not adapted to the African system, as long as some adapted to the African system, as long as some elementary rules of accountability have not been elementary rules of accountability have not been accepted. accepted.

Is this monster responsible for accumulation of arrears ?

Three major types of arrearsThree major types of arrears

Case 1Case 1: : expense is expense is commited but the payment order is not issuedcommited but the payment order is not issued. The . The ac-countant is not aware of this expense. At the end of the year, the fund, ac-countant is not aware of this expense. At the end of the year, the fund, with which the commitment has been made, is cancelled and the with which the commitment has been made, is cancelled and the commitment needs to be re-made next year. It could be an arrear. commitment needs to be re-made next year. It could be an arrear.

Case 2Case 2: expense is ordered to the accountant but the accountant cannot : expense is ordered to the accountant but the accountant cannot pay it (lack of cash). It is an arrear. pay it (lack of cash). It is an arrear.

Case 3Case 3: expense is commited and ordered by a fictive ordonnateur : expense is commited and ordered by a fictive ordonnateur (when I switch on the ligth, I create an expense without any prior (when I switch on the ligth, I create an expense without any prior commitment). It’s also an arrear. commitment). It’s also an arrear.

What kind of arrears is created by the francophone system?What kind of arrears is created by the francophone system? Case 1Case 1:: not at all (if invoice not sent, payment order cannot be issued)not at all (if invoice not sent, payment order cannot be issued) Case 2: yes, separation ordonnateur/accountant can be favorable factorCase 2: yes, separation ordonnateur/accountant can be favorable factor Case 3: no, it happens everywhere (system of quotas pre-paid) Case 3: no, it happens everywhere (system of quotas pre-paid)

Now, spending is over and reporting is issued.

What next ?

It is necesary, for more transparency, to close the exercice by issuing financial bills which allow to compare the initial

budget and the executed budget

Two legislative acts at the end of the year

Additive budget billAdditive budget bill Additive budget bill updates Additive budget bill updates

the initial law in receipts and the initial law in receipts and outlaysoutlays

It asks for opening new It asks for opening new appropriationsappropriations

It ensures cancellations of It ensures cancellations of fundsfunds

It give many informations It give many informations about the management of teh about the management of teh budget during the yearbudget during the year

It issues an updated resultIt issues an updated result It brings globally more It brings globally more

transaprency in public financestransaprency in public finances The later, the better oversigthThe later, the better oversigth

Loi de règlementLoi de règlement It closes definitely the budget It closes definitely the budget

(receipts, outlays) (receipts, outlays) It is joined with a report of Cour It is joined with a report of Cour

des Comptesdes Comptes It is the only document which give It is the only document which give

exactly th eprofile of the executionexactly th eprofile of the execution It gives two fundamental It gives two fundamental

informations about budget informations about budget management of appropria-tions management of appropria-tions and spending itselfand spending itself

It shows very clearly possible It shows very clearly possible irregularities in management and irregularities in management and spending.spending.

The sooner, the better oversigthThe sooner, the better oversigth

Are these two indispensable legislative acts issued in

francophone countries? Unfortunately Not. The practise of additive bills is unknown in Africa and The practise of additive bills is unknown in Africa and MagrhebMagrheb

it is a sign of lack of transparencyit is a sign of lack of transparency but it is also motivated by a fear for the aggregate fiscal discipline but it is also motivated by a fear for the aggregate fiscal discipline (viewed as a mean to open more funds, notably vis-a-vis the Presidence) (viewed as a mean to open more funds, notably vis-a-vis the Presidence) it explains why cancellations of funds are not used for the monitoringit explains why cancellations of funds are not used for the monitoring some countries (Madagascar) issue such a bill, but to early in the yearsome countries (Madagascar) issue such a bill, but to early in the year

The lack of the Loi de règlement is the worst pointThe lack of the Loi de règlement is the worst point Many countries issue regularly such documents but there are wrong Many countries issue regularly such documents but there are wrong because the reporting is not correct (Cameroon, Benin, …) because the reporting is not correct (Cameroon, Benin, …) Some countries issue very acurate documents but 3 or 4 years after teh Some countries issue very acurate documents but 3 or 4 years after teh battle, so there become unuseful (Morocco) battle, so there become unuseful (Morocco) Other do not issue any documentOther do not issue any document

The weakness of a francophone public management system is proportional to its

capacity to issuing a reliable « loi de règlement ».

The ex post control function is higlly

depending on this capacity.

END