Introduction

IntroductionThe Scheme of Integrated Financial Adviser currently operates in accordance with Office Memorandum No. 10(29)-E-Coord/73 dated 6. 10. 1975 issued by the Department of Expenditure, Ministry of Finance.

The scheme provides that the Financial Adviser would be responsible both to the Administrative Ministry and to the Ministry of Finance

The scheme also briefly indicates the functions of the Integrated Financial Adviser along with the modalities for functioning1Reasons :Why dual responsibility & need ? The Indian economy grown from a less developed stage to one of the fastest growing economies of the world. Role of IFA accordingly changing along with a plethora of reforms in monetary and fiscal management of the country. (2006-2009)Centralization doesn't workScrutiny for macro issues(subsidy etc)Bring thinking of MOF and implement themScrutinize and prepare proposals which need higher scrutinySectorial considerations, PPP, downsizing, outsourcing, costing etcPlan requirements, interse distribution ,evaluation

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ROLE IN ADMINSTRATIVE MINISTRIES

ROUTINE FUNCTIONSFinancial Advisers are meant to assist in the achievement of objectives/goals of their respective Administrative Ministries, as approved by the competent authority; that they must commit themselves to facilitate implementation of the approved programmes, with due financial prudence, (ex road metalling)to ensure that monies allocated are spent on time, (qtr, 33%) in the prescribed manner, (pl, np, cap, rev, account, progressive expdr)to achieve the intended outcomes defined in measurable and monitorable terms. (phy, fin target, result)Assisting Administrative Ministries in ensuring 'value for money' would be a key objective for Financial Advisers, (type of computer, renovation)with emphasis on improving the quality of expenditure and requisite systemic improvements / capacity building for this purpose. (training, rr)It may also be reiterated that FAs represent the Ministry of Finance in regard to all financial matters.3Not just responsibility but authority tooThe more complex responsibilities envisaged for FAs must be accompanied by corresponding authority and capacity. FAs are suitably empowered, and appropriate measures are taken for capacity building both institutionally and individually. The organizational resources, structure and processes themselves may need to be augmented I modified, and IT enabled systems, latest financial management practices, knowledge management structures etc. put in place.

4Role of Financial AdvisersCURRENT SCENARIOThe role of Financial Adviser akin to the role of the Chief Financial Officer in a corporate structure, ensuring fiscal prudence and sound financial management. bring requisite financial expertise, rendering professional advice to Adm SecretariesValue for money will be the most important parameter in evaluating such schemes and projects. that outlay for a scheme is intrinsically linked with the Outcome Budget -how effectively each penny spent?Performance Budget-physical financial targets

5In rendering their advice, the Financial Advisers would be expected to accord priority to macro management with a view to help in achieving the outcomes set by the Ministries as goals for themselves.

These macro issues could include schematic appraisal and concept functions, revenue management, subsidy management, fiscal resource transfer issues, defining and evaluating outcomes besides maintaining and safeguarding the budgetary integrity, etc. FAs would also be expected to look at the total picture of resources for the sectors in which they are functioning, and assist the Secretaries of the Administrative Ministries in moving towards greater resource mobilization, including in terms of enabling policy and regulatory framework to attract private sector funds.

FAs would in no case be assigned any routine administrative functions of the Ministry.

6Some issues1.Airport modernization: where/ how much/returns/methodologyWhether ATC, Runway, unconnected area2.Tendering: short listing, criteria3.RR: Why people not applying, change in TOR4.Phasing of expenditure: prioritisation; FTE, OE, Conferences5.NGO : Scrutiny: certification, audited accounts, UC, outcome, output6.Grants to States: actual implementation, physical, financial progress, divertion7.Subsidy: distribution methodology, agencies7IFD AND CHIEF ACCOUNTING AUTHORITYNormally views of FA should be adhered to

However in special circumstances the Secretary can overrule in writing.

The sanction also should carry the decision.

In cases where the FA feel that administrative ministry has taken decision in violation of financial norms, a note can be sent Sec Expenditure. 8FINANCIAL ADVISORFOLLOWING ARE THE SPECIFIC TASKS:

a)BUDGET FORMULATIONItemized budgetary processprev year anaysisYoyitemised assesmentsub prog b) OUT COME BUDGETlate marchoutlays-outcomes-measurable termsappraisal monitoring systemsevaluation by independent agencyreasonability of outcome vis budget est

SPECIFIC TASKSPERFORMANCE BUDGET(now performance-outcome merged 2006 )-(chapter 4 review of performance past)WHILE BUDGET , OUTCOME BUDGET FOR ENSUING YEARS, PB FOR PREV YEARActual achievements,performance in the year gone byPerformance to link past, present, future in integrated mannerd) FISCAL RESPONSIBILITY & BUDGET MANAGEMENT( FRBM)Disclosure statements-to parlia along with budget,dd for grantQuarterly review by FM e) EXPENDITURE AND CASH MANAGEMENTprojected cash flows mutually agreed bet MOF PSU, Autonomous body, MinistriesConvergence of expenditure and Revenue ,Reduce debt borrowingUnspent balances of statesClosely linked to outcome budget

10FOLLOWING ARE THE SPECIFIC TASKSf) PROJECT / PROGRAMME FORMULATION, APPRAISAL, MONITORING AND EVALUATIONg) SCREENING OF PROPOSALSLEVERAGING OF NON-BUDGETORY RESOURCES FOR SECTORAL DEVELOPMENTOPTIMISING PRIVATE SECTOR INVESTMENTPUBLIC PRIVATE PARTERNERSHIPEXTERNAL FUNDINGIEBR

11FOLLOWING ARE THE SPECIFIC TASKSNON TAX RECEIPTSHelp in limiting fiscal-revenue deficitSee market trends and review non tax receiptsUser chargesDividends, licence fee, royaltyTAX EXPENDITURERevenue forgone for activities

12FINANCIAL ADVISORk)MONITORING OF ASSETS AND LIABILITIESl)ACCOUNTS AND AUDITm)PROCUREMENT &CONTRACTSFINANCIAL MANAGEMENT SYSTEMProjects, programmes, PERTNOMINEE DIRECTOR ON BOARDS OF PUBLIC SECTOR UNDERTAKINGSgovt watch dog along with adminstrative nomineeFINANCIAL EXPERTISE,MOF guidelinesp)USE OF TECHNOLOGYPublic service,transparency,eco,efficiency,effectiveness

INTERNAL FINANCIAL ADVISOR WILL BE OVERALL IN-CHARGE OF BUDGET AND ACCOUNTS IN ADDITION TO INTERNAL FINANCE SECTION DUTY OF IFA-BUDGETENSURE ADHERENCE SCHEDULE FOR PREPRATION OF BUDGET AND AS PER INSTRUCTION OF MINISTRY OF FINANCE

SCRUTINISE BUDGET PROPOSALS BEFORE SENDING THEM MINISTRIES

MAINTENANCE OF DEPARTMENTAL ACCOUNTS IN ACCORDANCE WITH GENERAL FINANCIAL RULESINTERNAL FINANCIAL ADVISORWATCH AND REVIEW PROGRESS OF EXPENDITURE THROUGH CONTROL REGISTERS AND ISSUE TIMELY WARNINGS TO BUDGET CONTROLLING AUTHORITIES WHERE PROGRESS OF EXPENDITURE IS NOT EVEN.PROPER MAINTENANCE OF LIABILITY REGISTERS AND COMMITMENTS TO FACILTATE REALISTIC PREPERATION OF BUDGET ESTIMATES, BOOKING OF EXPENDITURE AND TIMELY SURRENDER OF SAVINGS.

SCREEN THE PROPOSALS FOR SUPPLEMENTARY DEMAND FOR GRANTSADVISE THE ADMINISTRATIVE MINISTRY ON ALL MATTERS FALLING WITHIN THE FIELD OF DELEGATED POWERS.INTERNAL FINANCIAL ADVISORTO IDENTIFY, IN PARTICULAR, SPECIFIC SAVINGS IN CASES OF CREATION OF POSTS

SCRUTINISE PROPOSALS FOR REDELEGATION OF POWERS TO SUBORDINATE AUTHORITIES

CLOSELY ASSOCIATE WITH THE FORMULATION OF SCHEMES AND IMPORTANT EXPENDITURE PROPOSALS FROM INITIAL STAGES

ASSOCIATE WITH THE EVALUATION OF PROGRESS/PERFORMANCE IN CASE OF PROJECTS AND OTHER CONTINUING SCHEMES

INTERNAL FINANCIAL ADVISORTO WATCH THE SETTLEMENT OF AUDIT PARAS, INSPECTION REPORTS, DRAFT AUDIT PARAS, ETC.PROMPT ACTION ON AUDIT REPORTS AND APPROPRIATION ACCOUNTS, REPORTS OF PUBLIC ACOUNTS COMMITTEE, ESTIMATES COMMITTEE AND COMMITTEE ON PUBLIC UNDERTAKINGSSCREEN ALL EXPENDITURE PROPOSALS REFERRED TO FINANCE MINISTRYREGULAR AND TIMELY SUBMISSION OF QUARTERLY STAFF STATEMENTS AND OTHER REPORTS AND RETURNS REQUIRED BY FINANCE MINISTRY

INTERACTION WITH MOFAS STATED EARLIER

EFC/ PIB/CABINET/CABINET SUB COMMITEES

QUARTERLY REPORTS

AUSTERITY MEASURES

OTHER GUIDELINES 18REPORTING SYSTEMANNUAL FINANCIAL REPORT

UC, DIVIDEND, AREAS OF TAX, NON TAX REVENUE, UNSPENT BALANCES, RESOURCE MANGEMENT

DISCLOSURE REPORT OF DEVIATION, VIOLATIONSCAPACITY BUILDING19CHIEF CONTROLLER OF ACCOUNTS / CONTROLLER OF ACCOUNTS PROVIDING BASIC ACCOUNTING AND FINANCIAL INPUTS TO FAs.

RECEIPTS,PAYMENTS AND ACCOUNTS

ACCURATE AND TIMELY PAYMENTS AS PER PRESCRIBED RULES AND REGULATIONS

TIMELY REALISATION OF RECEIPTS

TIMELY AND ACCURATE COMPLIATION AND CONSOLIDATION OF MONTHLY ANNUAL ACCOUNTS

EFFICIENT SERVICE DELIVERY BY THE BANKING SYSTEM

ADHERENCE TO PRESCRIBED ACCOUNTING STANDARDS, RULES AND PRINCIPLES.

TIMELY, ACCURATE, COMPREHENSIVE, RELEVANT AND USEFUL FINANCIAL REPORTING.

CHIEF CONTROLLER OF ACCOUNTS / CONTROLLER OF ACCOUNTSOTHER FINANCIAL MANAGEMENT ACTIVITIES

BUDGET FORMULATION INCLUDING THE OUTCOME AND PERFORMANCE BUDGET

EXPENDITURE AND CASH MANAGEMENT

ESTIMATION AND FLOW OF NON TAX REVENUE RECEIPTS

MONITORING OF ASSETS AND LIABILITIES DISCLOSURE AND REPORTING REQUIREMENTS UNDER FRBM ACT.

21CHIEF CONTROLLER OF ACCOUNTS / CONTROLLER OF ACCOUNTSINTERNAL AUDIT / PERFORMANCE AUDIT

ADEQUACY AND EFFECTIVENESS OF INTERNAL CONTROLS AND

SOUNDNESS OF FINANCIAL SYSTEMS/

RELIABILITY OF FINANCIAL AND ACCOUNTING REPORTS IN PARTICULAR

IDENTIFICATION AND MONITORING OF RISK FACTORS

PROVIDING AN EFFECTIVE MONITORING SYSTEM TO FACILITATE COURSE CORRECTIONS.