Training on Financial Operations for Officers posted in ...

Training on Financial Operations for Officers posted in ...

Office Management Assistant Course-FINANCE Resource Person :Nassir Hosanee Principal Financial Operations Officer Ministry of Ocean Economy , Marine Resources , Fisheries and Shipping Session 4 Date : 27 September,2017 Course Content Topics to be covered :

Legal Framework The Role and Importance of the Finance Section The Budget Process Disbursement and Payments procedures Revenue & Cash Management/Receipt Framework and Procedures Planning , Control and Managing Accounting Framework/Computerised Accounting System and Management Accounting System Internal Control System Duties and Responsibilties of Public Officers virement

3. Virement is a reallocation of funds (i) from an expenditure item to another expenditure item within the same Vote; or (ii) from an expenditure item in a Vote to another expenditure item in a different Vote. 4. In the case of capital expenditure and for the purpose of the 2% limit mentioned at paragraph 5, virement also includes a reallocation of funds across the sub-components of an expenditure item shown in the Estimates. Limitations and Conditions on Virements

A. Virement by an Accounting Officer 5. The authority to approve virement(s) within a Vote of Expenditure (or Sub-Head of Expenditure) is delegated to an Accounting Officer as long as the cumulative virements do not exceed 2% of the total appropriation under his/her control and subject to the limitations and conditions specified at paragraphs 7 to 10 below. .Virement

6. Where, within a Vote there is more than one Accounting Officer, a virement between items under the control of two or more Accounting Officers should be approved by the Accounting Officer whose budget is being reduced, subject to the agreement of the Supervising Officer, where applicable. 7. An Accounting Officer may effect a virement as long as it is: (a) from a recurrent expenditure item to another recurrent expenditure item; (b) from a recurrent expenditure item to a capital expenditure item; (c) from a capital expenditure item to another capital expenditure item; or (d) from a capital expenditure item to an expenditure item under Expenditure Class (22060) Maintenance. 8. An Accounting Officer may effect Virement to a capital expenditure item

to the extent that: (a) the item is in respect of an approved capital project included in the Estimates; and virement (b) the Virement does not lead to an increase in the approved Project Value of the receiving capital project. 9. An Accounting Officer may not effect a virement to: (a) the item Basic Salary except where the virement is for : (i) a shift of human resources entailing a need for additional provision under the item; (ii) meeting cost in respect of salary adjustment or compensation or implementation of the Performance Management System (PMS); or (iii) expenses in connection with approved Funded Positions in the Estimates; (b) items Overtime, Extra Assistance and Wages except where the virement is from an expenditure item under economic category Compensation of Employees; (c) an item where provision is required as a result of a new service, scheme or project (capital); or

(d) specific items as may be indicated from time to time by MOFED by way of circular or other written instructions. 10. An Accounting Officer may not effect a virement from: (a) an expenditure item in respect of maintenance to any other expenditure item, except where the virement: (i) is to an expenditure item under Expenditure Class (22060) Maintenance or to a capital expenditure item; and (ii) is not to the detriment of the asset(s) in respect of which maintenance provision is being reduced; (b) an expenditure item under Economic Category Social Benefits (code 27), except where the virement: (i) is to an item within the same Economic Category; and (ii) is in respect of an approved social programme/benefit; (c) an expenditure item under Economic Category Acquisition of Financial Assets (code 32), except where the virement: (i) is to an item in the same Economic Category; and (ii) is for an approved purpose.

(d) an expenditure item in respect of a project that is financed by grants/project loans from International Organisations/Foreign Countries; (e) an expenditure item in respect of contributions to Special Funds created under Finance and Audit Act; or (f) an expenditure item as may be indicated from time to time by MOFED by way of circular or other written instructions. Virement requiring prior approval of MOFED B. Virement requiring prior approval of MOFED 11. An Accounting officer should seek prior approval of MOFED where the virement is: (a) from one Vote of Expenditure to another Vote of Expenditure; (b) from a capital expenditure item to a recurrent expenditure item; (c) likely to exceed the Project Value of the receiving capital project; (d) likely to exceed the limit of 2 % specified at paragraph 5;

(e) in respect of instances mentioned at paragraphs 9 and 10; or (f) any other instance not elsewhere specified . vir em ent( Con tin ge nci es ) In line with Section 5 of the Finance and Audit Act a provision for Contingencies is included in the annual estimates to meet urgent and unforeseen expenditure. The provision for contingencies is appropriated by the National Assembly under Vote Contingencies & Reserves which is under the control of MOFED. 14. Virement from Vote Contingencies & Reserves may only be effected: (a) where the expenditure cannot, without injury to the public service, be postponed; (b) where the expenditure is in respect of an new service, scheme or project; (c) in case of natural disasters; or (d) in case of other emergencies requiring exceptional/urgent expenditure 15. In respect of instances mentioned paragraph 14, Accounting Officers should seek the prior approval of MOFED before taking any commitment that may involve additional financial implications to Government.

Carry Over Section 3A of the Finance and Audit Act provides that where an amount has been appropriated by the National Assembly for the purpose included in an item of capital expenditure for a fiscal year and the amount earmarked for a project has not already been fully incurred or reallocated to any other item of capital expenditure at the end of that fiscal year, the balance of the provision earmarked for that project may be carried over to a period not exceeding 3 months in the following fiscal year without the necessity for further appropriation by the National Assembly but shall be subject to such limitations and conditions as may be specified in financial instructions issued under section 22 of the Finance and Audit Act Criteria for carry-over

Any unspent budgetary provision earmarked in respect of a project may, subject to the approval of MOFED, be carried-over provided the following criteria are met:(a) the amount to be carried over will be used for the same purpose as the initial appropriation; and (b) the amount relates to expenditure committed by the executing agency under a contract or agreement and there is reasonable certainty that:(i) it will not be disbursed by the end of the fiscal year of appropriation; and (ii) it will be disbursed within 3 months after the end of the fiscal year of appropriation. Recording and Accounting for Carry-Over Expenditure incurred under carry-over will be accounted for in the year

in which the funds were appropriated and not in the year in which funds have been disbursed. REPORTING OF CARRY-OVER A consolidated list of carry-overs will have to be tabled by MOFED in the National Assembly, as soon as possible after the closing of Accounts by the Accountant General. PSIP Definition: Public Sector Investment Projects Normally there is a list of all capital projects which are set out in a booklet for all ministries and Departments including projects for

statutory bodies, also they have information regarding their project values,Funding,length of projects,status(pipeline,tender stage,feasibility stage,ongoing,completed and so on),amount spent uptodate,and the projected expenditure. Monitoring and Controlling of Funds The control of public funds in Mauritius involves the approval of revenues and expenditure by the National Assembly, monitoring by the Ministry of Finance over the collection and disbursement by Ministries of the funds approved by the National Assembly and reporting by the Director of Audit to the National Assembly on the spending of public monies. The National Assembly, when it authorises the expenditure of public funds through the Appropriation Act, sets in motion a system of budgetary control which embraces authorisation, monitoring, and audit. Effective financial management requires that all officers are familiar with

the concepts and principles of a system of budgetary control. Monitoring and Controlling of Funds Each revenue department, and all other departments that collect significant amounts of money, should prepare an overall plan at the beginning of each year to establish collection targets. This should be broken down into weekly, monthly or quarterly periods . Progress against the plan should be regularly monitored and all variances examined and explained, to enable any necessary corrective action to be taken promptly. In this way revenue earning departments will be able to continuously monitor their performance on revenue collection. Similarly, to enable the Government as a whole to forecast its cash requirements, all departments need to analyse their planned expenditure during the financial year so that the total estimates can be profiled over the 12 month period. This is particularly important for self-accounting departments operating their own bank accounts, as these plans will be used to determine the timing and amounts of funds to be transferred by the Accountant-General. Entry in the TAS FOR MONTHLY AND WEEKLY CASHFLOW BY ALL DEPTS AND Ministries cater for this aspect. This will be used to determine the Governments requirements for shortterm borrowings and investments and enable the Government to balance its need for liquidity (having sufficient funds available to meet payments, take advantage of discounts, etc) with the opportunity to earn interest from the investment of surplus funds.

. Consequentially it is important that all departments should monitor their performance against their plans, both for cash in and for cash out, and inform the Ministry of Finance of any major variations so that their impact on the Governments total cash requirements can be assessed. Management Accounting and Management Information Management Accounting is the preparation and presentation of financial and other information for the formulation of policies, planning, control and effective management of an organisations operations, and the achievement of its objectives. 2. The purpose of management accounting is to provide decision makers at all levels with the information needed to: (i) formulate and define Government policies and programmes; (ii) manage and monitor their implementation; and (iii) assess the results and the success in achieving the desired objectives.

Management Accounting and Management Information The key elements of good financial management are planning, monitoring and control of the Governments operations and activities, in terms of resources (both financial and nonfinancial) and achievements. Information is essential to all three elements of planning, monitoring and control. The purpose of all the income and expenditure authorized in the Governments Annual Estimates, is for the implementation of Government policies and programmes. The purpose of management accounting and management information necessary to determine the extent to which these policies and programmes have been implemented and their success in achieving the desired results. Management Accounting and Management Information Purely financial information, analyzed on a subjective

basis (such as personal emoluments, other charges) by vote item, as recorded in the Estimates and Financial Statements, is necessary for overall financial control and monitoring of the levels of income and expenditure. However, this needs to be supplemented by management accounting and information, on an objective basis, which relates the income received and the expenditure incurred to the intended purposes and their achievement of objectives.

DEVELOPMENT OF MANAGEMENT ACCOUNTING AND INFORMATION 4. The development of management accounting and use of management information require the following: Identification and recording of income and expenditure by cost centres or activity centres based on operational units, functions, projects or activities; Definition of policy and programme objectives into quantifiable and measurable targets; Monitoring of actual performance. In both financial and operational terms, against these targets; Investigation and explanation of variations in actual performance from financial and operational targets; and

Determination and implementation of corrective action where necessary 5. Thus management information should include: What was planned, at what cost and with what resources; and What has been achieved, at what cost and with what resources. COMPUTERISED ACCOUNTING SYSTEM (Treasury Accounting System The development of a computerised has been based on overall strategy for computerisation of Government activities.It was not aimed simply to automate existing manual procedures but also to provide the financial and management information required by various users for the efficient

and effective management and control of the Government activities. Objectives of the TAS The Treasury Accounting System(TAS) has been designed to cater for the needs of all users from officers to managers. It is not only meant to capture all transactions of the Government in terms of payments and revenue collections but also to allow for a proper recording and accounting of all transactions for reporting purposes. The Government is presently trying to translate any single operation(financial and non-financial) in the system for further use in accounting and management information system. QUESTIONS AND POSSIBLE ANSWERS 1. Expenditure may only be incurred with the Authority of Parliament. What happens when the appropriate Law in respect of expenditure for any fiscal year has not come into operation by the beginning of a fiscal year? 2. Write short notes on Director of Audit R.I.E

Deparmental Warrant Public Accounts Committee Imprest 3. The Public Accounts Committee is useless since we have an independent National Audit Office. Discuss? 4. What is the purpose of an imprest account and explain how the issue, replenishment and retirement of imprest monies are accounted for? QUESTIONS AND POSSIBLE ANSWERS 5. Explain the following:Virement Internal Check

Committee of Supply Internal Audit 6. In the Finance Section of a non self accounting, Ministry/Department, describe briefly the main duties? 7. In the Finance Section of a self accounting, Ministry/Department, describe briefly the main duties? 8. Define Virement and enumerate the circumstances where Virement is not possible?

9. Write brief notes on each of the following: Accounting officer Appropriation Act General warrant External Audit Consolidated Fund 10. Differentiate between Self Accounting and non self accounting department? 11. In what circumstances may additional provision be made available to Ministry/Department and state briefly the procedure involved? 12.Describe the difference between Recurrent and Capital Revenue ?.How are they raised?

13.Explain briefly how the National Assembly exercises control on expenditure of public funds? 14.The N.A.O and the PAC are the major safeguards in the Government Financial System .How far do you agree with this statement? Questions 15.How are capital Projects financed? 16.What do you understand by PSIP? 17.What do you understand by the concept CarryOver? 18.What is Below the line Accounting? 19.What is Contingencies Fund? THANK YOU FOR YOUR ATTENTION

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