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					  ADB Grant 0133-CAM: Public Financial
   Management in Rural Development
       Ministries (Component 1)
Advanced Accounting 2 – Existing Accounting
      Methodology in Line Ministries
           Day 3: August 18, 2010:
           Bookkeeping operations


              ADB Grant No.0133-CAM/Component 1:
                             PFMRD
        Day 3
Bookkeeping operations
          Content




    ADB Grant No.0133-CAM/Component 1:
                   PFMRD
                                         2
            Bookkeeping operations

The stakeholders of the public expenditure chain, i.e.
authorizing officers, financial controllers and accountants
(and petty cash management officers), must care for the
bookkeeping operations related to their transactions:
• Management bookkeeping operations of authorization
  officers.
• Commitment and payment bookkeeping of financial
  controllers
• Government bookkeeping operations for accountants,
  as well as revenue and advance payment officers.

                   ADB Grant No.0133-CAM/Component 1:
                                  PFMRD
                                                         3
      1. Administrative Bookkeeping by
            Authorizing Officers
• The authorizing officer firstly needs to know the status of
  the appropriations that he manages in order to use them
  properly: That is the purpose of commitment bookkeeping
  operations, handled openly before Financial Control.

• He must also be familiar with the payment orders that he
  has forwarded to the accounting officer for assumption
  and payment; besides, the Table of Government Financial
  Operations (TOFE) is drawn up based on the orders (issued
  and certified by the authorizing officer or assumed and
  certified by the accountant: the amount is to be the same
  in both sets of books.)
                    ADB Grant No.0133-CAM/Component 1:
                                   PFMRD
                                                           4
      1. Administrative Bookkeeping by
            Authorizing Officers
• The difference between the commitments requested
  and commitments authorized is Unauthorized
  Committed Expenditures (Dépenses Engagées non
  Ordonnancées - DENO).
• The difference between payment authorizations and
  payments corresponds to the accounts payable
  (Restes à Payer - RAP).
• According to the IMF terminology, accounts payable
  exceeding three months are referred to as payment
  arrears.

                  ADB Grant No.0133-CAM/Component 1:
                                 PFMRD
                                                       5
      1. Administrative Bookkeeping by
            Authorizing Officers
• The difference between issued (and assumed) receipt
  orders and the corresponding collections are the
  accounts receivable (Restes à recevoir - RAR).
• Accounts payable and accounts receivable are
  collectively referred to as outstanding balances.
• With integrated management (or automated) systems
  for public finance, each stakeholder (authorizing
  officer, financial controller, accountant) is able to know
  at any moment the status of a specific expenditure
  and the overall or detailed status of the
  appropriations.
                    ADB Grant No.0133-CAM/Component 1:
                                   PFMRD
                                                          6
 2. Bookkeeping operations of financial controllers

• This point was dealt with on day 2 of this course

3. Bookkeeping operations of revenue and advance
                payment officers

• This bookkeeping operation shows at any given time:
   • For revenue accounts: the status of their cash on
     hand
   • For advance payment accounts: the status of the
     advance received." (Article 101 of Sub-decree 82)


                   ADB Grant No.0133-CAM/Component 1:
                                  PFMRD
                                                         7
4. Bookkeeping Operations of the Government

• “The general bookkeeping operations of the
  government shall have trial of:
   – Budget operations.
   – Treasury operations
   – Operations conducted with third parties.” ( Article 98
     of Sub-decree 82)
• "The general bookkeeping operations of the
  government shall be handled pursuant to an accounting
  plan drawn up by the Minister of Finance .... Its
  nomenclature is to be in harmony with the general
  accounting plan." (Article 99 of Sub-decree 82)
                     ADB Grant No.0133-CAM/Component 1:
                                    PFMRD
                                                          8
Purchases through the Banking or National Treasury
                     System
• There are three cycle procedures for “current
  budget expenditure”:
  – Firstly, the amount to be spent must have been
    included in the approved budget;
  – Secondly, the ministry must obtain a “letter of
    commitment” from MEF prior to placing any orders
    or firm commitments; and
  – Thirdly, the ministry must obtain a Mandate from the
    MEF to actually spend the money.


                   ADB Grant No.0133-CAM/Component 1:
                                  PFMRD
                                                        9
Purchases through the Banking or National Treasury
                     System
Obtaining the Letter of Commitment from MEF
• The process is started in the line department by an officer
  submitting a request for a purchase item to his superior officer
  (usually the Chief of Unit/ Division/ Section/ or Office) by
  submitting a letter and attaching invoices and three quotes with a
  recommendation of which quote to use.
• The authorizing Officer submits a request to the accounting and
  planning section in his department by countersigning the letter
  and reviewing the invoices and quotes. This letter requesting a
  commitment to purchase is then forwarded under the signature
  of Chief of Planning and Accounting section and the Director of
  the Line Department to the Administration Department in the
  Ministry for the attention of the Director Department of
  Accounting and Finance.Grant No.0133-CAM/Component 1:
                         ADB
                                                                   10
                                PFMRD
Purchases through the Banking or National Treasury
                     System
Obtaining the Letter of Commitment from MEF
• The Administration Department registers and forwards the
  commitment request to Department of Accounting and Finance.
• Department of Accounting and Finance receives the commitment
  request and checks the total against the approved budget to
  ensure it was included.
• Department of Accounting and Finance will then collate a series
  of letters from the same department for forwarding to the
  Minister for approval or if the request is sufficiently large it may
  go as an individual request.
• After approval has been obtained from the Minister it is
  forwarded to the MEF Financial Controller in the Ministry.
                         ADB Grant No.0133-CAM/Component 1:
                                        PFMRD
                                                                   11
Purchases through the Banking or National Treasury
                     System
Obtaining the Letter of Commitment from MEF
• The request for a commitment proposal is sent to the
  Department of Administration at MEF.
• The Department of Administration at MEF will register and
  forward the request to the Department of Financial Affairs, who
  in turn will process a request for commitment and send it to a
  Senior Minister for approval.
• After the commitment letter has been signed it will be registered
  by the Department of Financial Affairs
• After approval of the commitment documents, the documents
  will come back to Department of Accounting and Finance in the
  Ministry.
• The Ministry can thenADB Grant No.0133-CAM/Componentpurchase proposal.
                          start work on the 1:
                                  PFMRD
                                                                     12
Purchases through the Banking or National Treasury
                     System
Obtaining the Letter of Commitment from MEF
    Line Ministry                MEF
    Department
    making the
     request

   Department of    Letter of Commitment
   Accounting and
      Finance

                                Minister or
      Minister                    General
                              Director of MEF

                              MEF DFA/Dept
     Financial
                               of Admin &
     Controller
                                 Finance        13
Purchases through the Banking or National Treasury
                     System
Obtaining a Mandate to spend the money
• The mandate request and commitment documents will be
  presented to the Budget Department at MEF for approval by the
  Budget Manager (can be a Senior Minister, Secretary of State or
  Under Secretary of State).
• After approval of the mandate documents by MEF, notification
  will be forwarded to the National Treasury or MEF will transfer
  money for the purchase to National Bank of Cambodia.
• The appointed agent of Advance Manager of Department of
  Accounting and Finance in MAFF will go to the National Treasury
  or National Bank of Cambodia to withdraw the cash.


                       ADB Grant No.0133-CAM/Component 1:
                                      PFMRD
                                                               14
Purchases through the Banking or National Treasury
                     System
Obtaining and cashing the Payment Mandate
          Line Ministry                      MEF                    NBC
          Department of
Request   Accounting and                                  Obtain
for          Finance                                      cash
payment                    Approved                       payment
mandate                    payment
             General       mandate
             Director                                           Or transfer to
                                               National
                                                                National Bank
                                               Treasury
                                                                of Cambodia
             Minister

                                                Approved payment mandate
                                        MEF Budget
            Financial
                                       Department –
            Controller
                                      Senior Minister
                                                                                 15
Illustration of integrated commitment and payment control

                                  COMMITMENTS                                   PAYMENTS
Chapter Original Revised Requests   %    Approved          %        Requests     % Approved       %
         Budget Budget
Non-Program Expenditure
   60      6,580     6,580   3,248 49.4%    1,942        29.5%         1,844    28.0%     340     5.2%
   61      1,350     1,350     691 51.2%        51        3.8%             51    3.8%       47    3.5%
   62      4,450     4,450   1,561 35.1%      817        18.4%           936    21.0%     680    15.3%
   63        140       140     -    0.0%      -           0.0%           -       0.0%     -       0.0%
   64     19,996    21,064   5,942 28.2%    5,942        28.2%         5,942    28.2%   4,487    21.3%
   65      7,763     7,763   3,837 49.4%    2,337        30.1%         2,266    29.2%   1,507    19.4%
Total     40,279    41,347  15,279 37.0%   11,089        26.8%        11,039    26.7%   7,061    17.1%
Program Expenditure
   60      5,313     5,313   2,637 49.6%    1,821        34.3%         1,210    22.8%     625 11.8%
   61      5,617     5,617   3,791 67.5%    3,217        57.3%           734    13.1%     532 9.5%
   62      3,540     3,540     401 11.3%      366        10.3%           603    17.0%     433 12.2%
   63        -         -       -              -                          -                -
   64        -         -       -              -                          -                -
   65          30        30    -    0.0%      -           0.0%           -       0.0%     -    0.0%
Total     14,500    14,500   6,829 47.1%    5,404        37.3%         2,547    17.6%   1,590 11.0%
                               ADB Grant No.0133-CAM/Component 1:
                                              PFMRD
                                                                                                  16
              Graphical representation
25,000



20,000



15,000                                                              Revised Budget
                                                                    Commitment Requests
                                                                    Commitment Approved
10,000                                                              Payment Request
                                                                    Payment Approved


 5,000



    -
          1
         60   612    3
                    62          634             5
                                               64              6
                                                              65   Chapter
                         ADB Grant No.0133-CAM/Component 1:
                                        PFMRD

				
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