Mr' Riaz Khan, Member

1
LOCAL GOVERNMENT FINANCE
FINANCIAL MANAGEMENT
By Mr. Riaz Khan, Member National Reconstruction
Bureau, Pakistan
3rd July , 2007
2

3
PRE DEVOLUTION ISSUES

• NO COMMUNITY INVOLVEMENT
• LIMITED ACCESS OF PUBLIC
• NO ACCOUNTABILITY TO CITIZENS
• CENTRALIZED SYSTEM
• PRIORITIES NOT IN LINE WITH NEEDS
• NO OWNERSHIP
• DEVELOPMENT CURRENT BUDGET NOT COORDINATED
• NO CONTINUITY OF POLICIES, PROGRAMS PLANS
• LONG GESTATION PERIODS OF PROJECTS
• GRAVEYARD OF PROJECTS

4
LGO , 2001
5
LGO CITIZENS EMPOWERMENT STRUCTURES
UNION COUNCIL
TEHSIL COUNCIL
ZILA COUNCIL
MONITORING COMMITTEES
VILLAGE / NEIGHBOURHOOD COUNCILS
CITIZEN COMMUNITY BOARDS
PROVINCIAL FINANCE COMMISSION
LOCAL GOVT. COMMISSION
DECISION MAKING TRANSFERRED TO ELECTED
REPRESENTATIVES COMMUNITY
6
Rules notified by Government of the Punjab under
the PLGO
7
Rules notified by Government of the Punjab under
the PLGO, 2001
8
DEVELOPMENT PLANNING
9
(No Transcript)
10
INTEGRATED BOTTOM UP PLANNING
NATIONAL / PROVINCIAL PLANS
LAWS, POLICIES, RULES, STANDARDS
LOCAL INPUT
ZILA COUNCIL
ZMC
TC
UC
CCBs
11
DEVELOPMENT PROCESS

• Need Identification
• Project Preparation
• Appraisal by Budget Development Committee
• Approval by Council
• Implementation
• Monitoring Progress
• Operationalization on Completion
• Evaluation

12
BUDGETING PROCESS
13
BUDGET PROCESS OVERVIEW

• Budget Meetings / Inputs
• Budget Call Letter
• Budget Preparation
• Non-development (Receipt / Expenditure)
• Development (CCB Non-CCB Schemes)
• Review by Budget and Development Committee
• Approval by Council
• Execution / Management Monitoring
• Re-appropriation
• Supplementary Grants
• Revised Budget Excess and Surrenders

14
SALIENT FEATURES - BUDGETING

• Approval by Council
• Concept of draft budget (from April to June)
• Performance Targets
• Budget development committee to integrate /
  monthly review of current development budget
• Community participation through reservation of
  25 of development funds for CCBs
• Monthly budget reporting system
• Budget Accounts reports integration
• No transfer of funds to Provincial Government
• MTBF through three years Award

15
SALIENT FEATURES - BUDGETING

• Provincial Government to prepare budget in case
  Council fails to approve the budget.
• Concept of charged expenditure e.g. Council
  budget.
• Conditional grants shown separately in budget.
• Review of budget by Provincial Government, if
  contrary to budget rules.
• Powers of re-appropriation to be delegated by
  Council, can be at any time during FY.
• Provision for honoraria allowances in budget
  for elected representatives.
• Performance incentives for employees
• Local governments can not incur debt.

16
(No Transcript)
17
ACCOUNT IV STATUS CITY DISTRICTS 2002-03 TO MARCH
2006-07
18
(No Transcript)
19
(No Transcript)
20
(No Transcript)
21
FUNDS UTILIZATION - END JULY FY
NO OF MONTHS FUNDS AVAILABLE AT END JUNE
22
(No Transcript)
23
(No Transcript)
24
CITIZEN COMMUNITY BOARDS

• CCBs are established under LGO, 2001
• Improvement of existing public service delivery
  facilities
• Development and management of a new facilities
• Provide a legal framework for non-elected
  citizens to participate in development activities
  at the local level
• 25 of Development Budget reserved for CCBs by
  local governments
• Minimum 25 persons to register a CCB
• Minimum CCB contribution 20 in cash
• Approved funds are transferred to CCB Bank
  Account and Project is executed by CCBs
• Detailed procedures provided under CCB Rules 2003

25
PROJECT CYCLE - CCBs
LG OFFICES
REGISTRATION EDO (CD)
UNION COUNCIL
3. PROJECT COSTING
1. REGISTRATION
TEHSIL COUNCIL
CCB (PROJECTS SUBMITTED THROUGH CCB OFFICIAL FOR
APPROVAL BY COUNCIL)
4. SUBMISSION
5. APPROVAL
ZILA COUNCIL
6.IMPLEMENT
HEADMISTRESS/ COMMUNITY/ CCB
2. NEEDS IDENTIFICATION
26
(No Transcript)
27
(No Transcript)
28
(No Transcript)
29
(No Transcript)
30
(No Transcript)
31
(No Transcript)
32
APPLICATION FOR REGISTRATION
33
(No Transcript)
34
CCB COSTS ESTIMATES
35
CCB COSTS ESTIMATES
36
CCB PROJECTS REPORT
37
PROCUREMENT
38

• PRE DEVOLUTION - CENTRALIZED PROCUREMENT

SECRETARY HEALTH
PURCHASE COMMITTEE
PURCHASE CELL
TENDER
DGHS
SUPPLY TO MSD
DHO
BHU
REQUEST FOR SUPPLIES
39

• DECENTRALIZED PROCUREMENT

PURCHASE COMMITTEE (DIST. GOVT.)
TENDER
EDO HEALTH
DISTRICT OFFICER
SUPPLIES
INDENT
BHU
40
FINANCIAL POWERS DISTRICT GOVERNMENTS
41
LGO ACCOUNTING
42
(No Transcript)
43
ACCOUNTING

• Government accounts were maintained by auditor
  general till may 2001. Functions transferred to
  controller general of accounts after may 2001
• DAO maintains accounts of Federal, Provincial and
  District Governments
• Approval of new accounting model in December
  2001.
• Local Government Accounts Manual notified in
  2003.
• Automation through project to Improved Financial
  Reporting and Accounting (PIFRA-I) 1996.
• PIFRA-II extension to TMAs
• Merging of LGs OSR and PFC funds and preparation
  of single account
• Appropriation and finance accounts

14
44
STANDARDIZATION OF CHART OF ACCOUNTS
NEW
OLD SYSTEM

• COMBINED
• PROVINCE
• DISTRICT
• TMAs
• UNIONS
• A/Cs

PROVINCE
PROVINCE A/C
DISTRICT GOVT.
ZILA COUNCIL A/C
CORPORATIONS, COMMITTEES A/C
TMAs
UNION COUNCIL A/C
UNION
45
CONSOLIDATION OF ACCOUNTS
CONSOLIDATED NATIONAL
FEDERAL GOVT.
PROV. GOVT.
CONSOLIDATED PROVINCE PG, DGs, TMAs, UAs
DG
CONSOLIDATED DISTRICT DG, TMAs UAs
CONSOLIDATED TEHSIL TMA UAs
TMA
UAs
UAs
UAs
UAs
46
AUDITING
47
(No Transcript)
48
AUDITING SYSTEM
ENTITIES
OLD
NEW
PROVINCE
AGP
AGP
LFA
AGP
ZILA COUNCIL
TOWN COMMITTEES CORPORATIONS
LFA
AGP
LFA
AGP
UNION COUNCIL
49
AUDIT FLOW CHART - DISTRICT GOVERNMENTS
Audit conducted Audit Inspection Report issued
Meetings held with officials of DG
Audit Report (AR) sent by AGP to Nazim through
Governor
Nazim submits AR to Council (Accounts Committee -
AC)
AC submits recommendations to Council
Council passes resolution For necessary action
50
ACCOUNTABILITY IN NEW SYSTEM

• Each scheme approved by Council
• Display of reports for public
• Monthly Reports to Council
• Monitoring Committee of Councils
• Accounts Committee
• Internal audit system
• Local Government Commission
• Provincial Finance Commission
• Auditing by AGP
• Principal Accounting Officer
• Accountability by the people

51
Thank You