Session 5: Aligning accounting systems and performance information 28.10.2008 Juha Majanen, Ministry of Finance, Finland Matti Väisänen, Ministry of Education, Finland.

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Transcript Session 5: Aligning accounting systems and performance information 28.10.2008 Juha Majanen, Ministry of Finance, Finland Matti Väisänen, Ministry of Education, Finland.

Session 5: Aligning accounting
systems and performance
information
28.10.2008
Juha Majanen, Ministry of Finance, Finland
Matti Väisänen, Ministry of Education, Finland
Aligning accounting systems and
performance information
 Key elements
 Accountability
 Agency --> Ministry/Government --> Parliament
 Performace targets
 True and fair information
 Performance management
 Agency <--> Ministry
 Agreement on resources and performance targets
 Information for managerial purposes
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What is performance management ?
 Performance management is an agreement-based interactive
control model.
 Its operational core is in the ability of the agreement parties
(ministry and agency) to find the appropriate balance between the
available resources and the results to be attained with them.
 The basic idea of performance management is to balance
resources and targets on the one hand and efficiency and quality
on the other as well as possible and to ensure that the desired
effects are cost-efficiently achieved.
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Performance management development
 Performance management problems and development needs have
mainly been identified, and they have been taken into consideration
in the performance management and accountability reform and in
changes to the budget legislation in 2004.
 The main aim has been to enhance performance management by
emphasising the contolling task and accountability of
ministries.
 The content of control has been diversified, and a clear distinction
has been made between strategic outcome targets and operational
performance targets.
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Use of performance information in budgeting
 Different level of targets are set and reported:
 social policy targets: changes in the state of society and the
conditions of its members and the extent to which the set
targets have been achieved (social effectiveness);
 costs of achieving the social policy targets (cost
effectiveness);
 operating performance
 outputs, service capacity and the quality of outputs and
processes (outputs and quality management)
 economy, productivity and the cost effectiveness and
profitability of charged and jointly financed operations
(operational efficiency)
 personnel and job satisfaction, and information, expertise
and renewal.
Mainly
at the level of
Government
and ministries
Mainly
at the level of
agencies
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Outcome targets and social impact targets
at the level of ministries

The ministries are responsible for the functionality of performance
management and for control development within their respective
operational branches.

The basic tasks of ministries are emphasized: preparation for political
decision-making, strategic control of their operational branches and
international influence.

Proper performance management includes the ministries ensuring that
proper performance targets are set (also regarding their own operations)
and the agencies presenting true and fair information on their operations in
their annual accounts.

Social impacts and outcome targets are amphasized in the performanace
targets of ministries (policy effectiveness).
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Operational performace targets at level of
Agencies and Institutions
 Operational performance targets are emphasized in the
perfromance targets of agencies and institutions.
 The targets should be connected with operations and resources as
closely as possible, whereby their attainment depends direcly on
what the agency does and how it is managed.
 Alongside positive performance targets and outcome targets,
targets conserning unintended effects or side effects should also be
set.
 Performance targets are set primarily as indicators and only
secondarily as verbal targets.
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Good performance targets
Targets are:
 connected with and derived from the basic tasks of a government
agency
 strategic, essential from the point of view of operations
 clear, understandable to everybody
 concrete and operational
 evaluable, measurable and tíme-dependent
 preferably comparable
 such that the government agency itself can influence them
 ambitious and challenging, but attainable and realistic
 acceptable, jointly outlined and agreed
 such that they cover as large a part of the operations as possible
while on the other hand determining priorities
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Basic performance criteria
(true and fair information)
Outcome targets
Policy effectiveness: outcomes
Policy
effectiveness
How operations and finances
have affected policy
effectiveness
Operational
performance
targets
Operational
efficiency
Outputs and quality
management
-economy
-goods and services
- productivity
- service capacity and
quality
- profitability
Operational results:
outputs (which can be
influenced through
management)
- cost-equivalence
Human resource management
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Performance information in budgeting
 Preliminary performance targets are agreed (between Agencies
and corresponding ministries) and set during the preparation of
spending limits (medium term fiscal framework)
 Preliminary performance targets (operational targets and outcome
targets) are represented to the Parliament in the budget proposal
together with the appropriations.
 At the same time the Financial Statements and the achievement (or
non-achievement) of the Performance targets of previuos year is
reported to the Parliament
 An important budget development point is the presentation of
outcome targets in the justifications for classes within the
main title for each ministry --> reflects the accountability of
ministry concerned.
 Budget classes need to be collated into larger entities
constituting an administrative sector or policy sector for which
an outcome target can be set.
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Public statement of the ministry
(Central Government Budget Decree section 66i§)
1) an estimate of performance and the trend therein and of the outturn
of the performance targets set;
2) a statement as to whether the grounds for reporting performance
are appropriate with respect to steering and accountability and the
ministry´s position on development needs;
3) the measures that should be taken by the agency due to the final
accounts and to improve performance;
4) the measures to be taken by the ministry because of the final
accounts and to improve performance.


The Ministry has to formulate an opinion on performance,
(achievements and non-achievements) and take its position
Opinion is published
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Accounting and Performance information I
 Netra Reporting System
 Operational since 2004
 Internet-based tool which includes
 Accounting data
 Performance data
 Tool for performance management --> providing information
for decision making and reporting in all levels
 Ready-defined reports and user-defined reports
 Public --> enhances transparency
 Available at www.netra.fi
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Accounting and Performance information II
 On-going reform of budget preparation system and some other
systems
 Started 2007, operational at 2010
 Common tool for preparation process of Budget proposals,
Spending Limits (medium term fiscal framework) and Financial
Statemens
 Will be in use in Agencies, line Ministries and MoF
 Enables more coherent approach
 Reduces manual work
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