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Approaches to Maximize Accountability, Minimize Risks, Improve Transparency and Reduce Fraud -New Developments in Government Financial Management.

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Presentation on theme: "Approaches to Maximize Accountability, Minimize Risks, Improve Transparency and Reduce Fraud -New Developments in Government Financial Management."— Presentation transcript:

1 Approaches to Maximize Accountability, Minimize Risks, Improve Transparency and Reduce Fraud -New Developments in Government Financial Management

2 Accountability Framework in India Parliamentary control over Government is ensured through various committees: –Public Accounts Committee (PAC) –Estimates Committee –Departmental Standing Committees The C & AG is a constitutional authority, scrutinizes Governments accounts and corrective actions taken.

3 Relationship between Accountability and Transparency Accountability - exercise of powers and discharge of duties with responsibility, consistent with obligations to society. Transparency - implies an open government, making available information about factors influencing decisions that have a bearing on public interest. Transparency and Accountability in Governance are mutually reinforcing.

4 Measures taken to introduce transparency A culture of secrecy develops predominantly due to: –Bureaucratic tendency to centralize power and authority. –restrictive provisions in laws not permitting disclosure of Government operations. Public Campaign by Social activists and NGOs for greater transparency in government. Enactment of Freedom of Information Act in 2002 - citizen has the right to obtain information from any public authority.

5 Transparency through e-governance Major benefits and objectives of e-governance: –Extensive use of IT has resulted in ushering transparency through wider and instantaneous dissemination of information. –strengthening efficiency and service delivery of Governmental operations (like tax administration, land and property records management, procurement of goods and services etc.) Major initiatives taken by the Government of India and many State Governments : –Reserving a certain percentage of each Ministry’s budget for investment in IT systems. –Placing greater information of governmental operations on the public domain through the Internet. –Citizen friendly public service delivery in an e-enabled environment..

6 Transparency through timely financial reporting Release of monthly details of Government’s fiscal operations on CGA’s web site ( –Aggregate budgetary outruns of the Central Government in terms of revenues, expenditures and fiscal deficit. –Attracts considerable attention in both print and electronic media. –Helps analysts, academicians, parliamentarians and the decision makers in Government. Assessment by IMF in its Report on the Observance of Standards and Codes (ROSC), February 2001: –India has a reasonably high level of fiscal transparency as regards the amount of fiscal information made available to the public. –Passing of fiscal policy legislation is a step further in this direction. –Notes that reporting on government finances should include information on contingent liabilities and quasi-fiscal activities.

7 Fiscal Consolidation and Discipline Fiscal Responsibility and Budget Management Act, 2003 : –requires the Central government to conduct its fiscal operations within a medium-term fiscal and macro-economic framework. –a medium-term fiscal policy statement, a fiscal policy strategy statement, and a macro-economic framework statement to accompany the annual budget. –availability of interim reports about fiscal developments to enhance transparency and enable corrective actions for deviations. Such fiscal responsibility legislations enacted both by the Central Government and some State Governments will contribute to sound fiscal management and discipline and thus accountability.

8 Strengthening of Public Financial Accountability (PFA) Framework of State Governmental agencies Several State Governments in India have taken the initiative to strengthen the PFA framework : –by providing for greater transparency on the functioning of Statutory Boards and Authorities and Urban Local Bodies, including disclosure of, and access by the public, to financial information. –Modernizing accounting and budgetary systems, financial and performance reporting, auditing, legislative scrutiny and disclosure of financial information. –Introduction of accrual accounting principles in several Urban Local Bodies.

9 Formulating Government Accounting Standards in India A Government Accounting Standards Advisory Board (GASAB) has been set up : –to formulate and recommend Indian Government Accounting Standards (IGASs). –with the objective of enhancing the quality of decision-making and public accountability. –GASAB has finalized four exposure drafts on different aspects so far.

10 Greater Delegation of Powers to Ministries in managing fiscal matters Reform aimed at providing greater delegation of powers to administrative Ministries in managing their financial transactions. Updated version of the ‘General Financial Rules’ will shortly come into force. To improve the quality of implementation of major programmes of the Government.

11 Recent Government financial management initiatives two recent initiatives taken by the Government of India to enhance the quality of accounting, increase transparency, and identify the direction of expenditure : examine the feasibility of introducing accrual accounting by commissioning pilot studies. 2.introducing gender budgeting in the Government of India to highlight gender sensitivities of budgetary allocation.

12 Strengthening the Governmental Vigilance System Central Vigilance Commission (CVC) has issued directions to all governmental agencies: –to introduce e-payments particularly to check on frauds and corruption at the cutting-edge level. –to publicize tenders on the web sites of the concerned agencies. –to ensure that accounts are duly reconciled between the Government accounting system and the banking system. Efforts are to move from a complaint-driven mode to a system-driven mode in order to check on frauds.

13 Promoting Government-Citizen interface in financial administration Citizens’ interface with governmental agencies has been made easier in some State Governments: –formation of the Public Record of Operations and Finance (PROOF) in Karnataka state to campaign for financial accountability as a vital mechanism for civic governance. –improving the transparency of financial operations of the Bangalore City Corporation through the Bangalore Agenda Task Force (BATF) These initiatives, though modest in scope, represent a concerted effort to promote citizens’ interest in public financial accountability.

14 Redressal of Citizen’s grievances A separate Department called as Department of Administrative Reforms and Public Grievances has been created. –to simplify the procedures to quicken the pace of public service delivery –to provide seamless services to the citizens The Reserve Bank of India (Central Bank) has set up a Banking Ombudsman Scheme. –to provide for an expeditious redressal grievance mechanism to bank customers Such Ombudsmen have also been instituted for tax administration, and in some states like Karnataka.

15 Summing up Measures taken in India to enhance transparency and maximize accountability : –Legislative action –Leveraging Information Technology –Developing and strengthening systems –Monitoring through constitutional and legislative watchdogs –Enabling easier citizen-Government interface etc.

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