Council on archives international records management trust

Internal Revenue and Customs and Excise Departments

These departments are responsible for the collection of government revenues. Internal Revenue usually comprises taxes on the income of individuals (income tax), on the profits of companies (corporation tax), on the gain in the value of capital assets (capital gains tax), on inherited wealth (inheritance tax) and on transfers of titles to assets (stamp duty). The Customs and Excise Department collects taxes on goods and services (value added tax), import and export duties (customs), and duties on petrol, spirits, tobacco, betting and gaming.

Heads of Ministries/Departments

The heads of ministries and departments are responsible for the management of their internal accounting systems. In many countries, the permanent head of the department is the accounting officer, but he or she will usually be able to draw upon the services of an officer responsible for administration and finance who will be responsible for the daily operation of the financial management systems within the department. In many Commonwealth countries, there is an accounting cadre/service under the control of a head (usually the Accountant General); this group provides accounting staff to ministries and departments. This group may also include internal audit staff posted to government departments.

In countries operating the Exchequer system there is no Accountant General (see above). Instead, ministries or departments have accounting staff appointed through the normal civil service appointments system – usually the Civil Service Commission. Individual ministries or departments operate and manage their own bank accounts, keep their own accounting own accounting records and are answerable in the final analysis to the Permanent Secretary to the Treasury. Thus each ministry has greater flexibility and degree of control over accounting and financial operations relating to their functions.

Internal Audit Units

Internal audit is an appraisal or monitoring activity set up by the management of an organisation to review and evaluate accounting and internal control systems. As such, it can be considered to be part of an organisation’s overall control system. In the central government sector, accounting officers are responsible for establishing appropriate internal audit arrangements within their departments. Often this takes the form of an internal audit unit.

Central Computing Bureau/IT Department

Computerised financial systems need to be maintained by IT specialists. Sometimes these specialists are organised into units dedicated to supporting specific strategic applications, such as payroll. These units are often physically located at the ministry in charge of finance. In other cases, they are operated by a central computing bureau on behalf of that ministry. In either case, IT specialists have a responsibility for providing advice on the choice of IT standards, systems and applications.

National Archives/National Records Service

The National Archives has a statutory responsibility for the preservation of financial records of permanent value. In addition it should have a role in ensuring that all government financial records are managed from the point of creation. It has an obligation to respect the interests of other stakeholders, especially the Auditor General and Accountant General, in controlling the security, use and treatment of financial records.

Summary

In this lesson we have surveyed the key stakeholders in the public sector financial function. We have seen that these can be divided into upper level stakeholders that provide a framework for accountability for government income and expenditure. The operational level stakeholders have a stake in making the financial management system work on a daily basis.

The stakeholders examined included

• 
  the legislature
  
• 
  the executive
  
• 
  the public
  
• 
  international and bilateral aid agencies
  
• 
  the central bank
  
• 
  departments responsible for finance and economic planning
  
• 
  the Accountant General
  
• 
  the supreme audit institution
  
• 
  the internal revenue and customs and excise departments
  
• 
  heads of ministries or departments
  
• 
  internal audit units
  
• 
  central computing bureaus and information technology departments
  
• 
  national archival institutions and national records services.
  
  
  

Study Questions

1. 
   List the stakeholders in the government financial system in your country and explain their roles.
   
2. 
   Draw a diagram to show the relationship between these stakeholders.
   
3. 
   What are the four main documents that the legislation of your country requires to fulfil its role in holding government institutions financially accountable?
   
4. 
   What is the difference in the role of the accountant general and the head of the supreme audit institution?
   

Activities: Comments

Activity 3

This activity will help you compare the information provided in this lesson with your own understanding of financial records and those stakeholders affected by their management. Compare your answers with the information given in this lesson and refer back to this information as you proceed through this module.

Lesson 3

The Financial Management System: Business Functions, Processes and Outcomes

Lesson 3 examines the major business functions and processes that comprise public sector financial management. These functions and processes result in records; therefore it is critical to understand financial activities in order to manage the records.

The nature of the financial records identified here in relation to outcomes will be discussed in greater detail in Lesson 4.

It is important to remember that financial management is a system.

System: A perceived whole whose elements ‘hang together’ because they continually affect each other over time and operate toward a common purpose. Systems consist of sub-systems or functions, processes, activities and tasks.

Function: The means by which an organisation or system fulfils its purpose.

Process (1): The means whereby a system’s functions are performed.

Process (2): The means whereby an organisation carries out any part its business.

For more information on systems, see Analysing Business Systems.

Financial management systems are broadly similar all over the world. The functions and processes described in this lesson are generic.

Figure 3: Functions and Processes of the Legislative Framework