CHAPTER 9: Dealing with Public Fiscal Administration and Performance Mechanism

Fiscal Administration
- Refer to the formulation, implementation, and evaluation of policies and decisions on taxation and revenue
collection; resources allocation; budgeting; and auditing.
- Is also concerned with public expenditures, accounting, and debt management.

Fiscal Transparency
- Required in the administration of public fiscal policies.
- Entails being open to the public about the government’s past, present, and future activities, and about the
structure and functions of government that determine fiscal policies and outcomes.

Fiscal Policies
- Programs of action involving the system of government expenditures and revenue administration.
- Designed to effectively manage all financial resources as to budgeting, revenue collection, accounting, and
then systemizing all processes to related for the developmental goals of the public sector.

Rooting from the theory of the center and periphery, most underdeveloped economies were product of
centuries’ long imperialism and colonialism.

Fiscal management commences from income generation for the public sector in the form of tax revenues.

FISCAL TRANSPARENCY AND ITS CODE

Fiscal Transparency
- Being open to public scrutiny.
- Defines the scope, functions, and responsibilities of government in a clear manner making public fiscal
information accessible for the budget information and execution.
- Recognized as a requisite of a well-functioning public sector.

Reports on Observance of Standards and Code (1990)

- Strengthened the financial system’s stability.
- An initiative to strengthen institutions with the aim of promoting good governance and transparency.

The development of international standards and codes has been accelerated by the Financial Stability Forum’s
endorsement of internationally organized standards in 12 areas:

1. Accounting
7. Fiscal Transparency
2. Anti-money laundering
8. Insolvency and creditors’ rights
3. Auditing
9. Insurance regulation
4. Banking
10. Monetary and financial transparency policies
5. Corporate governance
11. Payments Systems
6. Dissemination of data
12. Securities Market’s regulation

These areas cover three main categories:

1. Transparency Standards
2. Financial Sector
3. Market Integrity for the corporate sector
The Code on Good Practices on Fiscal Transparency (CGPFT)
- Initiated by the World Bank and IMF in the late 1990s that provided four principles of the Code:
1. Clarity of roles and responsibilities of the government.
2. Public availability of information.
3. Open budget preparation, execution, and reporting.
4. The assurances of integrity.

FISCAL ACCOUNTABILITY

Public Accountability
- The foundation of integrity. (Francisco S Tantuico Jr., Former Chairman of COA)
- Defined in the constitution:
o Public office is a public trust. Public officers and employees must at all times be accountable to the
people, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and
justice, and lead modest lives.

In short, it just means holding appointed officials responsible for their actions.

Different Levels of Accountability (Ledivina V. Cariño)

1. Traditional Accountability
o Focuses on the regularity of fiscal transaction and faithful compliance, and the adherence to legal
requirements and administrative policies.

2. Managerial Accountability
o Concerned with efficiency and economy in the use of funds, property, manpower, and other resources.

3. Program Accountability
o Pays attention to the results of government operations.

4. Process Accountability
o Emphasizes procedures and methods of operations.

Public Financial Accountability is promoted primarily through the conduct of regular audits.
1. Traditional Audits
- Include legal and compliance audit, the legality of financial transactions as well as compliance with
established rules, regulations, and procedures.
2. Performance Audits
- Look into the actual outputs of agencies in relation to programmed goals.

In the Philippines, the Bureau of the Treasury has shown that public financial accountability can be achieved
through the combination of the following factors:

1. A strong legal foundation and organized structure.

2. Regular monitoring and reporting to the public through media and civil society.
3. Appropriate technology for timely and reliable information processing
4. Strong leadership committed to ensuring accountability and promoting good governance.

FISCAL TRENDS
BUDGETARY MANAGEMENT IN THE PHILIPPINES

Development Budget Coordinating Committee (DBCC)

- A cabinet-level interagency committee.
- Determines the desirable level of expenditure and debt for the budget.
- Consists of:
o A representative of the Office of the President
o The Department of Budget and Management
 Tasked with formulating and efficiently implementing the national budget—including
budget programming and monitoring agency accountability.

o The National Economic and Development Authority (NEDA)

 Coordinates social and economic development planning and monitors major projects.

o The Department of Finance

 Manages the financial resources of the government, its subdivisions, and associated agencies.

o The Bangko Sentral ng Pilipinas

FRAMEWORK FOR BUDGETARY ACTIVITIES

The PRESIDENT is required by the constitution to submit annual budget proposal to Congress each fiscal year.
- A line-item veto can be retained by the president, who is allowed to deny provisions inserted by legislators.

DEPARTMENT OF BUDGET AND MANAGEMENT (DBM)

- The lead agency for budget assessment, distribution, and operation in the Philippines.
- Focuses on deepening fiscal responsibility, enhancing the efficiency of public expenditures, and promoting
good governance.

DBM’s Institutional Relevance:

This may be achieved by focusing on the following tactical roles and responsibilities:

1. Fiscal Discipline
o To ensure that the Government “lives within its means”.

2. Effective Resource Allocation

o Ensure that government expenditures will be channeled towards strategic requirements for a
competitive and job-creating economy.

3. Efficient Government Operations

o Ensure that quality government goods and services are delivered on time and at the least cost.

BUREAU OF INTERNAL REVENUE (BIR)

- Kawanihan ng Rentas Internas
- An attached agency of the Department of Finance.
- Collects over half of the government's total revenues.

Powers of BIR:
1. Comprehend the assessment and collection of all national internal revenue taxes, fees, charges.
 2. Enforcement of all forfeitures, penalties, and fines connected therewith, including the execution of
judgments in all cases in its favor by the Court of Tax Appeals and ordinary courts.
3. Give effect to and administer the supervisory and police powers conferred to it by the Law.

ACCOUNTING MONITORING

Commission on Audit (COA)

- The supreme audit authority of the Philippines.
- An independent constitutional commission established by the constitution.
- It examines, audit, and settle all accounts and expenditures of the funds and properties of the Philippine
Government.

New Government Accounting System (NGAS)

- Introduced January 2002 by the COA.
- Designed to simplify government accounting, improve efficiency of monitoring public sector performance,
increase the transparency of government audits through civil society involvement.