Fundamentals of Public Financial Management

Tax and Revenue Management October 25, 2025
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Introduction

This foundational course introduces the core concepts and systems of **Public Financial Management (PFM)**, which is essential for transparent and accountable governance. It provides a holistic view of the PFM cycle, covering budgeting, revenue collection, expenditure management, accounting, reporting, and audit. Participants will gain a working understanding of PFM's role in achieving fiscal discipline, strategic resource allocation, and operational efficiency. The course is designed to equip non-specialists and new entrants with the comprehensive knowledge necessary to understand and contribute to sound management of public finances in line with international standards.

Objectives

Upon completion of this course, participants will be able to:

  • Describe the complete public financial management (PFM) cycle and the linkages between its components.
  • Explain the core principles of sound public budgeting (e.g., comprehensiveness, realism, transparency).
  • Differentiate between various budgeting systems (e.g., line-item, program, performance-based).
  • Understand the principles of public accounting and financial reporting (e.g., IPSAS).
  • Explain the role of internal and external audit in ensuring accountability and oversight.
  • Analyze a country's PFM system using common diagnostic tools (e.g., PEFA).
  • Identify the institutional roles and responsibilities in managing public finances.
  • Understand the importance of fiscal discipline and sustainability in the PFM framework.

Target Audience

  • New Civil Servants and Public Sector Staff
  • Staff of Ministries of Finance (outside PFM core units)
  • Parliamentary Staff and Legislative Oversight Committees
  • Internal and External Auditors (new to public sector)
  • Development Partner and NGO Staff working on Governance
  • Project Managers of Public Sector Reforms
  • Journalists and Researchers focused on Public Policy

Methodology

  • Case studies of PFM reforms and their impact in different regions.
  • Group exercise on analyzing a public financial report for red flags.
  • Scenario analysis on the institutional conflicts in the PFM cycle (e.g., MoF vs. Line Ministry).
  • Discussions on the challenges of implementing performance-based budgeting.
  • Individual exercise: Drafting a basic budget narrative.

Personal Impact

  • A holistic and foundational understanding of the PFM framework.
  • Ability to read, interpret, and contribute to budget and financial reports.
  • Enhanced professional credibility in public sector management and finance.
  • Skills to participate effectively in PFM reform initiatives.
  • Clear understanding of accountability and anti-corruption mechanisms.

Organizational Impact

  • Improved cross-functional collaboration due to a shared understanding of PFM processes.
  • Better-informed policy and resource allocation decisions.
  • Enhanced fiscal discipline and control over public spending.
  • Increased transparency and accountability in financial governance.
  • Stronger foundation for successful PFM reform implementation.

Course Outline

Unit 1: The PFM Cycle and Institutional Framework

Defining PFM and its Objectives
  • The three pillars of PFM: fiscal discipline, strategic resource allocation, and operational efficiency
  • Mapping the PFM cycle: Policy to Budget to Execution to Scrutiny
  • Institutional arrangements: roles of Ministry of Finance, line ministries, and Supreme Audit Institution
  • The legal and constitutional basis for public financial management
Diagnostic Tools and Standards
  • Introduction to the Public Expenditure and Financial Accountability (PEFA) framework
  • Other international standards (IMF Fiscal Transparency Code)
  • Benchmarking national PFM systems against best practices

Unit 2: Budgeting and Fiscal Planning

Budget Preparation and Structure
  • Principles of sound public budgeting (unity, universality, accuracy)
  • Different budgeting systems: line-item, program, performance-based budgeting (PBB)
  • Medium-Term Expenditure Frameworks (MTEFs) and fiscal space analysis
Revenue and Debt Management
  • Introduction to tax policy and revenue administration functions
  • Fundamentals of public debt management and fiscal sustainability analysis
  • Linking revenue forecasting to credible budget ceilings

Unit 3: Budget Execution and Expenditure Control

Managing Expenditures
  • Warrant and commitment control processes
  • Treasury Single Account (TSA) and cash management principles
  • Public Procurement: principles of fairness, transparency, and value-for-money
Internal Control and Audit
  • The role of internal control systems and internal audit
  • Preventing and detecting fraud and corruption in expenditure management

Unit 4: Accounting, Reporting, and Oversight

Public Sector Accounting and Reporting
  • Cash vs. accrual basis of accounting (Introduction to IPSAS)
  • Generating in-year and annual financial reports
  • The importance of timely and comprehensive reporting
External Audit and Scrutiny
  • The mandate and independence of the Supreme Audit Institution (SAI)
  • Financial, compliance, and performance auditing in the public sector
  • The role of the legislature (Parliament) in budget oversight and accountability

Unit 5: PFM Reform and Modernization

Drivers of PFM Reform
  • The need for PFM modernization (e.g., technological change, demands for accountability)
  • Key elements of modern PFM reform strategies
  • The role of information technology in PFM systems (e.g., IFMIS)

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