FINANCIAL ADMINISTRATION (PAD 370)

INTRODUCTION TO FINANCIAL
ADMINISTRATION

The study of the revenue and expenditure

activities of government.
About budgets, taxes, government
expenditures, and public debts.
Hoover Commission Financial
management of a modern government.
Financial Administration, involving the
machinery and methods by which funds for
the support of public service are raised,
spent and accounted for is at the very core
modern government. (1949, USA).

National or Public Financial Policy is to

determine what is the government going to
do with our countrys wealth:
to achieve economic growth
Fair distribution of wealth
Effectiveness and efficiency of financial
management.

 As

a discipline study
Explain unity of facts, principles and their
theories that related to an increase and
matters by individual, businessman and
government.
As a process
Alderfer in his book Local Government In
The Third World Country stated that Public
Financial Management is time cycle starting
from tax until to final expenditures.

He mentioned on:
How to get
How to spend
As a management tools
D.P Francis in The Foundation of Financial
Management financial management as
the use accounting known economic
models, mathematical rules and aspects of
system analysis and behavioral science for
the purpose of assisting in its functions of
financial planning and control.

R.J Chambers stated financial administration

as the management of financial functions.
Management aspect involves planning and
control in goods used and services that is
given financial value to achieve
organization objective.
As a development tools
Public finance management must give
benefits to the people. For example the New
Economic Policy, which has implemented
since 1970 aims to eradicate poverty and
restructuring the society.

 As

a study regarding government activities

Otto Eckstein in Public Finance suggests
Public Financial management as a study
regarding on how government receive and
increase government revenue and matters
relating to the country debts.
As

an activities and functions

Nigro & Nigro in The Modern Public
Administration, suggests several
activities and functions of public
finance management which are:

 To

determine financial sources and tae

action to get money or provision.
To determine method to divide and use
money.
To control money usage and provision.
To manage payment and account aspect.

To avoid wastage
To avoid deception and breach of trust
To ensure the proper revenue system and
expenses is carried out correctly
To achieve government objectives
To ensure that purchasing/procurement is
done appropriately, correctly and legally.
To assess efficiency, effectiveness,
productivity and quality in the use of
resources.

Ensuring financial accountability of all

government agencies.
Proper management of public resources due
to high and unlimited demand from the
public.
Creating any alternatives ways in
using/manage that resources.
Compliance with legal and other mandatory
requirements.
To achieve governments objective.
To manage expenditure.

 Budgeting

A statement of revenue and expenditure for

the future, which is, used as planning and
management tools of national economic
sources to fulfill the peoples needs.
Types of budgeting
Operation Budgeting
Development Budgeting

 Tax

Management
It is a compulsory exaction of money by a
public authority for public purposes
enforceable by law.
Types of tax
Direct Tax
Indirect Tax

 Accounting

A process of recording, collecting and

spending public money and make a report
about it.
Systems of accounting
Obligation recording the transaction
when make the order.
Accrual recording the transaction when
receive the goods
Cash recording when money change hand

 Treasury

Summarize, plan and implement the

financial policy and government
expenditure.
To achieve a good economic growth and
fair distribution go along with the
government policy.
Treasury can control public money
expenditure through three stages:

Stage 1
Formation and representation of suggestion
and approval from Treasury.
Stage 2
Implementation of projects and programs
which had been approved by law and
withdrawal of money passed by the law., so
that, responsibility accord to the economic
needs in all matters is under authority of
Security Executive.

Stage 3
In auditing stage and report of general
auditor had been accepted, Treasury will
investigate all matter that had been evoked
with the purpose to assist Public accountant
Committee in measuring the report.

Roles:
To monitor government investment in
Non-Financial Public Enterprises.
Responsible for procurement of loans
from foreign and domestic sources to
finance national development projects.
To analyze and advise the Ministry of
Finance on short and medium term micro
and macro economic issues, policies and
strategies particularly in the relation to
fiscal and budgetary policies.

To formulates, implements and administers

tax policies.
Advises on legal aspect of financial and loan
management.
Responsible for the running of three
specialized bodies:
Special Commissioner for Income Tax
Office of the Ministry of Finance in Sabah
Office of the Ministry of Finance in
Sarawak
Issues guidelines and policies regarding the
procurement of goods and services by
governments departments.

 Supply

management
Used by the public sector in Malaysia
especially government agency.
Stress on purchase management and
storage.
These two aspects can create one system
supply management that can prepare
equipments for the government agencies
usage.

Public means the purposes/needs of

the people to be served by the
government.
It is related to services of the government.
Private sector means the
person/individual that are consider
achieving something by earn any profit as
they can.
Profit vs non-profit oriented
The ballot box vs the market place
Different in decisions processes for private
and public spending.

1. why is public financial management

important?
2. discuss the 6 main components of public
financial management
3. compare public and private sector
financial management
4. Discuss the development of public
finance in Malaysia.