DEPARTMENT OF BUDGET & MANAGEMENT

PUBLIC FINANCIAL MANAGEMENT

ASSESSMENT TOOL
FOR LOCAL GOVERNMENT UNITS
(PFMAT FOR LGUs)
OUTLINE OF PRESENTATION

Understanding the Conceptual Framework

for PFM Assessment
- Legal Bases
- PFM & Its Goals
- Rationale for PFM Assessments
- Analytical Framework for PFM Assessments

The PFM Assessment Tool for LGUs

- Basic Concepts
- Value of the PFMAT for LGUs
- Procedures for Conducting a PFM
Assessment
- Using the Results of the PFMAT for LGUs
Public Financial Management Assessment

Conceptual
Framework
 UNDERSTANDING THE CONCEPTUAL FRAMEWORK
FOR PFM ASSESSMENT

Legal Bases for LGU PFM:

1987 Philippine Constitution & Local Government Code of
1991

“The territorial and political subdivisions of the State shall

enjoy genuine and meaningful local autonomy to enable
them to attain their fullest development as self-reliant
communities and make them more effective partners in the
attainment of national goals. Toward this end, the State shall
provide for a more responsive and accountable local
government structure instituted through a system of
decentralization whereby local government units shall be
given more powers, authority, responsibilities, and
resources.”
 UNDERSTANDING THE CONCEPTUAL FRAMEWORK
FOR PFM ASSESSMENT

Legal Bases for LGU PFM:

Operative Principle of Decentralization:

“(b) There shall be established in every local

government unit an accountable, efficient, and
dynamic organizational structure and operating
mechanism that will meet the priority needs and
service requirements of its communities; “

PFM is an integral part of such

organizational structure and operating
mechanism
 UNDERSTANDING THE CONCEPTUAL FRAMEWORK
FOR PFM ASSESSMENT

What is Public Financial Management?

Public Financial Management (PFM) is a system of
rules, procedures and practices for government to
manage public finances encompassing:

o budgeting;
o accounting;
o auditing;
o cash management;
o management of public debt;
o revenue generation; and
o public reporting on public sector
financial operations.
 UNDERSTANDING THE CONCEPTUAL FRAMEWORK
FOR PFM ASSESSMENT

Goals of Public Financial Management

Strategic
Aggregate allocation of
Fiscal Resources
Discipline
Efficient
Service
Delivery

PFM
 UNDERSTANDING THE CONCEPTUAL FRAMEWORK
FOR PFM ASSESSMENT

“Kung walang corrupt, walang mahirap”

Rapid, Just, Inclusive Integrity of the

5 Priority Transparent, Poverty Reduction Equitable & & Lasting Environment/
Accountable & & Empowerment Sustained Peace & the Climate Change
Areas Participatory of the Poor Economic Rule of Law Mitigation &
Governance Growth Adaptation

Societal
Inclusive Growth and Poverty Reduction
Goal

Sectoral
Good Governance Fiscal Discipline
Goal

PFM Goal Improve efficiency, accountability and transparency of public

fund use for better service delivery

Source: PFM Roadmap presentation

PUBLIC FINANCIAL MANAGEMENT AND GOOD
GOVERNANCE

GOVERNANCE

Open and Orderly PFM System

 UNDERSTANDING THE CONCEPTUAL FRAMEWORK
FOR PFM ASSESSMENT

Rationale for PFM Assessments

PFM largely and directly affects the delivery of public
goods and services to the LGU’s constituents

Adequate funds for basic

services
PPAs aligned with
LGU and NG
development goals

Better service at lower costs

 UNDERSTANDING THE CONCEPTUAL FRAMEWORK
FOR PFM ASSESSMENT

Rationale for PFM Assessments

Part of government efforts to institutionalize

governance reforms

 Basis for PFM Improvement

Planning

 Pre-requisite to the release of

funds to LGUs under the
Bottom-Up Budgeting
The PFM Assessment
Tool for Local
Government Units
 The PFMAT FOR LGUs

What is the PFMAT?

A self-assessment instrument designed to

assist LGUs in:
evaluating their PFM
performance;
formulating strategies to
build on strengths and to
address weaknesses;
 The PFMAT FOR LGUs

Value of the PFMAT

Measure all or some aspects of its PFM

that require attention

Benchmark against other LGUs performance

Adopt new best practices through

the development of a PFM
Improvement Plan (PFMIP)

Facilitate accreditation for future donor support

 The PFMAT FOR LGUs

The PFMAT for LGUs is a Self-Administered Tool

 The PFMAT FOR LGUs

Procedures for Conducting PFM Assessments

Getting started…..
1. LCE formally organizes the PFM Team thru an Executive
Issuance

o Department Heads of:

• Treasury
• Budget
• Accounting
• Planning & Development
• GSO / BAC
o Representative of the Office of the LCE

2. LCE designates PFM Team Leader

 The PFMAT FOR LGUs

Procedures for Conducting PFM Assessments

Getting started…..
3. PFM Team should:

o Discuss PFMAT to establish a

common understanding;

o Orient the LCE & Local Sanggunian

on the PFMAT to obtain buy-in
 The PFMAT FOR LGUs

Procedures for Conducting PFM Assessments

4. Distribute pertinent portions of the PFMAT to

responsible Office / Department
5. Responsible Office fills out the PFMAT based on data
listed in the tool
- Fill out data tables first as basis for determining
applicable score
- Scores are summarized per Office and per critical
dimension
o Use Summary Tables 3 and 4
 The PFMAT FOR LGUs

Using the Results of the PFM Assessments

6. Summarize and explain the results of the

PFMAT in the PFM Assessment Report

The PFM-AR is a concise document containing the ff:

1. Executive Summary
2. Introduction
3. Background Information
4. Assessment of the LGU’s PFM Systems
5. Recommendations
 The PFMAT FOR LGUs

Using the Results of the PFM Assessments

 Analyze the results of the PFMAT further

 Focus on dimensions / key elements with low

scores

 Develop strategies to address identified

weaknesses

o Critical problem solving / planning tools

such as Logical Framework Analysis (LFA)
are suggested to be used
 The PFMAT FOR LGUs

Using the Results of the PFM Assessments

Value of the LFA in PFM Improvement Planning

 Facilitates in-depth analysis of the results of the

PFMAT, particularly causes of the low scores in
certain elements / dimensions of the PFM system.

 Helps the LGU design projects / programs which

will:
o address identified weaknesses in PFM;
o Sustain / further improve strong areas in
PFM;
 The PFMAT FOR LGUs

Using the Results of the PFM Assessments

Recommendations under the PFMAR are detailed in

the PFM Improvement Plan
 The PFMAT FOR LGUs

Using the Results of the PFM Assessments

Reminders …..

 PFMIP should be submitted to the

Sanggunian / LCE for approval

 LCE / Sanggunian to issue necessary policy

support to help PFMIP implementation

 PFMIP should be integrated in the AIP if

funding is required