Government Financial Management: A Comprehensive Overview

Government financial management encompasses a wide range of activities and processes aimed at ensuring the effective and efficient use of public funds. This article explores the key responsibilities of various stakeholders involved in government financial management, the budget process, financial controls, the role of Parliament, the significance of the Treasury Board, and the framework provided by the Financial Administration Act (FAA).

Key Responsibilities in Government Financial Management

Effective government financial management involves the collaborative efforts of several stakeholders, each with distinct responsibilities. Deputy Heads are tasked with designating a Chief Financial Officer (CFO) to lead the departmental financial management function. CFOs are responsible for providing strategic financial advice, leading the departmental financial planning and budgeting process, and establishing a risk-based system of internal control over financial management. Senior Departmental Managers are accountable for implementing and maintaining a system of internal control over financial management in their areas of responsibility. The Comptroller General of Canada provides leadership for financial management within the Government of Canada, including monitoring compliance with policies and recommending corrective actions.

Budget Process: Planning and Decision-Making

The budget process is a crucial aspect of government financial management. It involves assessing the results of previous budgets, setting priorities, developing multi-year activity plans, reviewing plans for consistency with budget objectives, and making final budget decisions. The President of the Treasury Board tables the Estimates in the House of Commons, outlining the government’s financial requirements for each fiscal year. Parliament plays a vital role in approving these expenditures.

Financial Controls: Ensuring Proper Use of Public Funds

Financial controls are essential in government financial management, particularly in times of budgetary restraint. These controls aim to ensure that public funds are spent correctly, efficiently, and as directed by Parliament. The Financial Administration Act (FAA) provides the legislative framework for financial management in the Canadian government. It establishes rules for government disbursements and receipts, accounting policies, and the preparation of financial statements.

Role of Parliament: Approving Expenditures and Holding Government Accountable

Parliament holds significant power in government financial management by approving the expenditures of every department and government agency for each fiscal year. The Estimates, tabled by the President of the Treasury Board, outline the government’s financial requirements and are subject to review and approval by Parliament. This process ensures that the government is held accountable for its financial decisions.

Treasury Board: A Central Control Agency

The Treasury Board serves as a central control agency responsible for regulating various aspects of financial management. It prepares the Main Estimates, establishes rules for government disbursements and receipts, and sets accounting policies. The Treasury Board also oversees program evaluation within the government and establishes guidelines for evaluations, audits, and reviews.

Financial Administration Act: The Legislative Framework

The Financial Administration Act (FAA) provides the legislative framework for the entire public financial management cycle. It establishes the main rules of financial management that government departments and agencies must follow. The FAA sets out the responsibilities of the Treasury Board, the Comptroller General, and the Department of Finance in managing the government’s finances. It also establishes accounting policies and procedures, as well as rules for the preparation and submission of financial statements.

Conclusion

Government financial management is a complex and multifaceted process that involves the collaboration of various stakeholders, including Deputy Heads, CFOs, Senior Departmental Managers, and the Comptroller General of Canada. The budget process, financial controls, the role of Parliament, the Treasury Board, and the framework provided by the Financial Administration Act (FAA) all play crucial roles in ensuring the effective and efficient use of public funds. By adhering to these principles and implementing sound financial management practices, governments can ensure that public resources are utilized responsibly and in a manner that aligns with their objectives and priorities.

References

1. Government of Canada. (2016). Compendium of Management Practices for Statistical Organizations from Statistics Canada’s International Statistical Fellowship Program. Section 2, Chapter 2.3: Financial management. Retrieved from https://www150.statcan.gc.ca/n1/pub/11-634-x/2016001/section2/chap3-eng.htm
2. Government of Canada. (2017). Policy on Financial Management. Retrieved from https://www.tbs-sct.canada.ca/pol/doc-eng.aspx?id=32495
3. Domingue, R., & Salvail, M. (1998). The Management and Control of Public Finances in Canada. Library of Parliament, Research Branch. Retrieved from https://publications.gc.ca/Collection-R/LoPBdP/BP/bp297-e.htm

FAQs

What is the primary objective of government financial management?

The primary objective of government financial management is to ensure the effective and efficient use of public funds, safeguarding public assets, and promoting accountability and transparency in the management of government finances.

What are the key responsibilities