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Overview

The Philippines–Australia Public Financial Management Program (PFMP) is a joint initiative of the Governments of Australia and the Philippines to improve the efficiency, accountability and transparency of public fund use in the Philippines. Through the Department of Foreign Affairs and Trade (DFAT), the Australian Government has committed A$ 30 million to the program, for a period of five years (2011 to 2016).

The Program commenced in October 2011 and is directly assisting the Philippine Government to implement its Public Financial Management (PFM) Reform Roadmap. This comprehensive PFM reform agenda aims to clarify, simplify, improve and harmonize the financial management processes and information systems of the Philippines’ bureaucracy.
 
For 2016, the Program continues to support core PFM Reforms, at the same time, focus on transport infrastructure in relation to PFM. This additional new focus of the Program is intended to help ensure that the PFM system can support the Government’s aggressive expenditure target in this sector. It also reflects the priorities of both Governments (Australia and Philippines) and is an emerging priority for Australian aid in the Philippines. 
 
 

Program Focus and Strategic Objectives

The PFMP prioritises practical budgeting and expenditure management reforms that improve the building blocks for a modern PFM system. It is helping decision-makers to do their jobs efficiently, effectively and economically so that Filipinos benefit from improved delivery of goods and services.

At the onset, the Program was originally designed to achieve the following four strategic objectives over the long term - 1) Increase the efficiency and effectiveness of the allocation, utilisation and reporting of budgeted funds by oversight agencies; 2) Improve PFM capability in select departments to enable more efficient utilisation and accountability of public funds for service delivery; 3) Generate more timely, reliable and accessible public expenditure management information; and 4) Strengthen external oversight of public expenditure management linked to physical performance information.
 
From 2011 to 2013, the above strategic objectives have been the focus of PFMP’s activities, supporting all of the Philippine Government’s PFM reform efforts. As specific PFM reforms have been put in place with the assistance of the Program, the Government’s priorities have then evolved to focus on fully operationalising and institutionalising these reforms. This change in priority has also prompted the Government to update its PFM Reform Roadmap. 
 
In response to these changes, the PFMP updated its Program Strategy, including its strategic objectives and Results Framework, to align it with the revised PFM Reform Roadmap. The updated Program Strategy was adopted by the PFMP Program Steering Committee for implementation at the beginning of 2015, with the following revised strategic objectives:
 
Objective 1: Government Delivers PFM reforms benefits through a systematic implementation approach
 
Objective 2: DepED improves financial management compliance and performance 
 
Objective 3: Government and CSOs enhance their engagement
 
For each strategic objective, specific program outcomes were identified with corresponding activities to help achieve the program’s overall goal. Details of these are discussed in the updated Results Framework.  
 
As of June 2016, the Program has completed all activities that were planned for strategic objectives 2 and 3. It has also completed most of the activities for strategic objective 1, while continuing some activities up to July 2017. PFMP will continue to deliver support to core PFM reforms to its current partner oversight agencies, as well as selected spending agencies for the planned new activities.  
 

 

Our Partners

The PFMP coordinates assistance for national government reforms across oversight agencies and targeted spending departments to build their long-term capability and emphasise a whole-of-government effort to achieve sustainable and lasting PFM reform.

It works in collaboration with: 

Oversight Agencies: to advance insitutional reforms

  • The Department of Budget and Management (DBM), Department of Finance (DoF) –Bureau of Treasury (BTr) and Commission on Audit (COA) 

Selected Spending Departments: to improve their PFM capability 

  • The PFMP has worked with the Department of Education (DepED), Department of Social Welfare and Development (DSWD), and Department of Public Works and Highways (DPWH) in helping strengthen their financial management systems. 

Development partners: to facilitate convergence towards the objectives of the Philippine PFM Reform Roadmap. 

In the past, the Program also worked with the Legislature: the technical offices of the Congress to inform the public policy debate and improve budget oversight; and Civil Society: select groups and networks to build demand for change and engage constructively with government on budget transparency and expenditure monitoring.

 

Our Initiatives

Since 2011, the Program has supported the implementation of key PFM reforms and initiatives under the PFM Reform Roadmap, conducted activities to improve financial management in selected spending agencies, and worked with selected CSOs and government agencies to enhance their engagement in relation to public expenditure matters. 

Some of the key initiatives of the Program to date are:

Establishment of a Program Management Office and Strategic Support for the PFM Committee

Since its inception, PFMP has provided a range of support to the management of the reforms. At the centre of this support was the Program Management Office (PMO) that provided both strategic advice and administrative support to the PFM Committee and to then-Project Information Units (PIUs). Embedded in the DBM and staffed entirely by PFMP technical advisers and project staff, the PMO acted as a Secretariat and advisory group to the PFM Committee. It provided briefings to all PFM Committee members on the progress of the reforms, key issues and recommendations. It also provided assistance in the review of the PFM Reform Roadmap, training coordination, and communications support for the PFM reforms. 

The assignment and location of the PMO proved to be a strategic decision as it placed PFMP at the centre of the action and had direct access to key government decision-makers, and therefore, effectively delivering assistance for the implementation of the reforms. As activities progressed and with the assistance provided by the PFMP, the Government reached a point where it had the full capability and resources to administer the reform process. Therefore, in 2014, the PFMP-funded PMO ended its operation while the management of PMO was assumed by the Government. Although this was the case, the PFMP still continued, and continues to deliver assistance to the PFM Committee and the PFM reform processes through the advice given by PFMP’s advisers and technical specialists. 

 
Strengthening Financial Management in DPWH and DepED and Internal Audit and Risk Management in DSWD
 
One of the features of PFMP’s design was to provide assistance to selected spending agencies to improve their PFM systems. The Program assisted the Department of Public Works and Highways (DPWH) and the Department of Education (DepED) to strengthen their financial management, and the Department of Social Welfare and Development (DSWD) to improve its internal controls, risk management and internal audit functions. The following are specific activities conducted by and with the support of PFMP for each agency:
 
 
Department of Public Works and Highways (DPWH)
 
From 2012 to 2013, the PFMP assisted the DPWH to roll out the electronic new government accounting system (eNGAS) and the electronic budget system (e-Budget) to all 206 offices of the Department, including its central, regional and district offices. It also assisted the DPWH to integrate these two systems with its project monitoring system. The rollout yielded improvements in the accuracy and timeliness of financial information and reporting, and provided a basis from which to link physical and financial performance information. For DPWH, this meant that it was in an improved position to track the physical progress of its infrastructure projects.  
 
Department of Social Welfare and Development (DSWD)
 
Support to DSWD focused on helping the Department implement improvements to its internal audit and risk management functions. A basic approach to risk management was developed and rolled out across the organisation, with support provided to operationalising risk management in several of DSWD’s regional offices. Improving the ability to identify and manage risks was vital since the resources allocated to the Department’s major social protection programs, at that time, rapidly increased. The PFMP’s support for the DSWD for these activities was completed in December 2013. 
 
Department of Education (DepED)
 
In the early years of the Program’s implementation, the assistance provided to DepED was focused on getting the Department ready to implement key PFM reforms, namely the then-GIFMIS, TSA, and UACS. From 2012 to 2015, a dedicated team from PFMP was assigned to DepED to conduct activities that were meant to strengthen the Department’s internal audit functions, budget and accounting systems, cash management, and other related financial management systems and business processes that would help operationalise the reforms. 
 
In 2014, the focus of the activities was on the adoption of the UACS in the budget execution and preparation for the implementation of the TSA and GIFMIS. Specific to UACS, support was provided in the form of training about the UACS which was conducted to around 5,000 staff, including trainers, and advice on upgrading DepED’s main budget and accounting systems to ensure their compliance to UACS. At the same time, the Program assisted in developing an inventory of bank accounts and initial implementation plan for the TSA. It also conducted a functional review and strategic design for financial management information systems, change readiness assessment that included visits to pilot sites, change management plan, and inventory of ICT hardware to prepare for the GIFMIS implementation. 
 
By 2015, the then-GIFMIS was formally discontinued to adopt a more incremental and smaller-scale financial management information system. The program continued to support DepED to strengthen its existing budget and accounting system as an interim step towards systems integration and enhancement. It also worked with DepED to develop a Financial Management Manual (FMM) as a guide to strengthen financial management transparency and accountability throughout DepED. This important document outlined the current systems and processes of DepED, identified internal controls and other financial management processes that can be applied throughout the Department, and therefore ensuring integrity and completeness of financial information provided to stakeholders. While developing the manual, the team conducted a thorough processes review and worked closely with the Central Office in defining the business processes. 
 
The PFMP also provided significant support to improve data integrity within DepED in 2015. This important work specifically focused on reconciling bank accounts, improving regularity of data entry, improving the rigour of management oversight, and developing a training manual on data integrity. Through these activities, the integrity of financial information has significantly improved and staff and management have become more focused and conscious in having timely and quality financial data. 
 
Support to DepED was completed in September 2015. 
 
 
Design and Implementation of the Treasury Single Account 
 
The Philippine Government introduced a Treasury Single Account (TSA) to improve cash management and execution of the national budget. This important reform provides fiscal managers with a reliable basis for cash flow forecasting, short-term financing, and maintaining appropriate daily cash balances. Essentially, the implementation of TSA will consolidate the bulk of the Government’s cash balances into a single account, and in so doing, improve transparency and generate potentially significant cost savings for the government. (Read more about TSA here.) 
 
The PFMP provided detailed analysis of existing cash management practices, and in close collaboration with the BTr, developed and designed a framework for the TSA. It also provided assistance for the implementation of TSA, which began in January 2014 with the consolidation of the government’s revenue accounts. Since then, work has been underway to try to improve visibility of expenditure accounts in spending agencies. 
Progress was achieved in 2015 on this front through upgrading two key systems – the TSA Reporting and Monitoring System (TRAMS) to complete its coverage to agency disbursements that will provide BTr and DBM with about daily agency-level expenditure; and the Electronic Modified Disbursement System (eMDS), Land Bank of the Philippines’ system for electronic payments by making the system UACS-compliant. 
 
The Program also provided advice and support on the upgrades and operationalisation of TRAMS and eMDS. 
 
 
Design and roll-out of the Unified Accounts Code Structure 
 
Working closely with DBM and COA, a new harmonised budget classification and coding framework called the Unified Account Code Structure (UACS) was formulated in 2012. As a classification system, the UACS specifically gives oversight agencies a common reference to track each individual government project or program, while helping DBM to monitor budget transactions (from appropriations and allotments to actual expenditures), and collectively enable financial staff, analysts, and decision-makers in the government to derive and analyse data from each project and program, and later convert it to timely and useful information that will facilitate decision-making and policy formulation. (Read more about UACS here and here)
 
The program provided extensive support to UACS – first, in providing expertise to help oversight agencies to design the UACS, then, in providing resources for its rollout to agencies, in support of its adoption in the 2014 National Budget Cycle. It developed and delivered training to 5,112 participants across all government agencies in 2014. Following this, the Program helped DBM set-up the arrangements to maintain the UACS. 
 
Support to UACS implementation concluded in January 2015, following the successful provision of training and operational support to DBM. 
 
 
Support to Budget Reforms – Linking resources to results 
 
Over the last three years, the performance-focus of the National Budget has strengthened from containing no outcome information in the 2013 budget, to output-level information in the 2014 budget, outcome-level information in the 2015 budget, and a trial of program budgets in six spending agencies in the 2016 budget. These structural changes to the budget happened following the decision of the DBM to include the agency outputs in the 2014 National Budget. 
 
The PFMP assisted DBM to implement this decision, and helped to then define the longer term strategy for performance budgeting, and then implement the succeeding budget reforms, such as the Performance-Informed Budgeting (PIB) in 2014 and the Two-Tier Budget Approach in 2015. It also helped DBM to work with all national government agencies (NGAs) to finalise their program structures in anticipation of the 2017 budget call. 
 
The Program’s assistance spanned from policy advice to operational advice, helping DBM to operationalize budget reforms, or put processes in place to manage a performance-oriented budget effectively. 
 
 
Assistance to implementing financial management information systems
 
One of the original objectives of the Program during its first few years of implementation was for government agencies to be able to generate more timely and reliable public expenditure management information. This was in line with priorities of the administration then, wherein Executive Order No.55 was issued which directed the integration and automation of all government financial management systems by implementing a Government Integrated Financial Management Information System (GIFMIS) by 2015. The GIFMIS would offer a long-term integrated systems solution for the entire government, from budget preparation and execution to financial reporting.
 
The Program advocated for the development of a conceptual design as the basis for defining detailed specifications and a procurement approach for the system. The conceptual design of the GIFMIS was formulated in 2012 and the Government proceeded to system development through procurement of a commercial-off-the-shelf solution in 2013. Throughout the preparation for and conduct of the procurement, extensive support was provided by the Program. 
 
In January 2015, Government decided to abandon the procurement process and proceed instead with a more limited, incremental approach to the implementation of the financial management information system that will be focused initially only on oversight agencies; thus, adopting to develop the Budget and Treasury Management System (BTMS). The PFMP provided extensive technical advice to assist DBM to develop an alternative strategy to GIFMIS and scope BTMS, all technical and tender specifications; secure the necessary approvals; conduct the procurement process; and develop and finalise the Terms of Reference for the procurement of a functional Independent Verification and Validation Team.  PFMP also provided extensive briefings and support to senior staff at DBM and BTr on progress and issues associated with the procurement and implementation of BTMS. 
 
The BTMS contract was successfully agreed between the Government and the joint venture of Innove and Free Balance in November 2015. For 2016, activities such as system design and implementation, training, user acceptance testing, and data migration are being implemented to enable the BTMS to go live by January 2017.
 
 
Development of the Budget Cycle Analytics Tool
 
Building on the foundation of the UACS and supporting the Government to operationalise reforms in the budget cycle, the Program developed the Budget Cycle Analytics (BCA) tool for the DBM in 2015. 
 
The  BCA will integrate data from DBM’s existing systems and provide a series of dashboards, analysis, and reports that will equip budget analysts to make better use of the financial data that DBM already receives, in support of decision-making. It will also give senior officials in DBM with real-time access to the dashboards for a quick overview of the budget and other relevant data. (Read more about it here.) 
 
The PFMP contracted the services of an IT firm (Tenth Planet) to develop the actual system, data warehouse, prototype, and final portal complete with analysis, reports and dashboards. The system was completed and went live in January 2016, in time to support the 2017 budget preparation. Roll-out activities such as training, awareness-raising, and live demonstrations were conducted in February 2016, also through PFMP’s assistance, to ensure that system users will be familiar with and be able to correctly use the system. The Program also hired a Budget Analysis Specialist who will work with stakeholders to help maximise take-up of the system and build it into day-to-day operations. 
 
 
Development of the PFM Competency Framework and PFM Certificate Program
 
Early in the reform process, the Government recognised the importance of skills development in strengthening the performance of the PFM system. At that time, however, there was no strategy for systematically addressing the skills challenge and training was typically delivered on an ad hoc basis. 
 
The PFMP then proposed and advocated an approach in which a PFM Competency Framework would first be developed in order to provide the basis for a strategic approach to addressing PFM staff development across the Government. This was approved by the Government, and in 2013, the Program assisted in developing the PFM Competency Framework. 
 
The framework was formally adopted by the Government in 2014 and was included in the PFM Reform Roadmap.  It defined a package of qualifications or specified skills, knowledge and attitudes necessary for efficient and effective financial management and operations.  More importantly, the formulation and adoption of the framework became the starting point for forming systematic human resource development approach for PFM.
 
To support the framework, a PFM Certificate Program was developed in 2014 through which PFM Training was provided to staff on a systematic, ongoing basis. In 2015, the Program provided the resources and expertise to develop the curriculum of the Certificate Program that included 48 courses across six tracks – PFM Foundation, Budget and Performance, Cash Management, Accounting, Auditing, and Procurement. It also provided assistance to the development of an overarching Learning and Development Strategy, Delivery Model for the curriculum, course materials for the Program’s PFM Foundation and Budget and Performance Tracks, and a Communications and Branding Plan for the Program. Likewise, it also assisted the DBM in delivering the initial rounds of training, as well as the subsequent training given to over 100 participants from ten agencies. 
 
With these mechanisms in place, the Government is in a strong position to continue to move toward establishing a systematic approach to delivery of PFM training. 
 
 
Policy Framework for Contingent Liabilities
 
During early 2015, it was agreed that the Program would provide support to the BTr in developing a policy framework to manage and monitor the Government’s Contingent Liabilities (CL). This important area of policy work was included in the original PFM Reform Roadmap.
 
The Program worked with the BTr to do a stocktake of the Government’s explicit CL, develop a valuation methodology, and use that methodology to value the CL for three Government Financial Institutions (GFIs) and 22 Government-Owned and Controlled Corporations (GOCCs).  In doing this, the Program also appointed SGV & Co., one of the top four accounting firms in the Philippines, to conduct the detailed aspects of the valuation work. (Read more about this here.)
 
Following the stocktake of the CL and development of the valuation methodology, the Program also assisted the BTr in developing a policy framework for the issuance and pricing of guarantee and foreign exchange cover, and iinstitutionalising a CL Reporting Guidelines and Framework. (Read more about this here.) 
 
The work was completed in March 2016.
 
 
Support for Citizens Participatory Audit
 
The PFMP has been supporting the Citizen Participatory Audit Project (CPA) of the Commission on Audit, since its launch in 2012. This innovative initiative is enhancing transparency, accountability and citizen participation in the public audit process, and is implemented in partnership with the Affiliated Network for Social Accountability in East Asia and the Pacific (ANSA-EAP). The project won the Bright Spots Award at the Open Government Summit in 2013 in London. (Read more about it here.)
 
The Program provided technical assistance in both the first and second and phases of the project with focus on the conduct of individual participatory audits. These projects were: 1) CAMANAVA Flood Control Project of DPWH, 2) Marikina Barangay Health Centers, 3) Quezon City Solid Waste Management, 4) Palawan Farm-to-Market Roads, 5) Surigao Tourism Roads Project, and 6) Water, Sanitation and Hygiene Facilities in Antipolo, Pampanga and Cagayan de Oro. Audits for the first five projects have been completed, while the audit report for the water and sanitation project is being finalized.  
 
 
Communicating effective PFM reforms
 
Recognizing the importance of engaging and communicating with stakeholders to ensure the success of and effective implementation of every reform, the Program provided communications support to the whole of government and the Public Financial Management Program. 
 
In 2013, a communications plan with a branding strategy and proposed activities was prepared to help strengthen the Government’s communications and raise awareness about the reforms. It also assisted the Government to develop new communication materials such as project briefers, fliers, FAQs, posters, audio-visual presentations, and merchandise that were used for awareness-raising activities, training and workshops, and stakeholder briefings. 
 
In communicating the reforms and their benefits and significance among stakeholders, the Program adopted a combination of traditional and non-traditional, creative methods and approach to communications. The Program also utilized the web and social media to reach a wider audience and give stakeholders easier access to information about the reforms. PFMP assisted the Government in setting up a program website (www.pfm.gov.ph) that served as a main portal for news, documents, and relevant information about the reform program, as well as  an intranet system for managing important documents. 
 
The Program also provided strategic communications support by preparing key messages for each project, giving inputs to technical reports and other communications-related documents of the Government, and doing media monitoring and crisis management for  reform-related issues.
 
In 2015, a new communications plan specific for PFMP was adopted that focused on highlighting the Australian Government’s assistance to the implementation of the reforms through PFMP’s support, achievements to-date, and the need to continue to build on those achievements to ensure that practical benefits are achieved and sustained. New communications activities were organized and implemented to support this, such as a dialogue event for senior executives of DBM, a series of Brown Bag sessions with DOF, BTr, COA and DPWH to communicate PFMP’s assistance, and updated the PFMP website and other communication materials.
 
 
Support to the development of PFM Bill
 
Working with the DBM, the World Bank and the International Monetary Fund (IMF), the Program supported the drafting of a PFM Bill in 2014 that would set rules and policies about budget formulation, legislation, enactment and review. The Bill also meant to provide a permanent basis for reforms introduced since 2010. Assistance was given through the program’s Senior Budget Adviser who developed an initial framework that directed the drafting of the Implementing Rules and Regulations (IRR), a draft brief on contentious issues to assist DBM in explaining the Bill to stakeholders, and occasional ad hoc advice on matters related to the Bill. The Bill was filed in the Senate in April and May 2015, and in Congress in September 2015. The drafting of the Bill was itself a useful exercise as it brought together key stakeholders to discuss a range of important policy issues. 
 
 

Our Results

The PFMP’s results are reported per year in the Annual Program Accomplishment Report (APAR). The APAR provides an overall assessement of the progress, followed by a more detailed discussion of each program outcome, analysis of the sustainability and cross-cutting issues encompassing the reforms, and concludes with a brief description of program activities.

An analysis and monitoring of the results is also conducted based on PFMP's defined Monitoring and Evaluation (M&E) Framework, which is also included in the APAR. The Program's M&E Framework uses a range of tools to providrobust analysis that not only describes achievements and progress, but also explains the reasons for progress, or the lack of it, and ultimately providng lessons learned and recommendations for theffective implementation of the reforms. 

Read more about PFMP's results here


 

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