The responsibility for the day-to-day application of PFM/IC and the maintenance of the appropriate standards within a line ministry or other public organisation should be that of the top civil or local government official responsible for operational management. In a line ministry or other public organisation, this would be a state secretary or equivalent. Their responsibility as the top operational management official is to ensure that throughout the organisation, PFM/IC is properly applied and follows guidance issued by the ministry of finance. That official would be accountable for the quality of the application of the reform.

In countries where a minister or mayor or other politically appointed official is nominally responsible for the effective and efficient administration of a public organisation, the reality is that a politically appointed official normally would have neither the time nor the relevant background to introduce such a significant managerial reform as PFM/IC. Their responsibility in such circumstances should be to ensure that the reform is properly applied by the top operational management official. The political head of the organisation would be accountable to the government for that.

This chapter describes the responsibilities that fall upon this top operational management official with the application of PFM/IC.

7.1 Nominal and Real Responsibility for the Application and Quality Control of PFM/IC

7.1.1 The PFM/IC Leadership Application Arrangements

The top political official such as a minister or mayor may have a nominal legal responsibility for the overall quality of the management of a public organisation. However, the person who should have the substantive responsibility for the overall quality of the management of a public organisation including the operational application and maintenance of the quality of PFM/IC should be the most senior operational management official within the organisation. This would be a state secretaryFootnote 1 or equivalent or a similar status official in local government. This should be the normal situation and is a prerequisite to applying the PFM/IC reform. If there is no such official it will be impossible to properly implement PFM/IC even where a politician has nominal responsibility for the quality of the public administration. This chapter therefore is written on the assumption that responsibility for operational management within a line ministry or other public organisation has been delegated to the civil or local government service and that the head of that service in that ministry or other public organisation is therefore responsible for the application of PFM/IC and the maintenance of its quality. The range of responsibilities that will fall upon that head will be substantial and in the sections below the ‘before PFM/IC and after’ responsibilities are compared. How a politically appointed official, if there were no delegation, given the level of practical knowledge and experience that would be required and the day-to-day demands upon his/her time, could undertake this responsibility and at the same time also carry out their political responsibilities is difficult to see. The state secretary (or equivalent) would be responsible for not only implementing the reform but also for ensuring that the administration remains capable of addressing whatever is required by the current operational environment. This official has a key role in securing the quality of operational management. He/she also has a responsibility to advise the politicians on the practical application of political objectives and that in turn affects the quality of operational management. The practical application of policy includes the politician working with the operational manager to set the objectives and performance standards and objectives which the operational management should be expected to meet. Operational management in the main (see also Chap. 14) should be delegated to the civil (or local government) service. In those countries where the delegation of operational management has not occurred, as has been explained in previous chapters, the reality is that PFM/IC could not be properly applied. (In some countries the state external auditor may be asked to comment upon the quality of the proposed arrangements with the application of PFM/IC. The state auditor would not approve the procedures but usually would offer advice.)

Given that a state secretary, or equivalent, is responsible for the application of the PFM/IC reform, this official would then be accountable to the top political official, the minister or mayor for the quality of the application and the maintenance of that quality. This is how the legal responsibility of the top political official would be fulfilled, that is, through the accountability arrangements. The state secretary or equivalent would also have a responsibility to the ministry of finance because that ministry would have overall responsibility for the application of the PFM/IC policy and quality maintenance. In effect, a state secretary has two reporting lines, one to the relevant minister and the other to the ministry of finance state secretary.

For second-level organisations the top official should be the responsible official for the application of PFM/IC. He/she should be accountable to the head of operational management for the controlling first-level organisation for the quality of application, that is, to the state secretary or equivalent. (The exact accountability arrangements for local government would depend upon the constitutional relationships between central and local government but an important element of that accountability would be from the chief official to the mayor or in some countries to a political leader where the mayor has only ceremonial responsibilities.)

In some countries a state secretary has only limited responsibilities such as those only relating to administrative matters. However, with the introduction of PFM/IC and the increased emphasis upon the delegation of operational management responsibilities from the political level, this limitation cannot be sustained. That would mean that either the current state secretary’s responsibilities were extended or another official was appointed with the appropriate authority.

Again, in some countries no state secretary post exists and the different ‘directors’ or heads of department report directly to a minister or deputy minister. This arrangement with PFM/IC cannot be sustained (see Sect. 7.1.5 below).

Whatever the exact civil service or local government organisational arrangements, with PFM/IC the person holding the role of state secretary (or equivalent) should have two essential characteristics. One is that they should be ‘politically’ aware because they work directly at the interface between the political and operational elements of public administration. The second is that they should possess leadership qualities. Leadership qualities include being willing to accept the risk that reform entails and to overcome the systemic constraints that tend to exist in established bureaucracies. Leadership qualities have also been described as inspiring, confident and empowering.Footnote 2

7.1.2 The Responsibilities of a State Secretary or Equivalent Before the Application of the PFM/IC Policy

The exact responsibilities of a state secretary (or equivalent), where such a post exists, before the introduction of PFM/IC will vary from country to country but they could include the following, although this is unlikely except in those countries where advances are being made in the quality of the public administration and where the implementation of PFM/IC is likely to be most successful:

  • Allocation of resources within the organisation in accordance with any budgetary constraints and collection of any income that is due;

  • Advising the minister on policy matters;

  • Addressing major administrative problems which may emerge;

  • Monitoring performance insofar as performance is specified;

  • Disseminating information;

  • Providing leadership in staffing and motivating staff.

Prior to the implementation of PFM/IC in many countries, there is unlikely to be a clear distinction between the responsibilities of the political level of management and the civil service for operational management activity. Also, in some countries on a change of government the state secretary may also change and where this occurs political loyalty may be regarded as more important than actual experience or even competence. But then with traditional public administration arrangements, the emphasis is upon administration, adherence to the relevant regulations and financial and budgetary control, rather than management, that is, the delivery of objectives and performance standards and objectives efficiently and effectively. As is shown in the next section, the former is less demanding in terms of experience and technical knowledge than would be required of a state secretary with the implementation of PFM/IC. For example, in practice objectives may have been specified by a minister but they are unlikely to be defined in a manner which is suitable for management purposes. Performance standards and objectives are unlikely to exist. Nor will an effective requirement exist to secure efficiency and effectiveness in the delivery of objectives. Objectives and performance standards are unlikely to be linked to budgetary availability. Consequently, the state secretary and the administrative staff are most unlikely to have available to them the information and authority they require for effective management purposes. (This would be true whether the operational manager was a political appointee or a civil or local government official.) The state secretary would be likely to have these financial, as opposed to financial management, related responsibilities:

  1. 1.

    Supporting the preparation of a budget for the next financial year within any constraints required by the ministry of finance: in some countries with good financial administrative support, broad policy objectives of a ministry or local government may be defined as part of the budget process, even though not directly linked to the budgetary availability.

  2. 2.

    Administering current services or activities, sometimes with broad operational objectives and sometimes without. However, whether there are objectives or not the likelihood is that the objectives will not be defined with such a precision that the administrator can be held to account for delivering those objectives.

  3. 3.

    Meeting budgetary constraints, which can be very restricting about how funds can be spent because the focus will be on the control of ‘inputs’ not on what those ‘inputs’ are achieving. Those budgetary constraints in some countries can be very detailed and inhibit managerial initiative. Any budgetary variations, such as substituting one type of employee for another, would be subject to approval by the ministry of finance or another central ministry.

  4. 4.

    Ensuring that financial and procurement regulations are adhered to, with the risk that if they are not, penalties could be imposed through financial inspection regimes and other administrative rules, although not usually on the senior administrator, especially where the administrator is a political appointee, but on the subordinate staff.

  5. 5.

    In some, more advanced developing and transition economy countries, making administrative decisions affecting finance and related matters necessary for the day-to-day running of the organisation such as those relating to approval of expenditure, securing income sources, staff management, office materials procurement and the security of stores. In other countries (and these are probably in the majority) responsibility for all or most of these matters may be retained by political appointees such as the minister or deputy ministers or equivalent in local government.

  6. 6.

    Providing financial reports to the minister of finance, including year-end financial statements and responding to external audit enquiries.

The state secretary may also have what amounts to a token responsibility for securing efficiency and effectiveness but in practice such a responsibility will be simply nominal because neither the budgetary nor accounting and performance information systems are likely to provide the information that will be required to enable these to be achieved. The linkage of the performance information systems, where they exist, to the budgetary and accounting systems is also unlikely to occur. Certainly, it would be possible to make savings by, say, improving purchasing arrangements, but that is different from achieving efficiency and effectiveness in the delivery of objectives. This is more about ‘economy’ and sometimes may be counter-productive in efficiency and effectiveness terms. Savings may also be made by introducing IT systems and the adoption of ‘e-government’ arrangements. Managements should always be encouraged to make such savings, under whatever financial management arrangements exist, but this is not the same as delivering the wider efficiency and effectiveness gains that become possible with PFM/IC. For example, switching to an IT system to deliver a service will not somehow automatically improve efficiency and probably not effectiveness, although it may be more economical. To achieve greater efficiency requires a systematic approach to the reform of the way in which services are delivered involving detailed cost analysis compared with operational performance. Effectiveness involves the measurement of achievements against defined objectives including identifying the views of the user of the service or activity. The state secretary would have no responsibilities for risk management which is a key requirement of PFM/IC and is necessary to secure the achievement of objectives. Internal audit would usually report directly to a minister rather than to a state secretary.

7.1.3 The Role and Responsibilities of a State Secretary (or Equivalent) Operating in a Managerial Environment

While the minister or mayor may ultimately be held to account by parliament for the effective application of the PFM/IC policy with actual application being the responsibility of the most senior civil or local government official (i.e., the state secretary or equivalent), the political head should be confident about the quality of the application through the delegation and managerial accountability arrangements that should be established. Those managerial accountability arrangements should be focussed on the key issues of concern to the political head and should not be overwhelmed by detail. (The arrangements for parliamentary accountability may require in some countries that the appropriate minister and the most senior official should appear together to answer to parliamentary scrutiny. Parliamentary scrutiny may be informed by reports of the state auditor who would be expected to review the quality of the PFM/IC arrangements.) Given the complexity of contemporary government ministers and mayors cannot be held directly responsible for all operational failings in their ministries or local governments, or in the second-level organisations through which services and activities are often delivered unless they can be shown to be systemic or of major significance. If they are systemic or significant, they should have been identified through the managerial accountability arrangements and then the political leadership can be held accountable.

The role of state secretary (or equivalent) is extremely demanding and complex. Introducing PFM/IC as has been shown previously, means that the style of public administration needs to change which adds to the complexities of the role. The change would be from a traditional administrative style to a managerial style (see also Chap. 14).

The functions of a state secretary with a managerial style of government include the followingFootnote 3:

  1. I.

    Act as the ‘principal policy adviser’ to the minister. This role may complement other sources of policy advice to a minister.

  2. II.

    Secure the implementation of ministerial policy priorities. This will be a critical responsibility so far as a minister is concerned because a ministerial reputation is likely to hinge on the success of policy implementation.

  3. III.

    Be the manager of the day-to-day ‘business’ of the ministry. The emphasis should be on management and the continuous improvement of current policies, personnel and systems. This is of particular importance when there is an emphasis upon improving efficiency and effectiveness in the delivery of public services, including the collection of any income that is due: this is a key feature of PFM/IC. This may well require state secretaries to become involved in the direct management oversight of operations, or management oversight through networks of complex devolved relationships to second-level organisations or where activities are contracted out to the private sector, to the implementation of those contracts. For second-level bodies, the first-level state secretary remains responsible for ensuring that effective arrangements exist to ensure that second-level bodies and market-based contractors deliver the required results.

  4. IV.

    Be responsible for ensuring the ‘financial control and propriety of spending’ within the ministry. This is a traditional and very important role which requires ensuring that spending is in conformity with ministry of finance regulations and with parliamentary approvals.

  5. V.

    Be the ‘guardians of propriety’ and of the rules and conventions of how government should operate. This would include ensuring that codes of practice were observed (e.g., on the behaviour of civil servants and ministers) and on advising ministers on issues such as potential conflicts of interest between ministerial and private or constituency matters.

  6. VI.

    Be responsible for the broader capability and organisational health of the civil service within their ministry. ‘Organisational health’ is defined as meaning that the state secretary should ensure that the civil service for which he/she is responsible is kept in a fit state to deal with future and longer term policy challenges, for instance, by maintaining sufficient research and foresight capacity. The state secretary should also ensure that the civil service is able to serve effectively a future minister or administration with different objectives. That would include the management of the transition to a new government if and when that occurs.

  7. VII.

    Support the ‘collective leadership of the civil service’ as a whole. This would be particularly important, for example, with the implementation of policies that apply to all ministries, such as PFM/IC. In this example the state secretary would have a responsibility to cooperate with the state secretary in the ministry of finance, or the head of the civil service where such a post exists, to secure the application of the reform.

7.1.4 The Specific Financial Responsibilities of a State Secretary with the Implementation of PFM/IC

Applying PFM/ICFootnote 4 is about the professionalisation of management. This affects the financial management responsibilities of a state secretary. As change in operational and policy circumstances will inevitably occur this also means that a state secretary will need to initiate changes to the PFM/IC arrangements.

To undertake all these responsibilities arising from the implementation of PFM/IC, a state secretary, because he/she cannot possibly undertake all these responsibilities personally, will need to be supported by several departments within the ministry administration. Exactly what those departments would include would depend upon local circumstances but should normally include the finance/economics department, the administration department, the procurement department, the human resources department, the legal department and any general policy department, for example, a policy department which should be responsible, amongst other things for the supervision of second-level bodies.Footnote 5 The internal audit department should have a close working relationship with the state secretary and for most internal audit activity the reports ought to be to the state secretary and only exceptionally to the political head of the organisation. The state secretary should agree the internal audit programme of activity. (In some countries where audit committees have been established, the internal auditor will also report to that committee.)

In the table below the specific responsibilities of the state secretary or equivalent are described and compared with the seven different roles of a state secretary referred to above. (This range of responsibilities contrasts with those which would exist for a state secretary acting simply as an administrator (Table 7.1).)

Table 7.1 The seven different roles and the duties of a state secretary
Full size table

7.1.5 Where No State Secretary Post Exists But Each Department Within a Ministry Is Headed by a ‘Director’ Who Reports Directly to a Minister

In those countries where there is no single civil servant responsible for all the activities of the civil service in a ministry and instead individual senior civil servants, sometimes called directors, are appointed to report directly to ministers or deputy ministers on particular topics, can this arrangement be maintained with the introduction of PFM/IC? The answer is ‘no’ for the reasons set out below.

Whilst each ‘director’ could take on the individual responsibilities described in items I to VI in the table above there would be no coordination at the civil service level of the standard of those individual activities and there would be no routine exchange of information or coordination of actions. In effect, what would exist is a series of ‘sub-ministries’ with the only coordination occurring at the ministerial level. This is not consistent with the idea of delegation. Also, the idea that a minister could ensure that the same standards applied in every department of the ministry would in effect turn that minister into a part time secretary general. This is not feasible given all the pressures upon a minister.

With PFM/IC, this arrangement therefore needs to be rethought because effectively it means that there is no single person responsible for the management of the whole ministry. Efficiency and effectiveness apply throughout the whole ministry as does finance. And where the functions of a ministry are divided over different directors and there is no single head, the opportunities for coordination and common approaches to problems are small or non-existent, and what develops is a ‘silo mentality’.

Few public sector problems can be fully addressed by a narrowly focussed approach. The result is a lack of sharing information, objectives, ideas, priorities and processes. Given that there is a single source of finance, the taxpayer, this is highly inefficient with, for example, no opportunity for savings in one area of activity to be used to support other areas within the same ministry. Similarly, within a ministry there is a need to ensure that all regulations are properly followed throughout the whole organisation. There would be no single person able to do that, unless that were a responsibility of the minister. Within a ministry there would be a single finance department having overall responsibility for budget preparation and the overall quality of financial management. As was explained in Chap. 6 the ministry of finance state secretary should be confident that a robust financial management structure exists within individual line ministries (and other public organisations). Unless a state secretary position exists the only person the ministry of finance state secretary could look to would be the head of finance. And that head of finance then ought to have a specific personal responsibility to object where decisions are proposed to be taken which are contrary to regulatory requirements or which potentially add to financial risk. Would a head of finance have the authority to challenge individual directors? This would be most unlikely and the only available appeal would be to the minister again drawing the minister into operational management issues. Similarly, internal audit would have no single authority to agree an audit programme with or to report to other that the minister which again negates the idea of the delegation of operational management to the civil service.

7.1.6 The Importance of Good Corporate Governance Arrangements

Good corporate governance is fundamental to any effective organisation and not least to public sector organisations. A failure of the corporate governance arrangements is likely to be a cause of serious difficulty to the top management, political and operational. Corporate governance is discussed in Chap. 1 but given the managerial responsibilities that will be expected to fall upon the civil and local government service with the introduction of PFM/IC, the quality of the corporate governance arrangements assumes added significance. The responsibility for securing the quality of corporate governance in an organisation lies with the head of the organisation, that is, both with the relevant minister and the state secretary. The corporate governance arrangements should not be regarded as ‘one-off’ arrangements but should be expected to evolve over time. The corporate governance processes should consider the arrangements for:

  • Leadership: the arrangements should distinguish between the responsibilities of the civil or local government operational service head of the ministry or local government and that of the minister or mayor: this should clarify first the roles of the political leadership and its responsibility for setting the objectives, performance standards and the performance objectives and, secondly, the operational leadership responsibility for securing the performance of the organisation in accordance with those objectives and for doing so efficiently and effectively.

  • Monitoring: the operational management head (the state secretary) should have a responsibility to monitor the performance of the organisation and to engage in active management to secure the ability of the organisation to deliver on its objectives, performance standards and performance objectives, including the arrangements for reviewing the performance and productivity of the organisation.

  • Risk management: as this should be a key element in securing delivery of the objectives the risk management policy should be determined jointly by the relevant minister and state secretary: that would include the key risk policies such as setting the risk appetite for the organisation and determining the arrangements for the management of risk (see also Chap. 11) with the actual implementation of the risk management policy being the responsibility of the state secretary.

  • Civil service competence: how the quality of the civil service would be established, its training, its political independence and its ability to provide independent advice, with that quality being assessed by the state secretary.

  • Defining relationships: especially between the ministry or local government and second-level bodies: a state secretary responsibility.

  • Consultation: arrangements with stakeholders which would include users of the services of the ministry or local government, the local community in the case of local government and any formal representative bodies, paying particular attention to their needs and interests: this would be primarily a responsibility of the state secretary with the minister becoming involved only in specific politically sensitive issues.

  • Accountability: to parliament, primarily a ministerial responsibility; to other ministries where appropriate, to regulatory and supervisory bodies and to third parties, (depending upon the issues) either a ministerial or a state secretary responsibility); responsibility for securing the preparation of and the quality of the statement of internal control (see Chap. 13) which should also be agreed with the minister.

Good corporate governance is an important tool for securing the quality of the services being provided by ministries and local governments and how they treat their clients/customers/patients. Where the corporate government requirements are incorporated into a formal code, then the general rule should be that public organisations should comply with the code or where they do not, explain the reasons for this.

7.1.7 The Relationship Between Line Ministry State Secretaries and the Ministry of Finance State Secretary with the Application of PFM/IC

The ministry of finance state secretary has a critical role in the development and application of PFM/IC and in the maintenance of its quality, that is, unless another official had this responsibility such as a head of the civil service. The list of responsibilities falling upon a state secretary described above in Sect. 7.1.4 with the implementation of PFM/IC is substantial. Therefore, the likelihood is that considerable advice and support will be required as well as detailed guidance. This means that an important initial role of the ministry of finance through its state secretary should be to engage with line ministry state secretaries and other heads of public organisations to explain the nature of the reform and its implications for them. This would be an important element in developing ‘local ownership’. State secretaries together could act also as an advisory group on the processes of implementation. Without local ownership, resistance could well emerge and pressure to return to the status quo ante could well develop over time. Ideally the ministry of finance state secretary should establish an ongoing relationship with this group of key officials throughout the whole development and implementation process. A useful addition to this group of officials probably in the form of a commentator would be the state external auditor who could make an important contribution to issues about ‘control’ in its broadest forms. Another adviser to the group could be the head of the government training institution or a university tutor responsible for management development training. As the leader, the ministry of finance state secretary should ensure that an agenda item was ‘emerging concerns’. The ministry of finance state secretary would almost certainly require support in undertaking this responsibility. Probably the head of the department responsible for the day-to-day application of PFM/IC should act as secretary to the group and coordinator of its activities (see Chap. 9 which discusses the functions of this department). An ongoing responsibility of this group should be to review and advise on the arrangements for the application of PFM/IC to coordinate experiences and encourage discussion between the different state secretaries involved. Coordination at this high level within the civil service is very important. However, in most countries applying PFM/IC discussions usually occur at a much lower level because it is seen as just a technical financial reform with no impact upon management.

A state secretary involved in this activity would need to consider and report upon:

  • The willingness/capacity of his/her organisation political leadership to respond to the separation of operational decision making from strategy and policy development and how in his/her opinion the political officials would react to the changes that would flow from that.

  • The capacity of the civil service within the ministry (or other public organisation) to absorb responsibility for operational decision making, the organisational restructuring that would be required, the additional staffing and the training that would be needed to achieve that, that is, the extent to which managerial training would be required.

  • The possibilities, and over what timescale, of defining detailed policy objectives, performance standards and performance objectives.

  • How to obtain the additional performance information needed and financial analytical information that would be required for effective management and to enable managers to improve efficiency and effectiveness.

  • The support and training that would be required for the finance officer and his/her staff to enable them to provide the information and professional support that the state secretary and other managers would require.

  • The difficulties and risks that would need to be addressed to secure effective implementation of the reform policy, not least the impact on personnel management arrangements as well as on penalty and inspection arrangements.

The ability/willingness of an organisation to respond to the requirements of PFM/IC and its capacity to absorb those requirements will depend heavily upon the characteristics of the current bureaucratic organisation and the capacity of the civil service. Thus, ideally the existing organisation should have the characteristics which are appropriate to the needs of a managerial style organisation, that is, the employees have specific objectives and performance standards and objectives they are expected to work to, an appropriate organisational structure exists, employees are clear about the scope of their responsibilities through the existence of written rules and procedures, all employees are required to conduct their activities in an unbiased manner, and employees should be appointed to jobs based upon their technical skills. If these characteristics do not exist or only partly exist, the first step is to establish these characteristics as part of the initial moves to PFM/IC.

Once a decision has been made to implement the PFM/IC reform policy, this process of consultation and coordination should be continued so that state secretaries (and as necessary other officials such as the finance officers) could participate in a continuing process of learning. (If the reform is being financed from aid funds it may also be desirable to include within the consultation process officials from the aid organisation.)

7.1.8 The State Secretary, Internal Audit and Inspection

In previous chapters and earlier in this chapter, the changed reporting arrangements for internal auditors have been discussed. Prior to the introduction of PFM/IC the traditional arrangement would be that the internal auditor would report directly to the political level of management, the minister. In some countries an inspection regime also exists designed to secure adherence to formal rules and procedures. Sometimes there is an overlap with internal audit. However, a clear separation of internal audit and inspection responsibilities should exist. To summarise those changes and the particular impact upon state secretaries, with PFM/IC as the quality of operational management is firmly the responsibility of a state secretary (or equivalent) in the normal course of internal audit activity, the auditor should report to the state secretary about the internal control arrangements rather than to the minister. (Bearing in mind that the definition of internal control with PFM/IC is much wider than in a traditional organisation.) This is because with PFM/IC the state secretary would have a direct responsibility for internal control. A minister would not have such a direct responsibility, except in the broad terms of having responsibility for the overall quality of the management of the ministry. With PFM/IC if serious problems exist, the internal auditor could always report directly to the minister although in practical terms, this would be likely to raise serious tensions with the state secretary to whom the auditor should normally report.Footnote 6 Exactly the same arrangements should apply with inspection.

Auditors may feel that this change would be a cause of concern. However, such a concern could be alleviated by the appointment of a truly independent audit committee and some may regard such a move as an appropriate complementary reform to the implementation of PFM/IC. The internal auditor would then report not only to the state secretary but also to the audit committee.

7.2 Summary

The responsibilities of the official (i.e., state secretary or equivalent) for the application of PFM/IC within a public organisation are considerable and much greater than those exercised by such an official prior to the implementation of PFM/IC. They reflect the fact that applying PFM/IC is about managerial reform and therefore is about how public organisations are organised and managed to deliver objectives as well as to ensure that public resources are properly utilised and deliver better public value, with responsibilities being allocated between the political and the official levels of management. Consequently, the responsibilities of that official are not just about the technicalities of PFM/IC but they also cover the managerial implications of the reform. The significant change that this reform will bring about is the professionalisation of civil service management coupled with the delegation of operational management from the political to the official level. Consequently, an important responsibility of a state secretary will be to retain the confidence of the political level of management in the competence of the operational management and its capacity to deliver the objectives and performance standards set by the minister efficiently and effectively and to maintain financial and budgetary control.

A ministry of finance through its state secretary should systematically engage with other public organisation state secretaries (or equivalent) about the application of PFM/IC through establishing a coordinating group. The role of the head of the department in the ministry of finance responsible for the application of PFM/IC should be to support the ministry of finance state secretary and act as secretary/coordinator of the group of state secretaries. Such engagement arrangements would form part of the process of generating ‘local ownership’ of the reform. That coordinating group should be prepared to consult with other persons as necessary such as the state external auditor and the head of the government’s training institution or a university tutor with experience of managerial training.

The introduction of PFM/IC will also affect the role and reporting responsibilities of internal audit and those of an inspection arrangement. Those reporting responsibilities should primarily be to the state secretary but with a right to still report to the minister where necessary. Internal audit concerns about this reporting change could be alleviated by the appointment of an independent audit committee to whom the internal auditor would also be required to report.