Good public financial management frameworks underpin the efficient use of public funds. Without these frameworks, money can be wasted, leading to higher taxes or cuts in public services. Effective financial management also requires sound financial and accounting processes, robust IT systems and skilled civil servants, as well as high levels of transparency and accountability.
Public accounts
Good management of public money is vital for good governance, ensuring essential services like healthcare and education run smoothly. Public accounts track government income and spending, they show how money is managed and if the government can fund these crucial services.
Key messages
Having comprehensive, accurate, and timely public accounts is essential to show how public resources are being spent, whether long-term financial commitments are taken by governments that will create obligations for future generations and if a country’s financial goals are being met. Timely updates ensure that any financial issues are detected early, allowing for quick corrective actions. Public accounts shade a light at the financial situation of a country and, in turn, allow assessing governments fiscal management performance.
Public accounts need to be accessible and understandable to both citizens and parliaments. When financial information is easy to understand and readily available, it empowers citizens to hold their government accountable and encourages civic engagement in public affairs. Clear and transparent financial reporting helps parliaments make informed decisions and allows them ensuring that governments are accountable for their financial management.
Context
Widespread adoption of accrual accounting in OECD countries embodies a trend towards higher standards of transparency in public accounts.
Most OECD countries have undertaken significant reforms to enhance their financial management and accounting systems. A notable reform is the adoption of the accrual basis of accounting, which allows for the production of public sector balance sheets that comprehensively reflect what the government owns and owes. This shift demonstrates a commitment to providing a more accurate picture of the government's financial situation. Efforts are ongoing to improve the quality, timeliness, and comprehensiveness of public accounts in many countries.
New technologies will drive future improvement to government financial management and reporting.
Digitalisation, notably IT systems, is already pivotal in driving efficiency, security, and innovation in government financial management and reporting. Many countries are actively working to harness the potential of more advanced technologies, including Artificial Intelligence (AI), including Robotic Process Automation (RPA), and blockchain, to further enhance productivity, reliability, and speed in financial management, as well as to revolutionise the communication of financial data to the public. With careful implementation, these tools promise a future where government financial management and the production of public accounts become more efficient, secure, and responsive to the needs of citizens.
Related policy issues
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Gender budgeting is a public governance tool that governments can use to assess how budget decisions impact gender equality. When implemented effectively, gender budgeting helps expose how gender inequalities may have inadvertently become embedded in public policies and the allocation of resources and promotes budget measures that will be effective at closing gender gaps.Learn more
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Green budgeting uses the tools of budgetary policy making to provide policy makers with a clearer understanding of the environmental and climate impacts of budgeting choices, while bringing evidence together in a systematic and co-ordinated manner for more informed decision making to fulfil national and international commitments.Learn more
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Without a major policy shift, health spending is projected to outstrip both expected growth in the overall economy and in government revenues across OECD countries. Competing priorities for government spending are also squeezing health budgets. Urgent action is therefore needed to finance more resilient health systems while ensuring the fiscal sustainability of health systems.Learn more
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Our work with parliaments and independent fiscal institutions (IFIs) supports fiscal transparency and accountability. At a time when the sustainability of public finances is under close scrutiny, these oversight institutions play a crucial role in raising the quality of the debate on fiscal policy and ensuring that public budgets are managed effectively.Learn more
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In an environment of budget constraints and high citizen expectations it is necessary to demonstrate that public expenditure is providing value for money and delivering on performance. The availability of good-quality performance information not only assists policymakers in making more informed budgetary decisions but also enables the broader public to hold the government accountable for delivering the outcomes promised to citizens.Learn more
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Prudent public debt management is critical for well-functioning national financial systems and helps to reinforce sound fiscal and monetary policies. However, public debt portfolios, both because of their size and composition, can generate substantial risk to countries’ balance sheets and overall financial stability. The OECD promotes good practices in public debt and risk management and provides recommendations to assist policy makers in their efforts to adopt and implement prudent debt management policies.Learn more
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Spending reviews are tools for systematically analysing the government’s existing expenditure. The OECD has found that spending reviews have proved to be an important tool for governments, not only to control total expenditure by making space for more resources, but also to align spending allocations with government priorities and to improve the effectiveness of policies and programmes.Learn more