MANAGEMENT AND CONTROL OF GOVERNMENT EXPENDITURE

The Block Vote Budget Allocation System which was introduced in FY89 provides Ministries very considerable autonomy in managing funds and manpower. The system enables Ministries to respond speedily to changing needs and circumstances. The objective in decentralizing financial control is to encourage managerial initiative and to promote the import of the techniques and ethos of business management into the public sector. While Ministries are given greater flexibility in managing their allocated resources, they are also expected to regularly monitor key activities to ensure that programmes are relevant and cost-effective. Ministries must hold themselves accountable for the costs they incur and the results they produce. My Ministry has, therefore, started the setting up of Management Accounting Systems in Ministries to provide them with the tools to track the costs of their services, products or activities.

Phase 1 of the Management Accounting Systems project covers five Ministries, namely, the Ministries of Finance, Education, Health, National Development and Environment. As the Accountant-General's Office and the Management Services Department, which is the Government's in-house management consultancy arm, have limited manpower resources, external consultants have been engaged to assist in the implementation. By the end of FY90, these five Ministries should have a working management accounting system which will allow them to exercise effective control over costs and facilitate management decisions on resource usage. It is my Ministry's plan that by FY93, all Ministries should have management accounting systems installed.

In developing management accounting systems, it is necessary to introduce certain aspects of accrual accounting to supplement the Government's cash basis of accounting. In particular, a Fixed Assets System is being installed to record the stock of public capital assets and compute depreciation expenses. This system should be ready by May 1990 for use by Ministries under Phase 1 of the Management Accounting Systems project.

Parallel with these developments, the Management Services Department and the Management Services Units within Ministries will continue to review the organisation, systems and procedures of Ministries to improve their efficiency and effectiveness. Periodic zero-based reviews will be conducted to ensure that outdated practices are weeded out and operating procedures meet present day needs.