Public finance diagnostics

From reviews conducted under the Public Expenditure and Financial Accountability (PEFA) framework to more in-depth fiduciary risk analyses, OPM is equipped to provide open and constructive assessments of the effectiveness of public finance management in different locations. Our comprehensive experience working in developing countries gives us additional insights into the challenges that may be encountered.

The introduction of international standards for public finance, such as PEFA, have transformed the dialogue around financial management. Instead of focusing solely on budget preparation, an increased emphasis is now placed on governance issues, such as internal control (through audit committees, etc), the availability of reliable and timely public accounts, the availability of performance reports, and the conduct of professional external audit. OPM’s trained experts have carried out PEFA assessments in a number of locations.

However, it is important to remember that the core purpose of such frameworks is to benchmark PFM performance against a series of internationally accepted indicators and standards of performance, as a precursor to and incentive for further improvements. They do not provide the kind of in-depth fiduciary risk analysis that donors, and some partner governments, increasingly require before entering into certain aid or development agreements.

Fiduciary risk analysis is particularly important in budget support approaches, where it helps assess the likelihood of donor funds not being properly accounted for, or not being used for their intended purposes. In some cases, such an analysis will affect whether or not the aid is granted; in others, it can lead to additional stipulations in the aid agreement to help mitigate the risks identified. Unlike collaborative PEFA assessments, fiduciary risk analysis is carried out independently and often put out to peer review. As well as conducting fiduciary risk analysis in countries including Sierra Leone and Malawi, OPM currently provides peer review of all DFID’s major fiduciary risk analyses.

For more on our effective public financial management, see our brochure below.

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