Under the Public Financial Management Act 2016, explain the Treasury Single Account and discuss four benefits associated with such a system in Ghana. Explain how the use of GIFMIS... Under the Public Financial Management Act 2016, explain the Treasury Single Account and discuss four benefits associated with such a system in Ghana. Explain how the use of GIFMIS has supported cash management, and budgeting and budgetary execution. Distinguish between the weakest link method and average method of scoring the performance indicators. Compute the score for each of the three indicators using the appropriate method of scoring and interpret your result. Suggest two ways the government can improve its performance in indicator 3: Annual financial reports.
Understand the Problem
The question assesses understanding of public financial management in Ghana, particularly in relation to the Public Financial Management Act 2016, Treasury Single Account (TSA), and Ghana Integrated Financial Management Information Systems (GIFMIS). It requires explaining the TSA, its benefits, and how GIFMIS supports public financial management functions. It also involves analyzing accounting and reporting pillars using Weakest Link and Average methods, computing scores, interpreting results, and suggesting improvements for annual financial reports.
Answer
A TSA is a unified structure of government bank accounts. Four benefits include improved cash management, minimized borrowing costs, enhanced revenue collection, and better expenditure control. GIFMIS improves cash management and budgetary execution. The weakest link method assigns the lowest dimension score. The average method calculates the average of the dimension scores.
Here is the answer:
Treasury Single Account (TSA) A Treasury Single Account (TSA) is a unified structure of government bank accounts enabling consolidation and oversight of government cash resources.
Benefits of TSA in Ghana
- Improved cash management.
- Minimizes borrowing costs.
- Enhanced revenue collection.
- Better expenditure control.
GIFMIS Support
- Cash Management: GIFMIS improves cash management by providing real-time information on cash balances and flows, enabling better forecasting and control.
- Budgeting and Budgetary Execution: GIFMIS supports budgeting and budgetary execution by facilitating the preparation, approval, and monitoring of budgets.
Weakest Link vs. Average Method The weakest link method assigns the lowest score of any dimension as the overall indicator score, while the average method calculates the average score of all dimensions for the overall indicator score.
Indicator Scores
- Indicator 1: Average Method = (D+D+A+C)/4. Using the PEFA conversion table of A=4, B=3, C=2, D=1. Therefore, (1+1+4+2)/4 = 2. The score is C (2=C)
- Indicator 2: Weakest Link Method = C
- Indicator 3: Weakest Link Method = D
Improvement of Annual Financial Reports
- Ensure timely submission of reports for external audit.
- Adoption of IPSAS accounting standards.
Answer for screen readers
Here is the answer:
Treasury Single Account (TSA) A Treasury Single Account (TSA) is a unified structure of government bank accounts enabling consolidation and oversight of government cash resources.
Benefits of TSA in Ghana
- Improved cash management.
- Minimizes borrowing costs.
- Enhanced revenue collection.
- Better expenditure control.
GIFMIS Support
- Cash Management: GIFMIS improves cash management by providing real-time information on cash balances and flows, enabling better forecasting and control.
- Budgeting and Budgetary Execution: GIFMIS supports budgeting and budgetary execution by facilitating the preparation, approval, and monitoring of budgets.
Weakest Link vs. Average Method The weakest link method assigns the lowest score of any dimension as the overall indicator score, while the average method calculates the average score of all dimensions for the overall indicator score.
Indicator Scores
- Indicator 1: Average Method = (D+D+A+C)/4. Using the PEFA conversion table of A=4, B=3, C=2, D=1. Therefore, (1+1+4+2)/4 = 2. The score is C (2=C)
- Indicator 2: Weakest Link Method = C
- Indicator 3: Weakest Link Method = D
Improvement of Annual Financial Reports
- Ensure timely submission of reports for external audit.
- Adoption of IPSAS accounting standards.
More Information
The Public Financial Management Act 2016 (Act 921) in Ghana, which recommends the Treasury Single Account (TSA) system for managing government cash resources. GIFMIS supports the implementation of the TSA. Public Expenditure and Financial Accountability (PEFA) Framework of 2016 assesses accounting and financial reporting using the Weakest Link Method (M1) and Average Method (M2).
Tips
Ensure you understand what the question is asking, for example, the difference between the weakest link method and the average method.
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