Developing the governmental accounting system for performance audit purposes

Control in government units is almost limited to financial and accounting control through which laws and regulations are ensured, and government funds are spent for their purposes without extending to show how efficient the administration is in exploiting resources economically, achieving targets with the lowest costs and gaining the optimal return from spending.

Due to the increase in government spending and social burdens on government units, budget deficits, and limited resources, this requires regulatory bodies to be developed by shifting to overall control or so-called performance control or operational auditing.

The business sector has many performance measures such as internal profitability, the rate of return on invested capital, standard costs and planning budgets, etc. However, in the government sector, there is a difficulty that actual activity in this sector is not easily subject to quantity measurement.

Since the accounting system in the area of control of government sector services is designed to serve the purposes of financial control, of which aim to ensure that government funds have been spent for the specified purposes and carried out in accordance with the laws, systems and regulations in force in government units, although there are some social objectives pursued, but the system does not provide appropriate information for performance control purposes.

Financial management also faces several challenges and difficulties in several areas, the most important of which are the method of preparing and implementing the general budget, managing public debt, human resources, training, information technology and systems, transparency and clarity. In this regard, the Ministries of finance are seeking to modernize financial management by building a results-oriented budget.

Therefore, the need has become particularly urgent in the face of limited resources and increased public spending to a more mature information system, which requires the development and modification of the existing system, so it is possible to summarize the problem of research in answering the following questions:

How appropriate is the current accounting system for performance auditing purposes in the government sector? What are the ways to develop it? How much is it needed to introduce a performance audit in the government sector?

Accordingly, government performance must be developed by:

– Gradually develop the current government accounting system towards the accrual accounting and in stages as it is the basis that provides the appropriate information to measure and audit performance. It fits with the budget of programs and performance, and provides information to calculate the depreciation of fixed assets and allocate joint costs, in addition to providing a regulatory manual by applying liability accounting and determining performance units up to the cost of the service unit performed according to cost-benefit.

– develop the method of budgeting (budget items) by gradually shifting towards budgeting programs and performance as it is the budget that determines the goals and performance rates, focuses on results and outputs and links them to spending, and provides information on the cost of programs and the identification and accountability of variances for purposes of rationalization of spending.

– develop the control in the field of government services to include, in addition to financial and accounting control, the economic control and efficiency in accessing and using resources in an economic way and to ensure the extent to which government programs achieve their objectives at the lowest costs, while identifying the causes of waste and loss if existed and ensuring accountability in line with global developments in this area.

– Reconsidering the organizational structures so that the centers are established according to the needs and the work required performing. This requires a system for job descriptions, selection and appointment according to needs in light of the general objectives of the government unit.

The need for the Court of Audit to be interested as an external control body and the Ministry of finance as an internal control body to follow developments in services and public expenditures to reach indexes that can be used to audit and improve performance and rationalize spending.

– develop and qualify employees in accounting and finance departments in the  ministries of the state through awarding them scholarships to attend specialized conferences as well as training courses, where they get accounting training courses in Dubai at a high level by professionals trainers.

If this sector is developed, it will be in the service of the oversight agencies in the government sector, which is represented by the Ministry of finance as an internal oversight body, which seeks to develop its control method, in addition to the regulatory bodies in government units, and external oversight bodies, as they have added a dimension to control public funds by indicating the need to adopt a performance control method, and to make recommendations for the development of the current government accounting system to provide methods and indexes to measure government performance by providing detailed and accurate information on the performance of government programs to achieve effective control and the use of resources efficiently, economically and effectively, in addition to identifying variances and their causes and holding accountable those responsible for these variances, to achieve savings in resources and rationalize spending. This requires the development of existing government accounting systems to provide such information, as the current system is designed to serve the purposes of financial control, not to serve the purposes of performance control.