Public Finance Management (published 2010)
“ Public Finance Management” is the compilation of modules developed by the State FinanceDepartment - Public Finance Faculty, Academy of Finance (AOF)to meet the need for teaching and learning special subject matters in English. This compilation is designed for undergraduate students, especially for those who desire to become public knowledge as well as updated information about public finance officers. It comprises 6 chaters providing basic finance under the current finance management mechanism. “Public Finance Management” has been approved by the AOF’s Scientific and Training Board, and will be used an teaching materials of the AOF, and as reading references for scientists, management, and other readers interested in the topic.
“Public Finance Management” is compiled by the group of scientists and lecturers from the State Finance Department – Public Finance Faculty, AOF and their counterparts from the National Economic University (NEU), including:
-Hoang Thi Thuy Nguyet, Ph.D, Vice Head of the State Finance Department, AOF, Co-editor and author of chapters 1 and 2;
- Pham Van Lien, Ph.D, Head of Training Administration Board of the AOF, lecturer of the State Finance Department, Co-editor and author of chapters 5;
-Vu Cuong, M.A, lecturer of the Planning and Finance Department, AOF, author of chapters 3 and 4;
-Ngo Thanh Hoang, M.A, lecturer of the State Finance Department, AOF, author of chapters 6;
-Pham Thi Lan Phuong, M.A, lecturer of Foreign Languages Department, AOF, language editor.
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Trang
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Abbreviations
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7
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Preface
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9
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Unit one:Historical perspective on budget reform
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11
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Key terms
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11
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A historiacal perspective on budget reform
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13
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Line tem budgeting
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13
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Performance budgeting
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15
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Program budgeting
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17
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Zero-based budgeting (ZBB)
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20
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Current initiatives in budget reform
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21
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The way forwad
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22
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Discussion
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24
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Fill banks with suitable words taken from the above section
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26
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Unit two: All overview of public expenditure management
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27
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Key terms
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27
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The objective context of PEM
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30
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The meaning and role of PEM
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30
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The policy context and the objective of pem
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31
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The institutional context
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32
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The governance context
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33
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Corruption and PEM
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36
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Information and communication technology
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37
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The budget cycle: A bid’s – eye view
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37
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Budget converage
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37
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Budget perparation
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39
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Budget execution
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41
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Discussion
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44
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Fill in blanks with suitable words taken from the above section
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46
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Unit three: Strengthening “Performance” in Pem
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47
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Key terms
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47
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Why measure performance in the public sector
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49
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The semantics of “Performance”
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51
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Beware the “Law of unintended consequences”
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52
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Formulating Performance indicators
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56
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Illustrations of performance indicators
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58
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The measurement indicators
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59
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The measurement problem
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60
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Discussion
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60
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Fill in blanks with suitable words taken from the above section
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62
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Unit four: Linking policy, planning and budgeting in a medium-term framework
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64
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Key terms
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65
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Linking policy, planning and budgeting in a mediumterm framework
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67
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Weaknessesthat produce poor budgeting outcomes
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69
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Linking policy, planning and budgeting at the government – wide level: A comprehensive MTEF
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70
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Stages of a comprehensive MTEF
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73
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Discussion
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81
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Fill in blanks with suitable words taken from the above section
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83
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Unit five: Management controls, audit, and evaluation
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85
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Key terms
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85
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Management control
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8
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Internal audit
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89
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Limitations of management control
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90
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Design flaws
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90
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Poor implementation
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90
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Poor response to reported anomalies
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91
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Collusion
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91
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Wrongdoing by top managers
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92
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External audit
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93
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Prerequisites for effective auditing
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93
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Independence
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93
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Professionnal skills
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94
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Evaluation
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95
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Objectives of Evaluation
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95
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Prerequisites for effective Evaluation
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96
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Discussion
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99
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Fill banks with suitable words taken from the above section
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101
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Unit 6: Managing and monitoring budget implementation
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103
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Key terms
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103
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Budgetary accounting
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105
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Importance of budgetary accounting
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105
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Defining and monitoring commitments
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107
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Managing payables and arrears issues
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109
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Arrears issues
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110
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Implementation of policies
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112
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Reviews
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112
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In-year budgetrevision
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113
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Personnel budget revision
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114
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Approaches
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114
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The role of ceilings
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116
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Management issues
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117
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The payroll system
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117
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Procurement
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118
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Procurement cycle
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118
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Principles of competition and transparency
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119
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Procurement administration
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120
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Discussion
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121
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Fill banks with suitable words taken from the above section
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123
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