Public Financial Management consists of the laws, regulations, systems and procedures applied by a government to identify and collect its revenues, to allocate its resources to various activities, to realize its expenditure, to record its accounting transactions, and to act upon the outcomes of any audits and reviews conducted.
The project of modernizing the public financial management of the government represents an initiative of the Treasury of the Republic of Cyprus which aims to strengthen the ability of the government to carry out proper financial management. The target of the project is to reinforce the decision-making process through the provision of relevant, comprehensive, trustworthy and prompt information, both to the decision makers and to the citizens, promoting in this way accountability and transparency, and increasing the efficiency of the governmental operations. This will be achieved through the completion of three actions-pillars that are incorporated in said project and are as follows:
· Transition from the cash accounting basis to the accrual accounting basis;
· Implementation of an Enterprise Resource Planning System; and
§ Creation of Financial Management Directorates.
These initiatives, which are currently underway, aim to improve the quality of the information provided (more comprehensive, relevant, prompt, valid), to strengthen the decision-making processes, and to improve the administrative ability, efficiency, transparency and accountability of the State.
By introducing the accrual basis of accounting, it will be able to provide more comprehensive information pertaining to the financial state of the government, and the creation of the financial management directorates will enhance the ability to assess and use this information, thus the process of taking important decisions will be reinforced. The Enterprise Resource Planning System is the tool that will support the provision and analysis of this information, and it will affect horizontally all of the public service. The implementation of this system will bring about simplifications and automations in manual procedures that are currently being performed by the whole spectrum of personnel (clerical staff, officers, directors). The system will also cover the human resource management processes, and its successful implementation will allow the government to reap the benefits of both the financial and the administrative reform which is being pursued.
In the course of this reform project, all those affected will be briefed and/or trained accordingly while, upon its completion, the financial management of the government will be carried out on a modern basis, similar to the one that the most progressive states in this field have in place.