Public Financial Management: Budgeting, Accountability and Auditing

Budgeting, accountability and auditing of the usage of the trusted tax money are traditional core areas of public sector financial management. In this section, these core areas of public financial management are presented, covering both Finnish local and central governments. Finland has a long tradition of accrual accounting, as the transition from the cameral accounting system to accrual accounting took place in the local government in 1997 and in the central government in 1998. Public sector performance is only partly captured by financial figures and performance. Non-financial activity performance, accounting for outputs and outcomes, has become vital for public accountability. These matters are planned and reported using performance-based budgeting. The key elements of the reporting of these non-financial components are also highlighted in this chapter. Transparent and reliable audit practices complement the core areas of public financial management. Auditing is efficiently and independently organised in both the local and central governments in Finland. This chapter introduces public sector audit institutions, such as the National Audit Office and chartered public finance auditors and shows that they have a vital role in ensuring transparent and reliable financial reporting at all levels of Finnish public sector governance.