Name : Dinda Putri Novanti

Student ID : 1910533004 / International Accounting

Local and State Finance

PUBLIC SECTOR FINANCIAL MANAGEMENT

1. Chapter 1
The budget is when the government presents its taxes and spending plans to
Parliament, although detailed estimates and the Secretary of the Treasury's
memorandum on public spending are usually presented a little longer.
 The public sector planning process
In 1992 the government concluded that although it was still appropriate to
publish expenditure plans long before the start of a budget, there was a major
advantage in combining tax and expenditure plans namely, that the minister would be
better positioned to assess expenditure plans, their presentation would be improved to
make policies appear more consistent and coherent. informed debate could ensue, the
early announcement of tax proposals would allow taxpayers to plan their affairs.
Therefore, the 1993 budget report will be accompanied by the following documents, a
summary of the principal changes to taxes and expenditures, analysis of expenditure
plans, a statement of medium-term financial strategies, short-term economic forecasts,
detailed material on possible outcomes, information on tax relief costs.
- General Government Expenditure
These general government expenditures are expenditures of central and
local government but do not include transfers such as revenue support grants
to local authorities. This is the main punical spending aggregate to be used as
the government's medium-term financial strategy.
- New Total Control
The government made changes in the public expenditure control system.
The changes are designed to increase control so that they can help the
government achieve its medium-term financial goals. To help the government
achieve that, the government established a 'new total Kontro'.
- Supply Expenditure
Supply expenditure is the annual expenditure of the central government
selected by Parliament in its supply estimate. Supply spending excludes all
central government spending, the biggest exception being that financed by the
National Insurance Fund which covers half of spending on social security.
Estimated supply is a way for the government to spend in the next fiscal year.

 The Citizen's Center

The citizen charter was announced by John Major in 1991. The purpose of this
charter is to achieve better quality in the provision of public services and make them
more responsive to public demands. The highlight of the citizen charter is a market
 tester of services provided by civil servants in comparison to quality and cost with the
tourism sector.

 The Financial Management Initiative

Having a general goal of increasing efficiency in civil servants, the
government developed a financial management initiative (FMI) in 1982. The aim of
FMI was to improve resource management, allocation and control.

 The National Health Service

The White Paper, which worked on patients in 1989, suggested that gross
spending on healthcare would increase. Due to the increase in spending, the
government intends to improve the performance of all hospitals and general
practitioners to be the best. Therefore, the White Paper proposes 7 main steps
including, making the Health Office more responsive, allowing hospitals to apply for
guardianship status, giving hospitals permission to offer their services to other health
authorities, reducing waiting times and improving service quality. These concepts of
financial management have improved significantly because of the two principles
underlying the white paper. These changes were incorporated into the National Health
Services Community Care Act. The main features of the law:
- National Health Service Trusts
This trust has the responsibility of ownership of the hospital or other
facility.
- External Financing Limits
NHS capital spending is part of the provision of public spending in
health programs. The national financing limit (EFL) controls access to
external finance with confidence. EFL is a concept where net financing is
measured by new loans taken from trust. less repaid loans.
- General Practitioner (GP) fund holding
Allowed to apply for recognition as a data retention practice. Doctors
must prove they have the capacity to manage budgets and have
administrative support.

 Local Government
The local government sector has to deal with a number of statutory
regulations. There are financial actions that contain laws.

 The Nationalized Industries and Public Corporations

Those nationalized by public bodies which are usually established by their
own laws and have a considerable degree of independence. These are usually run by
the board and report to the minister. The main objective of the government towards
nationalized industries is to make them work as effectively and efficiently as private
companies, and to strengthen them to the point where they can be transferred to the
private sector or if deemed necessary, remain in the public sector.
2. Identify important and similar initiative taking place in Indonesia context
The Supreme Audit Agency (BPK) takes 5 forms of initiatives to improve the
bookkeeping and management of state finances, both central and regional levels. The
Chairman of BPK said that this initiative is to examine all levels of government in
Indonesia. The following are the initiatives taken by the BPK:
- Require all administrators to submit a management representative letter to
the BPK. This letter is a statement from the highest leadership of government
organizations which states that the financial statements submitted are presented fairly
and in accordance with government accounting principles.
- Further encouraging the Central and Regional Governments to immediately
realize an integrated state financial accounting system (single treasury account). With
this, the government can find out its financial position or liquidity conditions at any
time.
- Requesting all audited entities to prepare an Action Plan to improve their
audit opinion on financial statements. This Action Plan must contain a clear work
program with implementation according to a clearly planned timetable. This Action
Plan must contain a bookkeeping system, a computer technology application system,
an inventory of assets and debts, a schedule for preparing financial reports and audits
and the person in charge of the budget, quality assurance by internal supervisors and
improvement of human resources, especially in the areas of accounting and state
financial management.
- Assist government entities to find solutions in implementing government
agencies Action Plans.
- And, suggesting that the DPR, DPD, DPRD Province and Regency / City
form a Public Accountability Committee (PAP). This PAP was formed to complement
the management function so that the legislative institutions could oversee the full
implementation of the government's budget and work program for one fiscal year.

3. Assess differences between similar initiative taking place in UK and Indonesia

context
The initiative used by the UK and Indonesia is the Balanced Scorecard (BSC),
which is the tool chosen by the Ministry of Finance to measure organizational
performance. Initially, the BSC concept was only applied in several private
organizations in the United States until it was successfully applied to various
companies in the world such as Rockwater Inc, AT&T Canada Lond Distance, BMW
Financial Services, etc. However, along with the development, the BSC concept has
been successfully applied to public sector organizations around the world. The first
public sector organization to apply the BSC concept was the municipal government of
Charlotte City, North Carolina, United States in 1996. With this success, then the
BSC was successfully implemented in many government agencies in various
countries such as England (British Ministry of Defense). Canada (Royal Canadian
Mounted Police), Ethiopia (Federal Ministry of Health), etc. Then, one of the public
sector organizations in the form of government in Indonesia, namely the first
implementation of the BSC concept, was the Ministry of Finance in 2008, but the
intended application was carried out in a gradual manner, namely only the upper level
had not yet reached the lower level. Meanwhile, the application of BSC to the
smallest organizational unit only began in 2011 which was regulated by the Minister
of Finance Decree (KMK) Number 12 of 2010 concerning Performance Management
within the Ministry of Finance which was later replaced by KMK No
454./KMK.1/2011, and KMK No 467 / KMK.01 / 2014 which was later also amended
by KMK No 556 / KMK.01 / 2015. The Ministry of Finance's policy of adopting the
BSC as a measuring tool for organizational performance as well as a strategic
management tool is a major breakthrough for the Indonesian government.