CA3.8 – Public Sector Financial Management

CA3.8-Public Sector Financial Management

On completion of this module, candidates will reach a competency sufficient to be able to:

• Explain the nature of the public sector finance and taxation framework in Zambia
• Describe the sources of public revenue and key areas of public expenditure
• Evaluate the nature of public sector budgeting and control systems
• Evaluate the public financial management system using measurement frameworks
• Recommend appropriate risk strategies for public sector financial management
• Evaluate public sector capital projects

Syllabus topics	Weighting (%)	LO
Public sector finance and taxation framework in Zambia	20	1 and 2
Budgeting and control	20	3
Public Finance Management Measurement Frameworks	10	4
Financial Risk management	25	5
Capital projects	25	4

Learning outcomes

• LO1: Explain the nature of the public sector finance and taxation framework in Zambia
• LO2: Describe the sources of public revenue and key areas of public expenditure

• LO3: Evaluate the nature of public sector budgeting and control system
• LO4: Evaluate the public financial management system using measurement frameworks

• LO5: Recommend appropriate financial risk strategies
• LO6: Evaluate public sector capital projects

1.  Public sector finance and taxation framework in Zambia: LO1, 2
   1. Identify the main governmental and administrative bodies with responsibility over public revenue and expenditure
   2. Identify the sources of public revenue for central and local government in Zambia
   3. Identify the key areas of public expenditure for central and local government in Zambia
   4. Explain the policy priorities for public expenditure in Zambia
   5. Explain the nature of financial risk in the public sector and identify, evaluate and recommend appropriate financial risk mitigation strategies, including those relating to public borrowing and financial market risks.
2. Budgeting and control: LO3
   1. Outline the public financial planning process
   2. Explain the critical dimensions of public financial management performance from the Public Expenditure and Financial Accountability (PEFA) framework
   3. Describe the budgetary framework, budget cycle and budget processes, including the nature of performance measures, target setting, budget monitoring, budget feedback and control
   4. Explain the budgetary risk management framework and procedures and recommend appropriate risk mitigation strategies
3. PFM Measurement Frameworks: LO4
   1. Explain the how the public financial management (PFM) system is measured
   2. Evaluate the PFM system using the Public Expenditure and Financial Accountability (PEFA) framework
   3. Evaluate the PFM system using other measurement frameworks such as Public Expenditure Tracking Survey (PETS) framework, etc.
4. Financial Risk management: LO5
   1. Evaluate the risk of capital projects including the identification and proposed mitigation of risk factors, including:
      1. Sensitivity
      2. Simulation
      3. Scenario building
   2. Evaluate and recommend investment strategies for the use of surplus public funds in the context of the Public Finance Act and the Local Government Management Act, paying attention to:
      1. The identification of appropriate investment vehicles such as pension funds
      2. Using portfolio theory, the creation of a balanced portfolio of investments, as far as the relevant legislation allows.
5. Capital projects: LO6
   1. Describe the nature of public sector capital projects including the approval process, performance measures, and target setting, paying particular attention to public/private partnerships
   2. Explain the role of and interaction between quantifiable and non-quantifiable targets and apply both sets of targets to capital project problems
   3. Determine an appropriate cost of capital to employ in capital projects
   4. Evaluate, using appropriate techniques, the viability of proposed capital projects