METHODS OF EXPENDITURE TRACKING

1. METHODS OF EXPENDITURE TRACKING Collaborative Africa Budget Reform Seminar. 1st to 3rd December 2004 FARM INN, Pretoria, South Africa

2. OUTLINE • Introduction • Planning and Budgeting • Budget Execution • Expenditure Tracking • Challenges • Conclusion

3. Introduction • Increased expenditure does not automatically translate into improved service delivery • Limited revenue increases do not allow increased allocations to priorities • Hence the need for improved efficiency and effectiveness in resource use

4. Planning and Budgeting • Strategic Allocation based on the Priorities (Allocative Efficiency) • Linking Budgets to Outputs and Outcomes • Unit Cost • Monitoring Indicators developed to measure implementation progress

5. Budget Execution • Work-plans (Annual/Quarterly) • MoUs • Financial Performance Reports • Actual vs Planned Expenditures • Physical Performance Reports • Actual vs Planned targets

6. Budget Execution Cont’d • Transparency • Wide participation of stakeholders in planning and budgeting • Publication of releases • Popular versions • PEAP • Citizens’ Guide to the Budget Process • Budget at a Glance

7. Expenditure Tracking (ET) • Why Expenditure Tracking? • To ensure that funds reach the intended target beneficiaries • Complements the existing monitoring system • Provides a rigorous review of expenditure • Highlights issues of operational efficiency due to in-depth analysis

8. Expenditure Tracking Cont’d • Review of processes and systems • How funds channelled including the banking system • Systems and capacity for recording and reporting on expenditure • Linkage between Inputs and outputs – Efficiency & Economy • Outcomes – Effectiveness/Incidence

9. Expenditure Tracking Cont’d • Budget Performance Reports (Quarterly, Biannual and Annual) • Public Expenditure Reviews • Expenditure Tracking Studies • Value for Money Audits • Surveys (HH, DHS, Impact studies, NSDS, PPAs + voices of the poor) • Civil Society – Independent monitoring

10. Expenditure Tracking Cont’d • Examples of Expenditure tracking studies • Education • Initial studies focused on reach of expenditures • Recent studies have in addition to expenditures focussed on other aspects such as quality and drop out rates • Health • Focussed on flow of funds • Who benefits and accountability

11. Expenditure Tracking Cont’d • Value for money audit in water focussed on: • Sector planning and management capacity • Procurement process • Contract supervision and monitoring • Functionality of the O&M of structures • Financial Management, reporting & accountability • Average cost of outputs

12. Challenges • Availability of skills • Availability of data particularly on outcomes/impact • Some systems/processes are difficult to change eg bottlenecks related to access to banking services • Difficulty in reducing the unit costs in the short run

13. Challenges Cont’d • Expenditure Tracking Studies may be expensive • Lack of good reporting mechanisms especially on physical performance

14. Conclusion • Increased expenditure alone may not result in improved service delivery • Linking budgets to outputs/outcomes and clear unit costs is a pre-requisite for improved ET. • Expenditure tracking does not replace monitoring but complements it