Several elements of private sector financial management provide a sound basis for practices in the public sector. The PFMA aims to introduce an approach of management for results instead of managing for compliance. Some characteristics of this approach include the following :
| • | accounting officers (departmental heads) enter into employment contracts with executive authorities supported by performance agreements that include performance standards; |
| • | clearly defined responsibility of the accounting officer and other role players for resources committed and outputs produced; |
| • | greater alignment of planning and budgeting processes; |
| • | strategic planning is introduced; |
| • | central regulations are reduced to the minimum and replaced with guidelines; |
| • | accounting officers are allowed flexibility in the use of resources; |
| • | management accounting and reporting; |
| • | appropriate internal control and risk management principles are followed; and |
| • | accounting practices similar to that employed in the private sector are being followed (i.e. accrual accounting, capitalisation of fixed assets and depreciation). |
It is recognised that the quality of financial management in public sector organisations is directly related to the ability of accounting officers to recruit and retain adequately qualified chief financial officers, financial and management accountants and programme managers. The approach of management for results, with its associated flexibility in the use of resources with a greater emphasis on accountability, should enable accounting officers to compete for the best personnel to achieve the agreed outputs of each department with an acceptable standard of financial management.
