Activities to further strengthen budget credibility
There were 04
objectives with 18 activities being implemented to further strenghten budget
credibility aiming to Improve Financial Accountability which was the
Strategic Goal of Phase II of PFMRP.
Improved Administration and Revenue Policy
Progress in Improved
Administration and Revenue Policy includes:
- Mid term
Revenue Mobilization Policy and Strategy (2011-2013) was approved and updated.
Working Group for Revenue Mobilization Policy was created to monitor and
evaluate of the implementation of the strategy. Mid term Revenue Mobilization
policy and framework was in use to support the budget preparation 2012
revenue policy was improved by reviewing the draft amended law on oil and gas
(the draft law was submitted to the Council of Ministers for adoption)law
on tax on natural mine resource operation
and on tax collection from oil and gas were drafted
forecasting was strengthened by updating macro-economic 2012-2014, Midium term
expenditure framework 2012-2014, producing economic outlook 2011-2014 and
monthly socio-economic report.
Improved tax administration:
Sub degree on
deduction of threshold of turnover and value added tax to place
under Self Assessed Regime category.
- Drafted circular on measures to
survey and collect information; drafted policy on information technology in The
General Department of Taxation.
- Further improved program for Self
Assessed Regime and tax on property, and program for auditing. The execution of
Prakas on collection of property tax; and registration of properties in Capital
to be taxed was being implemented
- Enterprises were classified by
types of business for better management and monitoring their revenue status
- Implemented and strengthened tax
debt reclaim; and meetings with large tax payers (2010-2013)
- Installed network at central,
provincial and Khan tax branches; the implementation of program to collect data
of revenue from all tax branches nationa wide and further developed system for
large tax payers to submit tax declaration for Self Assessed Regime and Estimate
- Disseminated guideline on
obligation and rights of tax payers; of which booklets on types of taxes, on
property tax, on services for tax payers, confidential for tax payers, and on
procedure for complaints.
- Further use of accounting for
small and medium tax payers
- Codes of conduct for tax officers
- Reviewed options to lower down
threshold of turnover, tax annual profit, tax on monthly salary, Value Added
Tax, Tax on capital pfofit, tax on fnance and banking sector, Lease Law, and
- Booklet on tax debt collection was being drafted. Enterprises
that were in tax debt over 5 years were recorded.
Improved Customs Administration:
- Automated System for Customs Data
(ASYCUDA) was improved and updated and Customs Risk Management Database System
(CRMDS) of the General Depatment of Customs and Excise of Cambodia was fully
- ASYCUDA was expanded by connecting
optical networking to certain in-land ports in Phnom Penh and main border
- Strengthened incorporation of cash
collection and payment through bank into treasury account.
Improved non tax revenue and state property administration:
- Prakas and circular on the use of
national receipts was launched and receipts were printed out for 17 line
ministries, Sub National Administrations, and 24 provincial departments and
disseminated by the mass media.
- Public services were prepared and
prices for those services were set for 23 ministries.
- Draft Law on the Management of
State Property was prepared; Guideline on Inventory of State Property; Circular
on the Management and Control of Contract and Agreement related to State
Property Management; Draft Prakas on Procedure of Exchange and Sale of State
Property were also further prepared.
- A Working Group was created to
work on legal framework for the non tax revenue management.
- Measures to collect non tax
revenue from Line Ministries, State Enterprises and Capital/Provinces were
taken. Accounting management at Public Enterprises was strengthened.
- Measures and Procedures to improve
the management of autonomous units, Administrative Public Institutions, Public
enterprises, and privatization were being taken. Measures were also taken to
claim public debt. Contract and Charge Book were reviewed to ensure
effectiveness in managing public revenue.
- Inter-ministrial Prakas on the set
of administrative service charge, registration, authorization, fines and
permission (7 inter-ministrial prakas were drafted, and 02 Prakas came into
Financial Industry Sector
- Draft Trust Law, Draft Law on Insurance, Draft Law on Casino
Management, Draft Law on Real Estate Management were finalized. Draft Sub Degree
on Micro Finance and Banking Management were further developed. Prakas on
Lottery Management; Circular on licensing of small scale insurance was being
devloped. Sub Degree on State Bond was incorpotated into Sub Degree on Public
- Developed database to monitor monthly, quarterly and annually
revenue collection. Developed automated debt payment monitor system for Casino.
Set commission rate for real estate business. Developed real estate management
- Developed and implemented the legal control system for Casino
- Developed procedure to manage Government’s sub-debt in
micro-finance. Developed draft Prakas on licensing the Real Estate Business, and
developed dratf sub-degree on licensing small scale insurance.
2.2. Further Improved Debt Management
- Debt Management and Financial Analysis System
(DMFAS) was operationalized and further improved by connecting to 3 more units
(General Department of National Treasury, Budget Department, and Department of
Economic and Public Finance Policy)
Sustainability Analysis (DSA) was integrated into Debt Management Office. Draft
of Division Operation Manual for Debt Management Office was developed and
revised. Standard Operation Procedure was further developed
- Capacity building portal was posted at the MEF’s webpage
- Monthly, quarterly and annually reports on debt were regularly produced
Degree on Public Debt Management was adopted and operationalized and Committee
on Public Debt Management was created
- Strategic paper
for Public Debt Management 2011-2018 was approved by the Government and came
- Procedure for
management of procurement of Development Partner-financed projects; Procedures
for Project Administrative management; and SOP/PM/FMM were developed.
2.3. Further improved cash
and bank account management
- As of now, there were no more current
accounts to be frozen; all active accountswere authorized
- Treasury Single Account was
strengthened. Accounts for General Department of Taxation and General Department
of Customs and Excise of Cambodia maintain zero balance at the end of everyday
- The use of Commercial banks was
expanded to 17 provinces for revenue and expenditure transaction. It was planned
to expand to all provinces by 2nd Quarter of 2013.
- Developed and
implemented budget based on administrative, economic and functional
classifications in line with GFS/COFOG
towards accrual accounting with FMIS was being developed, and template as input
for FMIS based on cash based accounting of IPSAS was completed.
- Transitional Information technology system for treasury accounting management
was gradually improved in Phase II of PFMRP, by incorporating module of cash
Management Unit was moved to General Department of National Treasury
Mechanism to match revenue and expenditure report 2011 with line ministries were
Capital/provincial treasuries were further encouraged to prepare their cash flow
Guideline on cash plan preparation was being implemented
Monthly cash forecasting and daily, weekly and monthly cash reports
(revenue-expenditure) was further improved.
Improved Public Procurement
- Law on Public Procurement was adopted
- Certain sub degrees and Prakas to implement the Law on Public Procurement were
- Implementing Rules and Regulations of Public Procurement (IRRPP) came into
effect and was disseminated.
- Website for Public Procurement was created
Improved Financial Accountability
49 activities under 08
objectives were implemented to improve financial accountability. Progress made
for each objective is as follows:
3.1. Improved lines of
accountability by clarifying roles, functions, and responsibilities of LMs,
levels, and within institutions
Controllers were relocated to 19 line ministries (17 Line Ministries remain)
budget expenditure starting from commitment to payment was completed.
- Comparison table
to ensure the consistency between Budget Strategic Plan and Investment plan was
developed and came into force.
- Draft of
Guideline on Expenditure Procedure and Financial Control was completed, and
discussed with General Departments/Departments and Line Ministries.
- Guideline on
Budget Entity was completed and guideline on the reparation and Implementation
of Budget Entity was disseminated to Line Ministries. 10 Line Ministries was
chosen to pilot the implementation of Budget Entity
- Business process
illustrating the current work flow starting from commitment to payment, in
which, there is Business Processes Template, Business outline/Process Steps and
Organization Chart Template was developed which would be the foundation to
incorporate into FMIS
- The development
of documents, legal papers, lexicons for Public Financial Management were in
3.2. Improved instruments for
encouraging responsibility of financial management and enforcing accountability
- The development
of financial inspection standard and manual on financial inspection procedure
was in progress
inspection program and website for General Inspection Department were created
of expenditure on salary, incentives, and functional allowances for advisors,
civil service officials whose workplace was more than one were made.
- Code of conduct
and professional responsibility of financial inspectors was further developed.
3.3. Further improved
the implementation of new budget classification and new chart of account
- New accounts in TOFE were reviewed
- TOFE and GFS reports were monthly
produced as of May 2012
- Comparison of
accounts between actual revenue and data through treasury in order to estimate
revenue was in progress.
- The development
of budget codes was in progresswhereas budget classification was requested with
timeframe for the implementation of budget codes.
- Reporting system
for geographic and functional classifications was in progress.
- Sub Degree on the
implementation of procedure for Development Partner- Financing projects came
Management for Development Partner- Financing projects was updated
- Improved budget
codes and Chart of Accounts.
3.4. Improved process and
transaction of budget execution
and Action plans for FMIS were revised and implemented. FMIS Working Group was
officially created. Board of Directors for FMIS was also created.
plan on Change Management and dissemination plan of Change Management were being
Process was reviews and revised and Change Management Paper was updated
Business Analysts were recruited and trained
Bidding document was revised, and Functional Module Requirement for FMIS were
submitted to concerned Institutions for comments in order to incorporate into
new rebidding document of FMIS; major report form for FMIS was also developed
- Survey was conducted in Provincial treasuries to learn more the
knowledge of FMIS and its related requirement
- Sub Degree on Improvement of Current and Capital Expenditure
Procedures for Advances came into effect
- 14 Line Ministries was chosen to pilot at first stage to
streamline commitment process, in which 05 Line Ministries were chosen to pilot
to streamline the Commitment and Payment
- Overspent budget was not authorized and committed credit was
3.5. Improved accounting system and financial
statement to ensure transparency
- Monthly TOFE reports were developed and regularly updated.
- GFS for
National Administration was in progress and GFS for Sub National Administrations
were planned to develop.
- Debt Management and Financial Analysis System
(DMFAS) was operationalized
toward Cash based-Cambodian accounting standard (IPSAS) for FMIS was developed.
through bank was executed in Phnom Penh, and piloted in other two provinces.
- Manual on
inventory listing was prepared. Inventory check was gradually conducted
3.6. Improved auditing, inspection, and
response to the use of auditing and inspection finding
- Reviewed progress of internal audit performance in 27 line
ministries, 12 public enterprises; of which 25 line ministries and 11 public
enterprises met the requirement by filling in the questionnaires.
- Draft assessment report of progress of internal audit function in
25 line ministries was finalized.
- 26 line ministries created their Internal Audit Departments; 23
of them were operationalized.
- internal audit functions in line ministries and public
enterprises were improved
- Disseminated the internal audit strategic plan and annual audit
plan to 33 line ministries and public enterprises.
- Circular on strengthening internal audit function in line
ministries public enterprises was prepared
- Further developed and revised manual on procedure for general
- Audit mail box was installed in every province
- Software IDEA for internal auditing was provided to Internal Audit Department
- Policy paper for internal management to support FMIS was developed and
translated into Khmer.
- Internal audit work within the Ministry of Economy and Finance were carried out
in 249 units (15 special cases). 34 audit results were issued urging all Units
to follow the recommendation
- Consulted on roles and responsibilities of inspection and internal audit in line
3.7.Strengthen and develop
fiscal decentralization policy
- Law on Financial Regimes and Property Management of Sub National Administration
was adopted and came into effect
- Sub Degree on
Establishment and Functioning of the District/Municipal Fund was adopted and
came into effect
- Budget Strategy Plan for Sub National Administration was drafted
- Circular on Budget Implementation 2013 for Sub National Administrations was
- Prakas on the implementation of Budget Classification and Budget Codes for Sub
National Administrations was disseminated
- Policy Paper for own source Revenue for Sub National Administrations was
- Conditional transfers for Sub National Administrations was furhter reviewed
- Policy paper on the establishment of Sub-National Investment Facility (SNIF) was
- Draft Sub Degree on Financial Management System for Districts and Municipalities
3.8. Building institutional
capacity and motivational measures
- Ministry of Economy and Finance conducted 203 training courses for its officials
(13 573 Officials) on key subjects: Financial Accointing, Audit, FMIS, Budget,
Revenue management, Public Procurement, Chart of Account, Macro-economic
management, Tax management, Customs and Excise management, Public Financial
tax revenue management, Medium term expenditure management, State Property
Management, Cash flow procedure, Tax policy, Financial Inspection, Change
Management, Leadership, Public Policy, Budget Classification, Strategy- Budget
linkages, Effective budget delegation, Budget Analysis, and Budget Transaction.
of Economy and Finance cooperated with key partners to build and develop human
resources; of which, with Singaporean Administrative College, China’s Asia
Pacific Finance and Development Center, and other bilateral partners.
- Assisted 15 line ministries to
develop their capacity building plan
courses on Public Financial Management for Sub national administrations and
provincial departments in 23 Provinces were conducted. Trainers were from
various General Departments/Department of the Ministry of Economy and Finance
- Development of training material for 6 key subjects (Public Procurement, Budget,
Auditing, Financial inspection, Accounting, and leadership and management) was
in progress with participation from trainers from General
- Training courses on ASYCUDA World, National Workshop in Interlectual Property
Right were conducted.
- Developed 2nd Course Training plan for Tax Officials. Training courses on
Information Technology to tax officials in 6 provinces
- 200 Customs officers attended local training coruses/seminars, including Risk
Data Management (CRMDS)
- Seminars, study tours about customs work, training on ASYCUDA, Customs
Declaration, Commission fees were conducted
- 74 Customs Officer attended training courses and seminars abroad
- Training courses on report writing on audit and audit on fraud for 27 line
ministries and 14 Units (150 participants).
- Training on Information technology neccessary for Public Financial Management
and strengthening IT capacity was organized with participation from Provincial
and Line Ministries’s officials
- Training on the use e-mail (@mef.gov.kh) was offered to Officials of the
Ministry of Economy and Finance and Provincial department of Economy and
- MEF’s Human Resourse Management and Development was launched.
- Code of Ethics of MEF’s officials and training materials for new recruited staff
in MEF was finalized, and implemented.
- Computerized document for entry examiniation into the Ministry of Economy and
Finance; Manual on procedure to manage officials of the Ministry of Economy and
Finance; 5 – year Human resource development and management were further
- 3 Trainings on the implementation of trade agreement under the ASEAN Free Trade
Agreement and ASEAN-Partner Trade was organized in Takeo and Svay Rieng and
Kompong Cham Provinces.
- Budget Strategy Plan 2013-2015 of theMinistry of Economy and Finance was
Activities for later platform
under 02 objectives were implemented in Phase 2 to be ready for later platform.
Progress made for each objective is as follows:
4.1. Improving and expanding the implementation of program budgeting
Report on the implementation of program budgeting for 08 program budgeting
ministries 2008-2011 and guideline on sectoral program budgeting was further
to expand and strengthen program budgeting was completed and action plans were
developed toward fully implement program budgeting in line ministries
- Disseminated guideline on program budgeting and further developed program
budgeting codes and guideline on sectoral program budgeting
- Strengthened the piloting of program budgeting in 08 line ministries and 24
Provincial Department of Education Youth and Sports under the monitoring of the
Ministry of Education Youth and Sports.
budget comprehensiveness and integration
- Medium Term Expenditure
Framework 2012-2014 was updated
- Policy on budget integration
(recurrent and capital budget and public enterprises) annex budget of public
enterprises and data on capital and annual revenue and expenditure transaction
of Public enterprises were developed and gradually consolidated. Off budget
revenue and expenditure was incorporated into annual budget including
Development Partners’ annual budget; and budget strategy plan was assessed for
budget preparation 2012
- Investment expenditure
allocation to priority ministries was further carried out in line with Annual
- 3-year Public Investment
Program was improved and guideline on preparation budget strategy plan was also
reviewed and improved.
- Developed Public Investment
Program 2010-2012 by highlighting domestic sources for investment expenditure
estimates. Improved procedure to score and assess budget strategy plan 2012-2013
of Line ministries. Developed circular on technical instruction to draft
- Improved annex table to
highlight budget of administrative public enterprises. Reviewed the mechanism to
collect information of off budget revenue and expenditure, Development Partners’
budget and verified Public Investment Program against budget strategy plan
- Majority of Line ministries
developed their budget strategy plan.
challenges should be mentioned were as follows:
- Capacity was still
limited, especially, the professional skills for public accounting, auditing and
information technology. Means for performing work did not meet with work load.
Training on certain basic skills could not be made as planned due to lack of
financial supports from Development Partners.
- Ownership and
Proactive Approach of Officials in charge was still limited. Cooperation from
Institutions, Line Ministries and Development Partners to share information
still needed improvement
- The use of Technical
Assistance was not so effective to meet with the requirement, such as the
recruitment of international advisors/consultants could not be made as planned;
They could not perform as TORs
- The approved budget was frozen
indefinitely, and the uncertainty of financing was undermining some reform
activities, such as study tours, twining program, and FMIS, etc.
- Financial Mechanism to support Reform
Officials (Priority Operation Cost) to replace Merit Based Pay Initiative came
to an end by June 2012.
- Contract for FMIS which was the core
of PFMRP Phase II to improve financial accountability could not be made as
planned; and this FMIS project needed to be revised
- Certain reform activities were not
clear and did not meet the reality of the current situation
Overall, the progress of the implementation of Public Financial
Management Reform Program Phase II against its objectives and action plans, and
against priority action plans as well as as agianst FMIS projects was
satisfactory and met high level indicators.Budget still remained credible and
built up foundation for the implementation of activities towards financial
accountability. Substantial Progress achieved has responded to strategic
objectives of the Public Financial Management Reform Program Phase II which
contributed to improved budget formulation, budget execution, budget auditing
and inspection, fiscal decentralization, and strengthened capacity. Meanwhile
activities for next stage of the Public Financial Management Reform Program also
showed remarkable progress , especially on comprehensiveness and integration of
budget. Hoever, some challenges still remained and needed to overcome in order
to ensure that achievement would be made in line with vision of the Public
Financial Management Reform Program: Cambodia would have a Public Financial
Management System with international standard.