Models of Public Budgeting and Accounting Reform

Models of Public Budgeting and 2, Supplement 1 Volume « Accounting Reform Models of Public This book provides a comparative look at financial management systems from a family of systems point of view. Despite the similarity between the models there Budgeting and are significant differences that have evolved over time because of systemic reasons like national culture and values, administrative culture, and constitutional Accounting Reform and organisational arrangements. The book looks at the two major families of accounting regimes: the Anglo-American model and the continental European model and its two subsets of the German tradition and the French tradition as well as how the accounting structure has evolved in China. These papers were originally delivered during a conference in Beijing in support of efforts to reform the public accounting structure in China. Models of Public Budgeting and Accounting Reform OECD's books, periodicals and statistical databases are now available via www.SourceOECD.org, our online library. This book is available to subscribers to the following SourceOECD theme: Governance Ask your librarian for more details of how to access OECD books onl ine, or write to us at [email protected] www.oecd.org 42 2002 13 1 P ISBN 92-64-19897-0 OECD Journal on Budgeting OECD Journal on Budgeting Volume 2, Supplement 1 -:HSTCQE=V^]^\Z: Volume 2, Supplement 1 Models of Public Budgeting and Accounting Reform OECD JOURNAL ON BUDGETING Volume 2/Supplement 1 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; – to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and – to contribute to the expansion of world trade on a multilateral, non- discriminatory basis in accordance with international obligations. The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries became Members subsequently through accession at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention). Cette publication est disponible en anglais uniquement. © OECD 2002 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, tel. (33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country except the United States. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: www.copyright.com. All other applications for permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France. FOREWORD The papers in this supplement to the OECD Journal on Budgeting originated from an international symposium held in April 2001 in Beijing, China. The symposium was sponsored by the Ministry of Finance of the People’s Republic of China and was conducted by the National Institute of Accounting, in association with Tsinghua University’s School of Economics and Management and Institute of Accounting Research. The papers give a comprehensive overview of various OECD Member country accounting models and as such are valuable not only to China, but to all countries. The main theme of these models is accountability and confidence in the execution of the budget plan. While the models are different and constructed to meet the needs of individual countries, there is great utility in presenting a comparative understanding of the theoretical basis for the systems. This understanding is especially important for non-member countries where an OECD “best practices” approach may not be valid. Presentations like these show that there is no single way to construct an accounting system, but rather that principles and common elements are important. The views expressed are those of the authors and do not commit or necessarily reflect those of governments of OECD Member countries. EDITORS James Chan (Editor), Professor of Accounting, University of Illinois at Chicago, United States. Chen Xiaoyue (co-editor), Professor of Accounting and Finance, Tsinghua University; and Vice President, National Accounting Institute, People’s Republic of China. 3 CONTRIBUTORS Richard Allen, Director, Public Expenditure and Financial Accountability (PEFA) Program, World Bank, Washington, D.C. Tom Allen, Chairman, Governmental Accounting Standards Board, United States Aad Bac, Professor of Government Accountancy, Tilburg University, Netherlands Eugenio Caperchione, Professor of Public Sector Accounting, University of Modena and Reggio Emilia, Italy James Chan, Professor of Accounting, University of Illinois at Chicago, United States Benoit Chevauchez, Director, Public Management Institute, Ministry of Economics, Finance and Industry, France Noel Hepworth, Chairman, Public Sector Committee, European Federation of Accountants; Chairman, Institute of Public Finance, United Kingdom Xiang Huaicheng, Minister of Finance, People’s Republic of China Lou Jiwei, First Vice Minister of Finance, People’s Republic of China Klaus Lüder, Professor Public Financial Management and Business Administration, German Postgraduate School of Administrative Sciences, Speyer, Germany Alex Matheson, Head of Division, Budgeting and Management, Public Management Service, Organisation for Economic Co-operation and Development, Paris, France Vicente Montesinos, Professor of Accounting, University of Valencia, Spain Riccardo Mussari, Professor of Public Management, University of Siena, Italy June Pallot, Professor Accounting, University of Canterbury, New Zealand Kuno Schedler, Professor of Public Management, University of St. Gallen, Switzerland 4 MODELS OF PUBLIC BUDGETING AND ACCOUNTING REFORM James L. Chan, Editor Chen Xiaoyue, Co-Editor Preface by Xiang Huaicheng...........................................................................7 Introduction by James L. Chan .......................................................................9 1. Accountability and Governance Public Accountability and Government Financial Reporting by Tom L. Allen11 Better Public Sector Governance: The Rationale for Budgeting and Accounting Reform in Western Nations by Alex Matheson ............................................37 2. China and Central-Eastern European Models China by Lou Jiwei .......................................................................................51 Central and Eastern Europe by Richard Allen ..............................................81 3. Anglo-American Models United Kingdom by Noel Hepworth ...........................................................115 New Zealand by June Pallot........................................................................163 United States by James L. Chan..................................................................187 5 4. Continental European Models -1 Germany by Klaus Lüder ..........................................................................2245 Switzerland by Kuno Schedler....................................................................243 Netherlands by Aad Bac..............................................................................265 5. Continental European Models - 2 France by Benoît Chevauchez.....................................................................285 Italy by Eugenio Caperchione and Riccardo Mussari.................................305 Spain by Vicente Montesinos......................................................................333 6 PREFACE BY XIANG HUAICHENG* China’s financial systems have undergone essential changes since China adopted the reform and opening policy. The previous phase focused on fiscal revenues aspects, and the management of expenditures is emphasised in the present phase. The reforms of the fundamental management systems íVXFK as government budgeting, treasury management system and budget accounting system í are particularly emphasised. This is a profound reform – indeed a revolution – of the traditional budget management systems. It covers changes in budget concepts, the budget preparation system and budgetary management. We hope that through this budget reform, we can promote the establishment of a public finance system that corresponds to the socialist market economy. Such a system would make better use of information technology and significantly improve the level of budget management.

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