Guidelines for a Democratic Financial System
It is impossible, therefore, to be accountable without being responsible. One can, however, be responsible (this means they execute their duties properly) without being accountable, as when the law does not require them to do so. However, in modern democracies, most Parliaments require their officials not only to be responsible in their actions and execution of their duties, but to be publicly accountable – to reveal in public all of the financial transactions and activities of their respective departments.
Accounting
All expenditure must be accounted for in Parliament. Accounting is the mechanism through which representatives can be accountable to the public – at the end of the financial year a report on the financial effects of each department’s activities is compiled. Tis report, called the appropriation report, is submitted to the Auditor-General and a copy is also sent to the Treasury (see functions of this institution in Module 4). It is a task entrusted to the departmental Accounting Officer.
Tey need to submit reports to the Auditor-General, who in turn reports to Parliament or the legislative body. All money travelling through “the hands” of elected officials – money collected, money kept and money spent, must be accounted for to Parliament. In other words: all details of money collected, kept and spent must be recorded. Accounting Officers, hold, therefore a very important office (or position: one speaks of the office of someone important that is given a political or civil task, such as Mayor or Director-General – this is the position or authority they assume). Tey remain accountable to the public for all expenditure.
We may classify expenditure according to: • Responsibility – who is allowed to collect, keep and spend the money; • Objective – what need is satisfied when the money is spent; • Item – the resource that was purchased. (what the money was spent on). (source: Financial Administration Course; Treasury of the Western Cape)
Financial Responsibility of the Accounting Officer (see more in Module 3) Tis responsibility consists of the following: • Financial accounting – keeping of all records of income and expenditure; • Safe keeping – looking aſter the money which has been collected; • Expenditure of public money – spending the money honestly and responsibly – this of course entails spending the money effectively and efficiently.
All money is made available to the executive authority to finance certain programmes. During the absence of Accounting Officers their powers are exercised by an official acting in their place. Te ministries and eventually the cabinet still remain responsible to Parliament on financial matters, but the detailed financial administration of a department is leſt to the Accounting Officer. Te first line of accountability starts with this office. Accounting Officers may not delegate their chief responsibilities to any subordinates.
In order to fulfill their responsibilities, Accounting Officers • have the authority to collect, handle and utilise state funds; and • are under obligation to account for all transactions by their department.
Tey do this by: • issuing necessary instructions to all subordinates, and • accepting full responsibility for their department’s financial transactions.
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