The problems associated with decentralized financial administration and exercising controls have received considerable attention from both academicians and legislators.
Required:
Explain FOUR reasons why it is necessary to have a decentralized financial management system in Ghana. (4 marks)
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- The Scope of Financial Activities of government has expanded tremendously since the country gained its independence and therefore there is the need to restructure, reform and decentralize methods and management of financial operations to reflect the diversity of public financial management in Ghana;
- Stewardship and Control is the act of protecting public property and money and control involves having the power or ability to make decisions. In the exercise of stewardship and control a head of government department is expected to produce quarterly profiles of reports about his/her unit. He is also responsible for undertaken the following:
o Control of expenditure;
o Handle unexpected events;
o Control cash limits;
o In some cases he may be called upon to produce a summary of economic prospects of his organisation.
o Control problems resulting from excessive bureaucracy will be improved through greater delegation of power and decentralization. - Local government authorities are best suited to plan, initiate, coordinate, manage and execute policies in respect of all matters affecting the local people since they are familiar with the environment.
- Enhancing and sustaining public accountability obviously require decentralization of public financial management because the lack of control at the local level makes it difficult to take financial decisions.
- Decentralized financial administration may reduce cost of making decisions and bringing financial administration closer to the local citizens especially in matters of revenue collection and management.