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Centre for Financial and Management Studies (CeFiMS)

Public Financial Management: Planning and Performance

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The focus of this course is almost entirely on the expenditure side of public financial management, looking at budgeting, accountability and the changes in financial management.

In professions across the public sector, whether medical, educational, legal, engineering or custodial, people are making choices about investments, about how to achieve efficiency, how to stay within budget and how to improve performance. Whether reluctantly or willingly, people are having to understand costs, budgets, financial statements about cash flows, and expenditures, even when they are not in accountancy.

There are also changes in what people are being held to account for. It is no longer sufficient to have accounts that show that money has been spent how governments intended. Politicians and the public want to know how well it has been spent, whether it has been used efficiently and whether it has achieved the purposes for which it was allocated.

To cope with these and other changes, the ways in which public finances are managed has had to adapt. In many countries, budgets and accounts are no longer concerned just with the cash allocated and spent but also with the resources used in providing services – capital resources and assets, as well as people and materials. The further away from cash accounting the systems get the less they look like our personal accounts and the more we need to learn about the relevant concepts to enable us to understand and run them.


Study Guide

You will receive a looseleaf binder containing eight ‘course units’. The units are carefully structured to provide the main teaching, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the further assigned readings. The unit files are also available to download from the Online Study Centre.


Bergman, A. (2009) Public Sector Financial Management, Prentice Hall Financial Times
Shah, A. (Ed.) (2007) Budgeting & Budgetary Institutions, Washington D.C.: World Bank


You will receive Reader volumes as part of the course materials, which consist of articles contributing to current debates in PFM. In addition, you will also use case studies and exercises in PFM in a variety of contexts.

Online Study Centre

You will have access to the OSC, which is a web-accessed learning environment. Via the OSC, you can communicate with your assigned academic tutor, administrators and other students on the course using discussion forums. The OSC also provides access to the course Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Objectives and learning outcomes of the course

By the end of this course, you should be able to:

  • understand how public budgeting fits into the macroeconomic framework
  • apply ideas about accountability to the production of various forms of account for public services and public money
  • understand how changes in public management require different forms of public accounting
  • read a budget and a set of national accounts in different jurisdictions
  • understand costs and different ways of measuring them and how costs are used in budgets
  • understand the budget process at national and sub-national levels and the techniques appropriate at different levels
  • apply budgetary control methods
  • appreciate how public financial management interfaces with politics and political choices
  • use financial management to enhance the performance of public organisations

Scope and syllabus

Course Units
Unit 1: The Context of Financial Management
  • Introduction
  • What is a budget?
  • The macroeconomic framework
  • Accountability
  • 'New Public Management' and financial management
  • Conclusion
Unit 2: Budget Classification and Structure
  • Introduction
  • Budget Coverage
  • Classification of the Budget
  • Budget Composition
  • The Line Item System vs Programme Systems
Unit 3: Costs
  • Some definitions of costs
  • Costing Systems
  • Cost-Volume-Profit Model
  • Absorption or Full cost recovery
  • Activity Based Costing (ABC)
  • Managing Costs
  • Price-based costing
  • Conclusions
Unit 4: Accounting and Budgeting: National Level
  • Introduction: approaches to public accounting and budgeting
  • Cash Accounting vs Accruals Accounting
  • Planning: the macroeconomic, fiscal framework and the medium-term expenditure framework
  • The role of the Ministry of Finance
  • Budget Timetable
  • Conclusions
Unit 5: Accounting and Budgeting: Sub-national Level
  • Translating the national budget into operational budgets
  • Structure, Performance, Discretion, Block Grants and Contracts
  • Fund Accounting
  • Resource Accounting and Budgeting
  • Which techniques at which stage?
  • Budget timetable at sub-national level
  • Accounting for services provided by third parties
  • Conclusion
Unit 6: The management and control of budgets
  • Introduction: Budgetary Control
  • Controlling Operations
  • Evaluation of Budgets
  • Taking Action
  • Summary
Unit 7: Financial Management and Performance
  • Introduction: Accruals Accounting and Output and Outcome Budgeting
  • Defining and Measuring Non-Financial Items, especially Outputs and Outcomes
  • Case Study 1: Output and Outcome Definitions
  • Output and Input Budgets
  • Case Study 2: Outcomes and Outputs in Budgets in England 1998-2009
  • Case Study 3: Performance Budgeting in Canada
  • Conclusions: Will Performance Management and Budgeting ever be Fully Implemented?
  • The journey from Bureaucracy to NPM as it affects Public Financial Management
Unit 8: Budgeting and Democracy
  • Introduction
  • National Legislatures and the Budget Process
  • Case Study 1: Politics and Budget Making in the USA - Executive or Legislature?
  • Case Study 2: Politicians and Output-orientated Performance Evaluation in Municipalities in the Netherlands
  • Conclusions on budgeting and democracy
  • Conclusions: Is there a single best method of financial management?
  • Is PEFA the answer?

Method of assessment

You will complete two assignments, which will be marked by your tutor. Each assignment is worth 15% of your total course mark. You will be expected to submit your first assignment by the Tuesday of Week 5, and the second assignment at the end of the course, on the Tuesday after Week 8. Assignments are submitted and feedback given online. You will also sit a three-hour examination on a specified date in October, worth 70% of your total mark. An up-to-date timetable of examinations is published in April each year.