Key elements of financial management

UNDP provides end-to-end capacity development support to help government and civil society organizations (CSOs) manage all aspects of the financial management process in the implementation of large-scale health programmes. Financial management involves much more than accounting for income and expenditure. It includes all aspects of planning, organizing, directing and controlling financial activities

Financial management and systems capacities are required to plan, direct, and control financial resources so that health programme objectives can be effectively and efficiently achieved. In addition to managing the short term cashflow needs, financial management includes budgeting, systems, procedures and controls to protect financial assets, as well as ensuring sufficient relevant and reliable information for good decision-making.

Financial management must therefore be integrated into the overall management of an entity implementing a health programme, with close coordination between financial planning and budgeting, and between the planning and delivery of programmatic results. Likewise, systems for financial management and reporting of donor-funded health programmes must be integrated into national public financial management systems to ensure sustainability.

UNDP’s approach

As part of its financial capacity-building activities for government and civil society partners, including as interim Principal Recipient (PR) of Global Fund grants in countries facing challenging operating environments, UNDP:

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  • takes into account the existing assessments and findings for financial management: UNDP has developed comprehensive capacity assessment tools to assess how closely existing financial management policies and procedures meet current and expected financial management needs. Using these tools helps to establish a baseline and a clear understanding of what financial management systems can achieve
  • conducts an objective assessment of all health implementing partners
  • develops risk mitigation measures
  • selects appropriate financial tools to mitigate risk, including UNDP financial modalities such as direct payments and reimbursement to enable implementation in high risk environments. Within the strengthening of national financial accounting and reporting systems, national implementation advances consist of cash transferred to a national implementing partner. The financial management modality used includes performance indicators and measurable milestones for sustainable transitions to national entities and systems.
  • facilitates a capacity development plan for sustainable financial systems for health.
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Case Study Support to the financial management system in Zimbabwe

The Government of Zimbabwe Public Financial Management System (PFMS) had been in limited use by government ministries and did not have the capability to manage donor funding. The Capacity Development Plan 2015-2017 prioritized the development and implementation of the PFMS Grant Management Module and the extension of the PFMS to the provincial and district levels.

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Financial accountability and managing for results

Good decision-making to achieve health programme objectives requires timely, relevant, and reliable financial data. A rigorous framework of accountability involves agreeing on expectations, and reporting results achieved as compared with those expectations. UNDP’s approach to financial management support recognizes the importance of accounting for results. In both government and non-government sectors, it is critical to set clear goals and establish systems and controls to report on them. As well as optimizing programme performance, the ability to demonstrate financial results of key interventions within the health sector facilitates the prioritization and scaling up of effective measures.

UNDP’s support to enhance financial accountability recognizes that:

  • financial information requirements need to reflect the fundamental accountability structures of the health system
  • in a highly centralized system, the information system should track expenditure over the whole of the health system, and feed information into the centre

UNDP’s offer

Fiscal transparency in the public sector not only strengthens governance but should also result in improvements in accountability and performance. To strengthen the linkage between financial reporting and improved programme performance, UNDP:

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  • supports national entities to assess the current financial management system and consider the options to meet national and international reporting requirements
  • assists national entities to strengthen their financial systems and consolidate financial data, including real-time data to improve monitoring and decision-making
  • leverages customized commercial software to help national partners, including ministries of finance, configure public financial management systems for the health sector
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Case Study Mentoring to strengthen financial systems in Zambia

In Zambia, UNDP assumed the role of interim Principal Recipient (PR) of Global Fund grants in 2010, with the aim of strengthening national capacity in key functional areas. This integrated capacity development approach of resilient and sustainable systems for health included working closely with the Ministry of Health (MoH) to strengthen programme management, health information systems and supply chain management and establishing a new financial management system. It resulted in the MoH reassuming the PR role again in 2015.

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Financial risk management

Financial control and risk management are central to the effective management of a health system. Facilitating global knowledge sharing as well as in-depth understanding of country specific issues, UNDP is able to ensure risk management is embedded in strategic planning as well as routine daily practices.

Through its partnership with the Global Fund and role as interim Principal Recipient of grants in challenging operating environments, UNDP has helped to reduce the risk of corruption and fraud by strengthening financial management, working together with national entities to better manage grants, set up web-based accounting systems, and introduce robust control frameworks.

Appropriate risk management and internal controls assist organizations in making informed decisions about the level of risk that they want to take and implementing the necessary controls to effectively pursue their objectives.

UNDP’s offer

Routine monitoring controls for financial management systems are only a small part of managing risk within the health system. UNDP works with government ministries and civil society organizations to understand and document the wide range of uncertain internal and external factors that may affect achievement of their objectives.

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Applying a coherent focus on strategic, operational and financial risk factors, UNDP:

  • works with the management of health programmes to focus on identifying actual and potential threats and opportunities, assessing the impact of those risks and then prioritising them;
  • supports national entities to make informed decisions about the level of risk that they want to take in order to effectively pursue their objectives;
  • helps to set up appropriate risk management frameworks and internal controls, including financial management systems, to counter threats and take advantage of opportunities
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Key resources