Sri Lanka : Country Financial Accountability Assessment

Abstract

The framework for public financial
 accountability in Sri Lanka is founded in the principles of
 governance associated with the model inherited from the
 British, widely accepted as appropriate for the country. The
 primary accountability institutions, and organizations for
 financial management, control, audit and legislative
 scrutiny have, however, not evolved in line with the changes
 in the more advanced democracies of a similar background.
 This lapse has reduced the effectiveness of the system of
 public financial accountability in Sri Lanka, resulting in
 less than adequate assurance, that public funds are used for
 the purposes intended with due consideration to economy and
 efficiency. Financial accountability at the sub-national
 level is less well developed than at the center. The reasons
 for this are similar to those concerning the central
 Government, but more acute and pronounced. Public
 enterprises are characterized by excessive staff; weak
 management; inefficiencies; heavy losses; dependency on
 budget transfers; and delayed publication of audited
 accounts, thus, further eroding public financial
 accountability. Discussions with stakeholders on reforms,
 centered around the urgent need to improve public financial
 accountability, showing five priority areas of concern: 1)
 Parliamentary control of the public purse has become
 ineffective, which can be restored by strengthening the
 oversight function provided by the public accounts and
 public enterprises committees; 2) the accountability of the
 executive is too focused on 'spending to budget',
 rather than on 'managing for results', therefore,
 introducing, on a progressive basis, a performance based
 culture with incentives focused on achievement of outputs
 and outcomes, and, holding government officials accountable
 for meeting objectives and performance standards should be
 considered; 3) need for strengthening the public audit
 function; 4) removing obstacles, and re-visiting the
 Establishment Code could prod good governance practices;
 and, 5) addressing greater specificity on financial
 accounting, reporting, auditing, and capacity building at
 sub-national levels.