The Ministry of Finance and Economic Management has commenced a review of the MFEM Act 1996/97 with the aim of continuing the process improving public finance management in a modern Cook Islands context. The review of the MFEM Act follows the most recent Public Expenditure Financial Accountability (PEFA) assessment which was completed and the underlying need to have robust systems and processes supporting the future strengthening of the Cook Islands public service.
The review will be headed by the Financial Secretary and will seek the feedback from a number of stakeholders across the community to get views on the suitability of the Act. MFEM will also work closely with the International Monetary Fund (IMF) PFTAC in Suva. Financial processes and systems in the Cook Islands are reasonably strong as evidenced by the 2014 which has now been finalised and expected to be published shortly. A preliminary outcome was provided to development partners in February 2015.
The Cook Islands has now completed two PEFA assessments, the first in 2011, the second in 2014.
The 2014 assessment demonstrated the achievement of several improvements since 2011 particularly in the areas of budget credibility, arrears monitoring; comprehensiveness of budget documentation; transparency of allocation to outer island governments; public access to reports on resources received by agencies; adherence to the budget preparation calendar; debt sustainability analysis; transparency of taxpayers obligations; effectiveness of taxpayers registration and collection system; frequency and timeliness of debt reporting; payroll controls; publication of bid opportunities and contract awards; completeness and timeliness of bank reconciliation processes; completeness of financial statements; and consistency of accounting policies.
Challenges still remain for the public sector as a whole. The 2014 PEFA outlined that a key focus for future efforts would need to be on the development of a common financial management system accessible by all agencies and outer islands. The PEFA also pointed out that improvements in cash management could also be achieved through a Treasury Single Account System. Currently, all agencies manage their own bank accounts to which funds are transferred to by MFEM on a monthly basis.
The PEFA pointed out that the full implementation of the new legal and policy framework on procurement would be a key challenge in the coming years and that a strong oversight unit at MFEM and continuous training to agencies would be useful to strengthen the implementation. Two key aspects underlie the ability to progress in these areas, they are the legislative and regulatory framework surrounding public financial management and the financial management systems utilised by the Crown. This review being concurrently run alongside an assessment of the financial systems being used by government will be a package of changes aimed at a process of continual improvement of public financial management (PFM) in the Cook Islands and the overall strengthening of the public sector.
Over the next two weeks an IMF consultant with a strong PFM background will be working with the Financial Secretary to look at the outcomes of the PEFA and to engage stakeholders in any required alterations which may be required to the MFEM Act. Dick Emery is a highly renowned public financial management expert who has worked in a number of nations and who spent a number of years as the Director of the Office of Budget Review in the United States Office of Management and Budget which assists the President in formulating the Federal Budget in the United States.
07 September 2015