The three year business and financial plans process : a review

Abstract

This study aims to explore the importance of the three year business and financial plans process, within the Government of Malta. It looks at the evolution the process has advanced so far, since it was introduced in 1993, and offers suggestions as to how it can be further improved. It is based on factuality and shows how the whole process is done and how budgetary allocations are arrived at whilst bearing in mind the Government's financial strategy, priorities and resources. The project tries to discover the relevance of business and financial planning to the Public Sector. While it examines the main participants of the process and the process itself, it offers some practical suggestions for improvement. The research methodology used in this project is based on documentary research and fieldwork. Given that the author is directly involved in this process from the first year it was introduced, a lot of fieldwork was carried out, which gives the study greater depth. A great deal of information came about by means of informal discussions with the author's colleagues, working within the Ministry for Finance. The process is compared with the British business plans process introduced in 2010, outlining the main differences. The study describes its structure and how the five sections of the business plans deal with internal and external accountability. It looks at its three key actors and how their roles play within internal and external accountability. The author also refers to a report on the business planning process conducted within the Government of Canada and extracts some points which may be applicable to the Maltese process. Finally, the conclusion winds up by proposing a new business and financial planning process, where all the information is brought together in a central data base, where it can be shared and retrieved by the different stakeholders. It gives an insight of its implementation. It recommends ways to improve the outcome of the process which will result into improved financial management and higher level of efficiency in the administration of public funds. The change from a cash based system to an accrual base one and the introduction of Public Sector Accounting Standards (IPSAS) will ensure greater transparency and fiscal discipline. All this will ensure that the business and financial plans will be more effective and durable tools because as the proverb says, "he who fails to plan, plans to fail."