Page 32 - CMA Journal (July-August 2025)

Focus Section

3) Unsynchronized or disconnected systems: The
third challenge is unsynchronized or disconnected
systems. This is a global public finance issue. A
disconnected public financial system poses a major
obstacle to effective governance. The World Bank
and IMF have consistently identified this issue as a
root cause of inefficiency and data inconsistency in
PFM (World Bank. (2019). Public Financial
Management: Addressing Challenges in Developing
Countries; IMF Technical Report 2018). All the
components of PFM, including budgeting,
procurement, tax, and reporting systems, operate
independently; this causes duplication of efforts,
delays in decision-making, and reduced (acceptable practice for management of public finance),
transparency. The IMF’s Fiscal Transparency the Open Contracting Data Standard (internationally
Evaluation Reports for various countries, including recognized standards to ensure government contracting
Pakistan, Ghana, and Kenya, highlight the processes are transparent and efficient), PFM Technical
inefficiency of non-integrated financial platforms Notes, and the Public Integrity Handbook, which guide
and recommend Integrated Financial Management public sectors in applying data analytics for stronger
Information Systems (IFMIS) as a reform priority. public finance management.
4) Bureaucracy and system challenges: The fourth is Crucial datasets such as budget and actual spending
bureaucracy and system challenges. Excessive records, tax data, procurement tender logs, public works
bureaucracy with outdated systems and completion reports, funds disbursement records,
unnecessary documentation creates a rigid accounting and asset register data, project master plans,
structure, misallocation of resources, and under- workflow approval logs, and digitization records are
performance in capital investment projects. Weak essential for developing controls to address weaknesses
institutional capacity and outdated public financial and achieve desired outcomes.
systems hinder the effective implementation of
policy and undermine accountability. Transparency In today’s world, where data visibility is readily accessible
International also underscores that bureaucratic and artificial intelligence alongside machine learning
inefficiency opens opportunities for rent-seeking enhances analysis, developing forecasts and
behavior and undermines citizens' trust in public implementing controls to achieve desired outcomes has
institutions. Red tape and non-transparent processes become significantly easier.
are often exploited to delay payments, alter
Datasets, combined with various economic and market
procurement decisions, or manipulate accounting
factors, can be leveraged for data analytics in public
records.
finance management. Predictive analytics can improve
5) Political interference: The fifth challenge is political revenue forecasting, while deviation detection enhances
interference, which leads to inconsistent policies, the forecast accuracy. Geospatial mapping helps track
allocation of funds to low-impact areas, weakened economic activities, and real-time budget dashboards
accountability, and the neglect of critical issues. In along with expenditure tracking promote greater
many developing countries, a primary cause of transparency. Data mining and automation streamline
failure is the use of public funds for political gain. The bureaucratic processes, and data-driven
Organization for Economic Co-operation and decision-making can minimize political interference.
Development (OECD), in its 2020 Public Integrity
To support these efforts, technologies such as
Handbook, recommends establishing integrity
blockchain, artificial intelligence, and machine learning
standards to prevent conflicts of interest.
should be adopted.
Overcoming Hurdles: Data Analytics and
Leveraging data analytics will improve efficiency,
Standards effectiveness, and accountability in public finance
management. The adoption of advanced technologies
Overcoming these hurdles requires leveraging data
analytics tools and globally recognized standards. will enable governments to ensure accurate
Institutions such as the IMF, World Bank, and record-keeping, increase transparency, and combat
Transparency International have developed key corruption. Integrating and connecting diverse datasets
frameworks. These include the Fiscal Transparency Code will eliminate redundancies, minimize fragmentation,
and accelerate decision-making processes.
30 ICMA’s Chartered Management Accountant, Jul-Aug 2025