Financial Management (FM) refers to the capacity to prepare budgets and ensure their timely release; to ensure smooth flow of funds with adequate controls; to maintain transparent, timely accounting for spending; and to provide auditing of expenditures and follow up on findings. The harmonization and alignment of FM in developing countries is critical to ensure that scarce resources are used efficiently.

Why financial management harmonization?

Effective FM in countries is key to improving the accountability and efficiency of health services, and achieving better results. In many developing countries, the health system receives funding from multiple sources with different accounting systems, reporting formats, controls and criteria for release of funding, and different audit requirements. Consequently, overview and control of the use of resources become muddled, resulting in weak transparency and accountability, and less efficiency. Additionally, the transaction costs of managing multiple FM systems are considerable, taking up managers’ time that could be better used to improve service delivery. 
See also FM Harmonization & Alignment FAQ.

What is IHP+ involvement in FM harmonization and alignment?

In recent years it has become clear that more needs to be done to reduce inefficiencies associated with duplicate FM assessments and parallel systems, for both governments and development partners. Country FM systems are too infrequently utilized – even when those systems meet international standards. Furthermore, fiduciary harmonization issues are often not well understood by health professionals. Finally, there is a need for greater coordination between Ministries of Health and other ministries such as Finance, and within development agencies (between health and FM departments). IHP+ offers an approach and tools to help solve these problems.

IHP+ offers a country-tested approach to FM harmonization.
The approach is based on three main principles:

1) Development partners align with country systems whenever they meet the minimum acceptable level 
2) Harmonize procedures among development partners, if alignment is not possible
3) Support the implementation of a joint action plan that strengthens the national system, to enable alignment     with the country system in the future.

The approach calls for:

  • a single, joint FM assessment
  • a common FM framework, in the form of a Joint Fiduciary Arrangement (JFA)
  • a single, comprehensive system and capacity strengthening programme
  • coordinated and joint FM supervision during implementation.

IHP+ provides additional tools to improve harmonization at both the country and agency level.

  • FM Harmonization Report and Guidance note;
  • The IHP+ FM Technical Working Group will draft generic elements of a Memorandum of Understanding (MoU) for Joint Fiduciary Arrangements (JFA) to be agreed by all major stakeholders.

IHP+ assists in the implementation of the harmonized approach at the country level.

IHP+ helps build capacity at both the country and regional level, to enable south-south learning.

Financial management and procurement

Joint strengthening of country procurement systems and aligning with these is an emerging priority of IHP+, and will be addressed during the implementation of the 2016-17 Work Programme.

Read more about public financial management from ODI.

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