engleski

Public financial management, accountability, and citizens’ trust

The main goal of the paper is to determine opportunities for the application of analytical tools to improve the management of state and local finances and increase the accountability and trust of citizens in state and local self- government units. PEFA is a useful tool for meeting such goals. PEFA is used on a global scale, primarily in countries that are beneficiaries of international aid, but also increasingly in countries that seek to increase their international credibility as well as their credibility regarding financial management in the eyes of their citizens. In the case of Croatia, PEFA was used in four cities in 2014. The implementation experience shows that PEFA allowed local government units to detect key weaknesses and technical shortcomings in their financial management, as well as to recognize the shortcomings of the provisions of certain regulations implemented at central government level. PEFA is an analytical tool that can be applied both at the national (central government) level and at the level of local self-government units. PEFA is certainly a demanding analytical tool which makes previous knowledge on financial management, budget accounting, and auditing more than desirable. For all European countries likely to join the European Union and finance part of their capital investments through EU funds, PEFA can be a very useful tool not only for the early recognition of weaknesses, but also strengths in financial management. Despite the fact that PEFA does not offer direct instructions on how to solve potential problems in financial management, the findings of the analysis with the accompanying rankings are more than sufficient to serve as recommendations for addressing weaknesses in financial management. The implementation of PEFA requires strong support of the heads of local units and the state. These are also the people expected to initiate reforms and improve financial management. As an analytical tool, PEFA can help these improvements happen much faster and more effectively.

public financial management ; PEFA ; Local government units ; Croatia

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