Financial Management Manual 2001 - Ministry of Finance

1 Royal Government of BhutanMinistry of FinanceFinancial Management ManualRoyal Government of Bhutan Financial Management ManualFile: : July 2001 ForewordIn its efforts to promote good governance, the Royal Government of Bhutan attachesgreat importance to economy, efficiency, accountability and transparency in themanagement and utilization of public resources. In order to achieve these importantobjectives, it is vital that a coherent and consistent set of principles, rules andinstructions is available to guide officials in undertaking their existing Financial Manual was first introduced in 1988. Since then, there have beenmany new developments in the Royal Government as well as in the fields of financialmanagement. Consequently, a thorough revision to the existing Manual had becomeessential. Towards this end, the Ministry of Finance undertook a series of exercisesstarting in 1998.

2 The set of manuals, titled Financial Rules and Regulations - 2001 , isthe outcome of these rules contained in these manuals have been structured in a more orderly manner,specifying clearly the roles and responsibilities of concerned officials at all levels. TheMinistry of Finance consulted with various stakeholders in the framing of these revised materials were presented and comprehensively discussed in the FinancialManual Revision Steering Committee and the Financial Rules Committee thatcomprised of representatives of various government undersigned takes this opportunity to record the Royal Government s appreciationto the Government of the Netherlands for its generous Financial assistance in thisundertaking. Appreciation also goes to the numerous officials of the Royal Governmentwho readily rendered their co-operation to the Ministry of Finance and contributed tothe achievement of this important task despite their daily all other acts, laws and rules, the achievement of the noble aspirations of theRoyal Government sought for through these rules shall depend largely on their diligentand efficient application.

3 It is the duty of every public servant to act according to theprinciples, rules and guidelines prescribed in these manuals. I am convinced that indoing so, we will be able to realize the Royal Government s objectives.(Yeshey Zimba) Finance Minister1st July 2001 Royal Government of Bhutan Financial Management ManualFile: : July 2001 Royal Government of Bhutan Financial Management ManualFile: : July 2001 ContentsCHAPTER I .. of the Manuals .. and Compliance .. Date .. , Clarifications, Review and Update .. year and Currency .. 5 CHAPTER II .. 7 STRUCTURE AND ORGANISATION FOR FINANCIALMANAGEMENT SYSTEM .. linkages in the Financial Management System .. of Financial and Accounting Responsibilities .. 8A. Ministry of Finance .. , Departments, Dzongkhags, Autonomous Audit Authority (RAA) .. 12D. Planning Commission Secretariat (PCS).. Monetary Authority (RMA) .. 13 CHAPTER III.

4 15 Financial Management .. Principles .. Management Tools .. of accounting .. 19A. Key basis of accounting system .. of the accounting characteristics of the accounting system .. 19D. Accounting Records .. 22G. Reporting .. 22 Royal Government of Bhutan Financial Management ManualFile: : July 2001 CHAPTER IV .. 23 Financial POWERS .. Financial 24 APPENDIX - I .. 27 SCHEDULE OF DELEGATION OF 27 Royal Government of Bhutan Financial Management ManualFile: : July 2001 Page : - 1 -Chapter Government in its role of providing essential services to the public,and of bringing about further socio-economic developments, has tomobilise adequate funds and ensure that they are spent for public purposeswith economy, efficiency and effectiveness while ensuring transparencyand accountability. It is incumbent upon all officials entrusted withresponsibilities to deal with public funds to ensure that public resourcesare used for the intended purposes in accordance with appropriate rulesand regulations.

5 These rules and regulations are prescribed in the form ofManuals. The Financial Rules and Regulations 2001 consists of a main document,named the Financial Management Manual (FMM) and six technicaldocuments, the Finance and Accounting Manual (FAM), the BudgetManual (BM), the Aid & Debt Management Manual (ADMM), theProperty Management Manual (PMM), the Procurement Manual (PM) andthe Revenue Manual (RM). The FMM introduces the Financial Rules andRegulations 2001 and prescribes the Financial Management principles,framework and the Financial Management structure of the delegation of Financial powers at various levels in the Governmentalso forms part of the FMM. The six supporting manuals provide detailedrules and procedures relating to various aspects of Financial and Financial Rules and Regulations 2001 is intended to serve thefollowing objectives:a.

6 To meet the challenges posed by the increasing size and complexityof the public administration system;b. To make the systems appropriate for computerisation;c. To update the relevant parts of the Manual with the latest methodsand discard those which are no longer relevant;d. To serve as a useful tool for enhancing good governance in financialtransactions;e. To serve as a reliable, professional and user friendly documentwhich will further promote national execution of projects supportedby various bilateral and multilateral development partners;Royal Government of Bhutan Financial Management ManualFile: : July 2001 Page : - 2 -f. To ensure uniformity and standardisation amongst all governmentagencies in the matters of Financial Management and of the ManualsThe manuals deal with the rules and procedures in respect of particularaspects of Financial Management as mentioned below:1.

7 Budget Manual (BM)The BM covers the budget process, including the timetable and the fourphases of preparation, approval, execution and accountability;2. Revenue Manual (RM)The 1993 version of this Manual includes the procedures concerning thecollection and accounting of taxes, duties, fees and other revenue Finance and Accounting Manual (FAM)The FAM includes the Finance and accounting system and includes the banking system, Management , custody and accounting ofGovernment funds and accounting of Government Procurement Manual (PM)This Manual , in force since 1998, prescribes the rules and procedures forthe procurement of goods and services including the engagement ofcontractors for execution of Aid and Debt Management Manual (ADMM)The ADMM prescribes the guidelines and procedures for processing ofdevelopment assistance from external Property Management Manual (PMM)The PMM covers the handling of Government properties, includingregistration, proper use, maintenance and disposal of such and rules and regulations shall apply to all Agencies of the RoyalGovernment.

8 These supersede the Financial Manual the context indicates otherwise, the singular shall include pluraland the masculine shall include Government of Bhutan Financial Management ManualFile: : July 2001 Page : - 3 Corporations may adopt separate rules and regulations for themanagement of their finances, but the basic principles of this Manual ,which is to ensure the proper use of public funds, shall be taken intoaccount. In the absence of separate Financial rules and regulations, suchbodies shall be governed by the provisions of these effective date for application of these Manuals shall be the datesprescribed by the Ministry of Finance (MoF). , Clarifications, Review and Ministry of Finance , through the Financial Rules Committee, shall bethe final authority for interpretation and clarification of the provisions inthese Financial Rules Committee with various representations shall, amongother tasks, be responsible for reviewing and updating the revisions to the provisions of the Manuals felt necessary by therespective agency shall be referred to the Financial Rules Committee,which shall examine and deal with the MoF shall announce revisions in the Manuals as follows:a.

9 The changes compared to the previous version shall be With every change, a new index and an overview of all the changesin the current Fiscal Year shall be made and distributed. Majorchanges shall be accompanied by powers which are not prescribed in these rules as well as thosein excess of the ceilings in Appendix I shall be referred to the Ministryof year and year of the Government shall commence on 1st of July and end on30th of June, and shall consist of twelve monthly accounting Government of Bhutan Financial Management ManualFile: : July 2001 Page : - 4 receipts and payments of the Government shall be accounted for inNgultrums. Memorandum records in other currencies shall be maintainedin required abbreviations used in the FMM are as follows:a. ADMMAid & Debt Management Manualb. AFDA dministration & Finance Divisionc.

10 AFSA dministration & Finance Sectiond. BMBudget Manuale. COMC ouncil of Ministersf. DADMD epartment of Aid & Debt Managementg. DBAD epartment of Budget & Accountsh. DDOD rawing & Disbursing Officeri. DNPD epartment of National Propertiesj. DRCD epartment of Revenue & Customsk. DYTD zongkhag Yargay Tshogchungl. FAMF inance & Accounting Manualm. FMMF inancial Management Manualn. FMSF inancial Management Systemo. GYTGeog Yargay Tshogchungp. MoFMinistry of Financeq. NANational Assemblyr. PCSP lanning Commission Secretariats. PMProcurement Manualt. PMMP roperty Management Manualu. PPDP olicy & Planning Divisionv. PPSP lanning & Programming Sectionw. RAAR oyal Audit AuthorityRoyal Government of Bhutan Financial Management ManualFile: : July 2001 Page : - 5 -x. RGoBRoyal Government of Bhutany. RMRevenue Manualz. RMAR oyal Monetary definitions of the terms used in this Manual are as follows:(1) Accounting period: The time period over which financialinformation is reported, normally either a year, quarter or a month.