Capacitacion y Esfuerzos Afines Requeridos Para Mejorar la Gestion Financiera en los Paises del Tercer Mundo

ID-79-46-S: Published: Sep 20, 1979. Publicly Released: Sep 20, 1979.

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To identify the causes of inadequacies in the developing countries' ability to establish sound financial management in the public sector, GAO visited five countries in Latin America, including some of the more developed and some of the lesser developed countries. Using the results of this study, GAO held a symposium on the need to improve financial management and the whole spectrum of public administration in developing country governments.

The major weakness in government accounting in the countries GAO visited is a lack of integrated financial information, produced in a timely manner, that can be used as a management tool in decisionmaking. Comptroller General offices in these countries have traditionally emphasized precontrol or postcontrol voucher audits. These audits, primarily concerned with the legality of the transactions, place little or no emphasis on financial controls, management systems, program evaluations, or the economy and efficiency of operations. The relatively small number of trained and experienced people in developing countries are often reluctant to work for the government, because of the low pay and ineffective civil service systems which neither protect career employees from political actions nor provide for merit promotions. Training offered by institutions in developing countries in financial management and control is often inadequate and of poor quality. Two of the biggest problems in this area are an insufficient supply of qualified, full-time faculty members and a shortage of current textbooks and teaching materials translated into the local language. Assistance is needed to strengthen developing countries in improving financial management in government; however, agreement on the measures to insure these improvements is also required.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should amend the foreign assistance act to read as follows: "the sense of the Congress that improvement of governmental financial management should be given a higher priority within the development process. More development assistance resources being made available to Third World should be directed toward improving financial management capabilities through effective training and technical assistance in this field."

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director, International Development Cooperation Agency along with the Administrator, Agency for International Development, should act to improve the financial management in developing countries by: cooperating more fully with other major donors, such as the U.N. organizations and multilateral development banks, in an effort to strengthen regional and national institutions that provide financial-management training to Third World countries; determining, at the time of authorizing assistance projects and programs, to what extent the developing-country implementing agency requires training and technical assistance in general management, in order to carry out the U.S. assisted effort; strengthening the U.S. capability to plan, program, and assist in implementing financial-management programs and projects; instructing U.S. representatives and delegates to international organizations and other forums to emphasize the benefits to be gained by improving financial management in developing countries and encourage that the necessary resources be directed toward this objective; and convening an international symposium or workshop of major donors and recipients, at the earliest opportunity, to launch a coordinated effort for instituting a financial-management improvement program to remove this major obstacle to development.

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