This module provides understanding of the financial development and trajectory of central government finances in the advanced economies. The first half of this module will introduce students to the challenges facing governments in the advanced economies, and in particular, that of sustaining deficit financing. How have the components of central government revenues changed over time relative to expenditures in GDP and the nature of accumulated sovereign debt (roll-over timings and repayments schedule)? Students will examine the political context of public budgeting. We shall explore how the policy shift towards macro-prudential management of these economies has impacted not only on monetary policy, but also on public spending and cutback management, nationally and at regional and local levels of government. The module examines the link between changing budgetary politics and pressure to develop innovative financial vehicles, as well as exploring some of the medium-term financial risks to which these innovations can unintendly give rise. The second half of this module will focus on the importance for public management of reforms in accounting systems which require a shift toward resource-based and accrual-based accounting. We examine the impact on managers' accountability for public expenditure of the convergence of public sector with corporate international financial reporting standards (IFRS) and role of resource-based auditing . What are some of the implications of adoption “corporate” financial accounting and performance key financial and non-financial KPIs? We examine public-private partnerships such as the UK's Private Finance Initiatives (PFIs) for financing public sector capital projects, and issues of risk transfer and cost-effectiveness. We will consider changes financial practices and reporting in sub-national public agencies (local authorities, health care, policing, etc), the possibilities in some countries for bond-financing for sub-national agencies, and their implications on their financial stability and organisational dynamics.
100% coursework (30% critical essay and 70% analytical essay)
Bandy G, 2011, Financial management and accounting in the public sector, London: Routledge.