Finance and financial information are central to efficient management practices and to every company’s long term survival. Policy functions such as undertaking fiscal policy analysis, developing new tax policies, or formulating the annual budget represent finance ministries’ core business and need to be retained at the center. Finance people who don’t know enough about computer science to gauge whether what they’re asking their IT counterparts to do is technologically feasible.
Many regulatory and transactional functions, however, can be outsourced or devolved to line ministries or executive agencies operating independently or under the jurisdiction of the finance ministry. Other countries choose to distribute the functions among two or more ministries, often for political reasons, perhaps to dilute the power exercised by a single finance minister.
Examples include Australia, Brazil, Canada, Germany, Turkey, the Philippines, and the U.S.A. In addition, many countries have also adopted various forms of an agency model” in which semi-autonomous entities are created to carry out specialized finance functions such as debt management, public procurement and revenue administration. Functions usually regarded as core” finance functions are thus not always performed by the finance ministry these days. We are always on the lookout for graduates with a solid grounding in computer science and finance.
In OECD countries, for example, over 90 percent of finance ministries are responsible for managing the preparation of the annual budget and over 80 percent for tax policy, but less than half are responsible for macro-economic forecasting or public investment planning. Looking at an important sub-group of finance functions, namely treasury operations (cash planning and cash management, accounting and internal control), the working paper identifies a similarly wide variation in approach. Most organizational changes take place incrementally, step-by-step; a full restructuring of the entire finance ministry is much rarer.
Some elements of the emerging” model have flourished in the aftermath of the global financial crisis, notably the emphasis on transparency and accountability, which has put the spotlight on finance ministers to better manage public finances. In the face of inevitable economic and fiscal shocks, the finance ministry usually finds itself in the front line of defense.