Advanced Public Financial Management December 2023 Past Paper

CPA ADVANCED LEVEL ADVANCED PUBLIC FINANCIAL MANAGEMENT
THURSDAY: 7 December 2023. Morning Paper. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.

QUESTION ONE
(a) Describe TWO benefits of an integrated tax system to taxpayers in your country. (2 marks)
(b) Explain TWO conditions under which each of the following methods of procurement may be used by public sector entities:
(i) Restricted tendering. (4 marks)
(ii) Request for quotations. (4 marks)
(c) In an extract from a public finance publication on “Effectiveness of Medium-Term Expenditure Framework (MTEF)”, the author noted that, the Medium-Term Expenditure Framework (MTEF) is considered appropriate in developing countries because there is fragile linkage between the budgeting system and planning. The MTEF is one of the aspects of public financial management, which incorporates planning into budgeting over the medium term. It should encourage ongoing reallocation and broaden the budgeting scope. The MTEF is meant to achieve a balanced budget, shift resources to pro-poor activities and further the practice of good governance. Despite being considered an aspect of effective budgetary management, it has been reported to be complex and challenging, even in developed countries. Public financial management experts criticise the MTEF and its implementation with the experts questioning MTEF effectiveness and reliability in guiding annual budget processes. Although the MTEF is argued to be complex, some public financial management experts argue that it is the contextual environment of the developing countries which constrains MTEF success.
Required:
From the above extract, analyse FIVE strategies that developing countries could adopt to minimise conflict between the Medium-Term Expenditure Framework (MTEF) and annual budgeting. (10 marks)
(Total: 20 marks)
QUESTION TWO
(a) XYZ is a developing country and is struggling with the implementation of public finance reforms. You have been appointed to a taskforce to assess the challenges of implementing the reforms and offer possible solutions.
Required:
(i) Discuss FOUR challenges that XYZ is likely to face during implementation of public finance reforms.
(4 marks)
(ii) Propose FOUR possible solutions to the challenges cited in (a) (i) above. (4 marks)
(b) You are an advisor of the National Treasury of your country, and you have been tasked with formulating a framework for national government borrowing. The government is seeking to strike a balance between funding critical projects and maintaining fiscal stability. There is a need for clear guiding principles to govern borrowing decisions.
Required:
(i) Summarise FOUR key guiding principles that should inform national government borrowing decisions as provisioned by Public Financial Management regulations 183. (4 marks)
(ii) Identify FOUR policy frameworks that your government could adopt in public debt management and clearly indicate the role of each framework. (8 marks)
(Total: 20 marks)

QUESTION THREE
(a) Your country is considering a large-scale infrastructure development aimed at upgrading the country’s road network. Further, the project will be financed using a public private partnership model.

With reference to the above statement, evaluate FOUR areas of potential revenue losses in public-private partnerships (PPPs) models in infrastructure development and services. (8 marks)

(b) During the annual audit committee master class held in your country, one of the speakers made the following observation; “Public sector stakeholders have different perceptions and criticisms on the effectiveness of audit committees and have often labelled audit committees as “talk shops”.

Required:
Citing FOUR reasons, justify the above observation. (4 marks)

(c) Explain FOUR different types of public funds, citing how each contributes to the development in your country.
(8 marks)
(Total: 20 marks)

QUESTION FOUR
(a) Explain FOUR challenges faced in the management of state corporations by most developing countries.
(8 marks)

(b) Evaluate THREE guiding basic principles used by public entities in deciding whether money or sums should be applied as Appropriation-In-Aid as per Public Financial Management regulations. (6 marks)

(c) Analyse FOUR provisions relating to confidential reporting of unlawful acts by the Auditor General as provisioned by section 60 of the Public Audit Act. (6 marks)
(Total: 20 marks)

QUESTION FIVE
(a) In a public finance management seminar, one of the facilitators noted that “there are certain matters specified under Section 6 of the Public Finance Management (PFM) Act, 2012, where in case of any inconsistence with the PFM Act, the Act shall prevail”.

With reference to the above statement, outline FOUR such matters where in case of inconsistence with the PFM Act, the Act prevails. (4 marks)

(b) Public Financial Management Regulation 170 (Risk based audit assessment strategic plan) requires that internal audit planning should be carried out on the basis of risk assessment and should be set out in a three-year strategic plan, on the basis of which an annual internal audit activity plan should be developed.

As the head of internal audit in a government entity, evaluate THREE procedures you would undertake to ascertain that your department is complying with this regulation. (6 marks)

(c) Managing revenue in public finance at the county level can be a complex task, and executive committee members responsible for this area face several difficulties and challenges.

In light of the above statement, describe FIVE ways in which executive committee members of finance could address these challenges. (10 marks)
(Total: 20 marks)
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