Financial Management Guide: An overview and field guide for ...


Nov 9, 2013 (3 years and 8 months ago)


This section explains financial management,and therefore forms the basis for
the other sections that follow.
inancial management is an integral part of district health management. It is made up of a
number of distinct processes that happen in a cyclical way. Service and district managers
receive support from their finance sections to manage the finances.
4.1 Understanding Financial Management
The processes that make up financial management are explained in the table below. Note
that these approaches are implicit to the district management cycle explained in Section 3.
S E C T I O N 4
Financial Management
About this section
Financial Planning


Setting targets
for monitoring
and evaluation
Financial Management: An Overview and Field Guide for District Management Teams
Reviewing and
Assessing the current resource position, linking resources to service
plans and determining a budget.

Drawing up a budget which will guide how money is spent in
order to achieve the goals set.

Setting targets for revenue and expenditure.

Setting targets for efficiency and equity.
Allocating resources across district services.

Ensuring that funds are spent and revenue collected according
to the financial plan and according to the norms and standards
set by the Treasury.

Making sure that there are good internal control measures and
monitor that these are applied.

Linking expenditures to service outputs and analysing with
respect to equity, efficiency and sustainability.

Drawing up an annual report.

Identifying key strategic issues for the next District Health Plan.
Table 2:Financial Management Pr o c e s s e s
In the past the management of services and finances happened separately from each other.
This is now changing in an integrated district health management approach as was discussed
in Section 2.
The Financial Management Cycle
The figure below shows the order of the different processes of financial management.T h e s e
processes happen within the Medium Term Expenditure Framework (MTEF). The MTEF is a
3-year rolling expenditure showing a detailed present year budget with projected figures for the
next two years. The MTEF requires that the Financial Plan must include longer term planning
for a further two years.
Figure 4:The Financial Management Cycle
Financial Management: An Overview and Field Guide for District Management Teams
The Financial Management Cycle is supported by a financial administration system that is
designed to make sure that all transactions are captured, and that management can withdraw
data to monitor trends. The financial administration system, such as the Financial Manage-
ment System (FMS), has a specific structure with identity codes to show the following:

Where funds are spent (responsibility area such as a clinic)

Why funds are spent (programme such as district health services)

What the money is being spent on (the objective, for example environmental health

What item the money is being spent on. These are called line items and will be explained
in more detail in Section 5.
Planning and
(Section 5)
(Section 6)
and reporting
(Section 8)
In-year management:
monitoring and
(Section 7)
Financial Management: An Overview and Field Guide for District Management Teams
Good performance in this phase
The following measures would indicate good financial management:
✔ A clear understanding of the financial management processes.
✔ Integrating the management of services and finances.