x Abu Dhabi, UAEFriday 19 January 2018

Budget rules revamped to stop irregularities

Zero-based budgeting has been introduced to solve irregularities in spending such as those the council objected to in 2010 audit report.

Ali Jassim, an FNC member from Umm Al Quwain, says that while ministers can still be questioned over future audit reports, the council should not dwell on minor comments in the reports.
Ali Jassim, an FNC member from Umm Al Quwain, says that while ministers can still be questioned over future audit reports, the council should not dwell on minor comments in the reports.

ABU DHABI // In response to prodding by the FNC, the Finance Ministry said that it had introduced budgeting rules to prevent wasteful spending.

The FNC last month received a report from its finance committee that outlined numerous rules of expenditure flouted by federal bodies in 2010.

The FNC members expressed their displeasure with the reported waste by refusing to approve the report, and sending it back to the committee for action. The committee then met with ministry officials last week to reach a solution.

The ministry told the committee that it had introduced so-called "zero-based budgeting" system, which would require ministries to submit detailed budgets that detail all the expenditures rather than just presenting headline figures.

The zero-based system was not in place at the time of the 2010 expenditures.

The ministry said it had also initiated a three-year spending plan for the years to 2013 that allocated Dh122 billion to federal ministries and bodies over the period.

Ministry officials asked that the FNC pass the 2010 accounts at its next meeting on May 8, noting the new system would leave far less room for errors.

"They told us things have changed since 2010; they said to let it go this time, and the next time we would see the difference," said Dr Abdulrahim Al Shahin, an FNC member from Ras Al Khaimah. "They promised that this year they will take all our recommendations."

The new budgeting system will give the ministries greater flexibility in spending, but will also require them to present a timeline for budgeted projects.

In the past, it was common for new government bodies to begin spending before working out details such as organisational structures and systems, in the interest of expediency.

The FNC member Ali Jassim (UAQ) said this had often resulted in money going to waste.

"Some of the new authorities get a budget, but when it comes to the final accounts we find they didn't do any of the projects they wanted the money for," he said. "When we ask why, they say, 'We are new, so the administrative structure has not even been done yet'."

This, however, would be resolved with the new budgeting system. Ministries will no longer need prior approval to move funds between different areas - the cause of many of the irregularities cited in the 2010 audit report and council members.

The secretary of the FNC finance committee, Ali Al Nuaimi (Ajman), had suggested last week that the law could be changed so that such transactions would not be recorded as breaches.

Dr Al Shahin agreed with the proposal, but said the zero-budgeting system would now take care of this problem, too.

The ministry also told FNC members at the meeting that future end-of-year accounts would include assessments of ministries' performance.

"Previously there were excuses," Mr Al Nuaimi said. "We want to end the excuses, we want to give the responsibility to each ministry to finish tasks on time."

Mr Jassim said ministers could still be questioned over future audit reports, but noted that the FNC should not dwell on all minor comments in the reports, as many sounded worse than they actually were.

One problem highlighted in the 2010 report which still needed to be resolved, he said, was that revenues that should have gone into the federal budget ended up in local government accounts.

The FNC's finance committee, along with its legal committee, which took part in the meeting with the Finance Ministry, finalised a draft report that will be presented to the full body next month for approval.


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