2. Costs: i although i allocation i decisions i may i be i made i at i a i given i level, i these i may i be i constrained. i They i may i be i constrained i by i legislation, i regulations i and i by i other i types i of i policy. i They i are i also i constrained i by i the i degree i to i which i at i any i given i level i there i exists i a i choice i about i costs. i The i "top" i may i set i in i place i direct i constraints i (laws, i regulations, i etc) i and i indirect i constraints i (the i fixing i of i cots, i e.g., i national i salary i scale). i Thus, i although i there i may i be i some i discretion i over i allocation, i there i may i be i less i discretion i over i costs. 3. Policy: i A i budget i is i a i financial i expression i of i policy. i An i annual i budget i reflects i the i planning i of i expenditures i for i that i year. i Allocations i therefore i are i /should i be i based i on i the i achievement i of i a i given i policy. 4. Recent i Ethiopian i Financial i Management i Reforms According i to i Muhammed i (2014) i after i the i dawn i fall i of i the i Derg i regime i and i replaced i by i the i Ethiopian i Federal i Democratic i Republic i of i Ethiopia i (EPRDF), i i The i new i system i which i was i undertaken i i by i the i change i of i government i in i 1991 i required i new i orientation i of i the i civil i service i with i change i in i the i management i structure i and i system, i as i well i as i in i attitude. i Financial i management i involves i the i management i of i the i finance i function. i It i is i concerned i with i the i planning, i organizing, i directing i and i controlling i the i financial i activities i of i an i enterprise. i It i deals i mainly i with i raising i funds i most i economically i and i suitably; i using i these i funds i as i profitably i as i possible; 11
i planning i future i operations; i and i controlling i current i performance i and i future i developments i through i financial i accounting, i cost i accounting, i budgeting, i statistics, i and i other i means. Reform i areas i include i among i others: i implementing i legal i and i regulatory i framework i to i maintain i fiscal i discipline; i embarking i on i a i medium-term i framework i for i the i annual i budget i process; i establishing i an i effective i and i efficient i cash i management i system; i installing i modern i accounting i function i to i strengthen i its i accountability i to i the i legislature i and i the i public i at i large; i strengthened i the i legal i framework i for i procurement; i adopting i a i strategy i for i introducing i a i modern i internal i and i external i audit i services; i and i install i modern i financial i information i flow. i The i recent i activities i of i the i Program i focus i on i consolidating i improved i PFM i systems i and i reviewed i the i previously i enacted i laws, i regulations, i and i directives i because i of i correcting i failures, i bottlenecks, i and i challenges i in i implementing i the i reform i agendas.
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