FINANCIAL

ADMINISTRATION
AGENDA
01 INTRODUCTION
04 IMPORTANCE OF FINANCIAL
ADMINISTRATION

02 WHAT IS FINANCIAL
ADMINISTRATION? 05
IMPORTANCE AND NATURE OF
FINANCIAL ADMINISTRATION

03 THE DISTINCTION BETWEEN PUBLIC FINANCE

AND PRIVATE FINANCE 06 SCOPE,COMPONENTS AND ELEMENTS
OF FINANCIAL ADMINISTRATION
INTRODUCTION
Finance is the life blood of every organization. Personnel and materials
which are needed for the functioning of any office, industry, enterprise
can be made available only if money is provided.
The efficiency of operating systems and maintenance systems depends
upon the effectiveness of financial system as every administrative act
may have financial implications. The significance of finance to public
administration is quite obvious as is evident from the remark of Lloyd
George: “Government is finance”.
Financial administration, as an important aspect of public
administration is as ancient as organized governments all over the world.
 What is
Financial
Administration?
FINANCIAL ADMINISTRATION
The term Financial Administration consists of two words “Finance” and
“Administration”.
The word ‘Finance’ refers to monetary (money) resource.
The word ‘Administration’ refers to organization and management of collective
human efforts in the pursuit of a conscious objective.
Financial Administration refers to the set of activities which are related to making
available money to the various branches of an office, or an organization to enable it
to carrying out its objectives. Whether it s the Department of Agriculture,
Railways, Road Transport Corporation, Primary Health Centre and Municipality
or Gram Panchayat.
Financial Administration includes all the activities which
generate, regulate and distribute monetary resources needed for
the sustenance and growth of the members of a political
community.
According to Jaze Gaston, “Financial Administration is that part
of government organization which deals with the collection,
preservation and distribution of public funds, with the
coordination of public revenue and expenditure, with the
management of credit operations on behalf of he State and with
the general control of the financial affairs of public household.”
PRIVATE FINANCE VS. PUBLIC FINANCE
PRIVATE FINANCE PUBLIC FINANCE
1. Adjustment of Income to
1. Adjustment of Expenditure to
Expenditure
Income
1a. Popular control
1a. Corporate control
2. Elastic resources
2. Limited resources 3. Resource mobilization through
3. No such power coercive power
4. Tendency towards balanced 4. Tendency towards deficit
5. Towards profit maximization 5. Direction of expenditure towards
public service
IMPORTANCE
The importance of Financial Administration was not considered
till after industrial revolution. The concept of minimum
government as an offshoot of laissez faire doctrine, dictated
observance of minimum taxation. Financial Administration was
entrusted with the responsibility of formulating effective policies
to achieve these new objectives of the State. It was called upon to
transform financial resources into public purposes and thus to
improve the lot of the individual through distributive justice.
NATURE OF FINANCIAL ADMINISTRATION

TRADITIONAL MODERN
VIEW VIEW
 TRADITIONAL VIEW
Advocates of this view conceive financial
administration as a sum of activities undertaken in
pursuit of generation, regulation and distribution
of monetary resources needed for the sustenance
and growth of public organizations.
A financial administrator shoulders responsibility
for ensuring adequate financial backing for
running public organization in the most efficient
manner. Financial administrator’s job is to plan,
programmed, organize, and direct all financial
activities in public organizations so as to achieve
efficient implementation of public policy.
MODERN VIEW
The modern view considers financial
administration as integral part of the overall
management process of public organizations
rather than one of raising and disbursing
public funds.
It includes all the activities of all persons
engaged in public administration, for quite
obviously almost every public official takes
decisions which are bound to have some
direct or indirect consequences of financial
nature.
MODERN VIEW
The modern view considers financial
administration as integral part of the overall
management process of public organizations
rather than one of raising and disbursing
public funds.
It includes all the activities of all persons
engaged in public administration, for quite
obviously almost every public official takes
decisions which are bound to have some
direct or indirect consequences of financial
nature.
ACCORDING TO THIS VIEW FINANCIAL
ADMINISTRATION HAS THE
FOLLOWING ROLES.

1 2 3
EQUALIZING ROLE FUNCTIONAL ROLE ACTIVATING ROLE
Financial administration Financial administration seeks to Financial administration
seeks to demolish the ensure, through taxation, public involves the study of such
inequalities of wealth. It expenditure and public debt, and steps that will facilitate a
seeks, through fiscal proper functioning of the economy. smooth and rapid flow of
policies, to transfer income It evolves policy instruments to investment and its optimal
from the affluent to the poor. maintain high economic growth and allocation to increase the
full employment. volume of national income.
ACCORDING TO THIS VIEW FINANCIAL
ADMINISTRATION HAS THE
FOLLOWING ROLES.

4 5
STABILIZING ROLE PARTICIPATORY ROLE
Financial administration Financial administration involves formulation
is the stabilization of and execution of policies for making the state
a producer of both public and private goods
price level and
with the objective of maximizing social
inflationary trends welfare of the community. It also seeks to
through fiscal as well as promote economic development through
monetary policies. direct and indirect participation of the state.
SCOPE OF FINANCIAL ADMINISTRATION
The government organization which deals with the following
four aspects constitutes financial administration. These
include:

Lorem ipsum dolor sit amet, consectetur adipiscing

The collection, preservation
elit, sed do eiusmod tempor incididunt ut labore et The coordination of public
and distribution of public
dolore magna aliqua. Ut enim ad minim veniam. revenues and expenditure
funds.

The management of credit The general control of the

operations on behalf of the financial affairs of the
State government
THE FOLLOWING ASPECTS EMERGE AS THE CORE AREAS
OF FINANCIAL ADMINISTRATION

Financial Resource
Budgeting
Planning Mobilization

In a restrictive sense one

This area is the core of
may consider budgeting as Imposition of taxes,
financial administration. It
planning since its basic
includes examination and collection of rates and
concern is to facilitate the
formulation of such taxes etc. are associated
formulation and adoption
important aspects as fiscal with resource
of policies and programme
policy, equity, and social
with a view to achieving mobilization effort.
justice
the goals of government.
THE FOLLOWING ASPECTS EMERGE AS THE CORE AREAS
OF FINANCIAL ADMINISTRATION
Expenditure
Investment Control Accounting
Decisions Reporting
Auditing
Finances of the modern governments are
becoming quite inelastic. Almost every
government is suffering from resource
Financial and socio- crunch. Further, the society cannot be
taxed beyond a certain point without These aspects are
economic appraisal of
doing a great damage to the economy as a
capital expenditure
designed to aid both the
whole. Thus, there is an imperative need
constitutes what has come for careful utilization of resources. executive control and
to be known as project Executive control- a process aimed at legislative control
achieving this ideal.
appraisal.
Legislative control- aimed at the
protection of the individual tax payers
interest as well as public interest
 Theorists of public finance have
identified three elements of
public finance. They are:
COMPONENTS
OF Public Revenue

FINANCIAL Public Expenditure

ADMINISTRATION Public Debt
Some other thinkers, taking clue from Luther Gulick, have
tried to project POSDCORCs view wherein:
P Financial Planning

Financial Organization such as Finance

O Ministry

Financial Personnel
S
Direction such as Financial advise
D

Coordination of Income and Expenditure

CO

R Financial Reporting such as accounting

Control which includes executive control,

C audit control and legislative
control
THE ABOVE EXPOSITION DOES NOT REVEAL THE EXACT PICTURE
RELATED TO THE ELEMENTS OF FINANCIAL ADMINISTRATION. AN
ORGANIZATION SYSTEM CONSISTS OF THE FOLLOWING BASIC
ELEMENTS:
THE SYSTEMS
PEOPLE WORK AND
AND PROCEDURE
represent STRUCTURE represent
represent efforts framework to
human
and process facilitate
resources of the
concerning interactions
organization between the
definition of tasks
and roles, and people and the
organization of work
reporting
relationships
 ELEMENTS OF
FINANCIAL
ADMINISTRATION
 HUMAN ELEMENT
Consists of participants whose
involvement is determined by
contribution-inducement equilibrium.
Tax payers
Supplies (Funds and Materials)
Employees (Public Officials)
Entrepreneurs (Politicians)
Customers and Common person
 WORK AND STRUCTURE
refers to the organization process, divisional
processes, and integration processes by means
of which organization subdivisions are created
with a provision for mutual interaction
The Legislative and its financial committees
The Cabinet
The Finance Department
The Administrative Departments
The Executive Departments
The Audit Department
 SYSTEM AND PROCEDURES

Devices which link the people to the

work and structure.
Planning Systems
Budgeting systems and procedure
Controlling systems such as
accounting and auditing
The three components interact
with each other to produce
organizational structure.
THANK
YOU!
 MEMBERS
VALDEZ, YVER GAIL BARRIENTOS, CAMILLE ANGEL
MOLINA, VERONICA ALOIT, SHAMMER
PEREZ, JULAICA MUYANO, REGINA
CRUZ, PRINCESS HANNAH ALLYSA T. SOLIS, CHEZKA
BANIQUED, PRINCESS JO-ANN SALVATERA, CHRISTINE
IBASAN, MARY ANGEL MARTINEZ, SHEILA MAE
RAMOS, ALYSSA GRACE ABAD, DAMIAN