What is PFMAT?

PFMAT stands for the Public Financial Management Assessment Tool. The PFMAT for LGUs is a self-assessment, evidence-based instrument which describes the characteristics of an open and orderly PFM system.

The tool describes the characteristics of a good PFM system, identifies performance indicators to gauge how the LGU is actually doing in a particular area of PFM, and identifies the sources of information which will help the LGUs establish their compliance with graduated levels of performance. This will help the LGUs identify the strengths and weaknesses in their PFM system as bases for improvement measures. (DBM Local Budget Circular No. 2012-101, October 12, 2012)

To facilitate the PFM assessment undertaken by the LGUs using the PFMAT, a software version of the tool has been developed under the auspices of the European Commission (EC) Grant for PFM Reforms.

The software has been further enhanced as part of the institutionalization of the PFMAT and PFMIP under the European Union (EU) funded project, “Support to the Local Government Units for More Effective and Accountable Public Financial Management.”

The enhancements to the software include a Data Management Module which would facilitate the analysis of the results of the assessments undertaken by the LGUs at the regional and national levels.



Value of the PFMAT for LGUs

The results of the PFM assessments using the PFMAT can:

  • Help the LGUs determine the strengths and weaknesses in their PFM systems, and provide bases for the adoption and implementation of improvement measures; (see sample PFM Improvement Plan)
  • Provide baseline information on the state of LGU PFM and serve as bases for benchmarking with other LGUs;
  • Encourage the development and replication of best practices in PFM; and
  • Serve as bases/criteria for inter-governmental transfers.


Critical Dimensions of Performance of a Good PFM System

Given the seven (7) key elements of the PFM system, the framework identifies the critical dimensions of performance of an open and orderly PFM system, as follows:

01Policy Based Budgeting  The LGU prepares its budget with due regard to government policy.

02Comprehensiveness and Transparency  contains indicators that measure if budget information provide a complete picture of revenue forecasts, prior, current and budget years’ expenditures, and the expected outputs. They also measure whether fiscal and budget information are accessible to the public.

03Credibility of the Budget  contains indicators that measure whether or not the budget is realistic and is implemented as intended.

04Predictability and Control in Budget Execution  The LGU prepares its budget with due regard to government policy.

05Accounting, Recording and Reporting  contains indicators that measure whether or not adequate records and information are produced, maintained, and disseminated for purposes of decision-making, control, management, and reporting on operations.

06Internal and External Audit  contains indicators that examine the arrangements for scrutiny of public finances and follow-up by the LCE and/or the Local Sanggunian.

07Citizens’ Participation  contains indicators that measure the extent by which the LGU encourages concerned citizens organized as Civil Society Organizations (CSOs) become partners of the LGU in the formulation, monitoring, evaluation and improvement of the local budget.