Allow us to hereby share with you the most relevant aspects of the Preferred Bill that the President of the Republic sent to the Senate for its vote in order to amend several provisions of the General Governmental Accounting Law (hereinafter “the Accounting Law”), which was approved and published in the Official Federal Gazette on November 12, 2012. As background, the Accounting Law was incorporated into our legal framework on December 31, 2008.
The purpose of this law was to establish the general criteria governing governmental accounting and the issuance of financial information of the different levels of government. Several provisions of the Federal Budget and Treasury Responsibility Law were also amended. On September 2, 2012 the President of the Republic presented a preferred bill to amend the law. The purpose is to standardize the financial information of the three branches of government during the administrative process and application of public resources. In this regard, it reforms articles 56 and 57 and adds articles 58 to 86 of the Accounting Law.
The following are the most important points of the reform:
Obligation to present financial information. Governments are obligated to present reports on the stages of programming, budget, exercise, evaluation and accountability, according to the rules and formats established by the National Accounting Harmonization Council.
The Ministry of Finance and Public Credit (SHCP) and the ministries of finance of the States (or their equivalent) must establish electronic links that make it possible to access the financial information of all the public entities that make up the respective government branch, including the delegations of the Federal District and the municipalities.
Public entities are obligated to include in their respective budget laws specific sections that indicate and describe:
Sources of the income.
Public debt obligations.
Their main programs and projects, and the payments made to public officials as remuneration.
Payments for pensions, investment expenses, as well as the approved public private partnership projects (PPP), the list of programs that will be submitted to performance evaluations, the strategic indicators and approved management, and the application of the resources they exercise, among others.
The state, municipal and delegational governments must prepare and disseminate on their respective web pages documents directed to citizens explaining simply and in accessible formats the content of the financial information that is revealed.
With respect to the legislatures and city halls, they must disseminate by internet the approved budget laws. Public entities must publish in their official media the income calendars of the respective government powers, as well as the budget calendars, within 10 business days after the publication of the budget.
The reform establishes that the financial information and the Federal Public Account will be subject to the provisions of the Federal Budget and Treasury Responsibility Law and the Federal Law of Investigation and Accountability.
For the presentation of the financial information in the Public Account the specific bank accounts created by each federal contributions fund, subsidies program and reallocation agreement must be registered before the Federal Treasury in order to give transparency to the exercise of federal resources delivered to local governments. In this regard, it is proposed that resources may not be transferred between specific accounts or to accounts having other types of resources, and that there will be accounts for each fiscal year.
In relation to the obligations that are now imposed on the states, it is established that they must send to the SHCP the information on the fiscal year and use of the federal resources received by the municipalities and the territorial demarcations of the Federal District, the decentralized state bodies, public universities, civil associations and other third party beneficiaries.
The reform points out the information the states must include in the quarterly reports they must present, relative to the funds for Contributions to Basic and Teacher Education, and Contribution to Technological and Adult Education, establishing the obligation to publish it on their web pages.
Additionally, in order to make more transparent the exercise of the resources of the Fund for Contributions to Municipal Social Infrastructure, the states must include in their quarterly reports the information relative to the application of those resources.
Similarly, this reform gives transparency to the exercise and use of the public resources administered to the states by the funds for federal aid in public security, establishing the obligation to include the following information in the periodic generation of the financial statements and information:
The exercise, destination and results obtained with the resources of the funds.
Their financial availabilities.
Budget committed, accrued and paid.
The above indicated information, in addition to being published on the internet, must be clearly associated with the objectives of the strategies defined previously by the National Public Security Council.
Furthermore, a new Chapter V is incorporated into the Accounting Law referring to information on evaluation and accountability, which will make it possible to harmonize the information in those items that the different government bodies present and make available to the public.
As part of the new transparency obligations, it is now necessary to include in the Quarterly Reports and in the corresponding Public Account the information referring to the exercise and destination of the federalized expenditure, and the exercise relative to the reintegration of the federal resources not incurred by the states, municipalities and territorial demarcations of the Federal District.
One of the most relevant aspects of the reform is that in order to strengthen transparency and the of financial information sharing system applicable to the three levels of government, and since it involves obligations established in a federal law, a new crime is created. The sanctions go from 2 to 5 years of prison and a fine from 100 thousand to 250 thousand SMGVDF on anyone who knowingly fails to comply with the obligations of the Law, and from 4 to 7 years of prison and a fine from 300 to 500 thousand days of SMGVDF on anyone who causes damages to the Public Treasury or to the assets of any public entity.
If you would like to learn more about this topic you may consult: Lic. Rafael Sámano: rsamano@samanosc.com.mx Lic. Cristina Loera.