A New Approach compares and contrasts the various instruments and approaches used by the World Bank, IMF, European Commission and other development agencies to assess and reform public financial management systems in developing and transitional countries. It recommends an approach to assessment and reform that is country-led, has multi-donor support and is based on a coherent and integrated medium-term strategy for public financial management work, linked to a country's poverty reduction strategy and other key policy goals. This report makes concrete and practical recommendations to streamline the coverage of instruments and enhance collaboration between, donors, governments and other stakeholders. In doing so, it provides a firm basis for achieving more efficient and effective use of aid flows and national budgetary resources, to reduce poverty and realize other key policy goals and development outcomes. Assessing and Reforming Public Financial Management was written as part of the work of the Public Expenditure and Financial Accountability (PEFA) Program, a partnership of the World Bank, European Commission, IMF and several bilateral donor agencies that was established in December 2001.