Chapter four: Economic governance and management planning and public finance management reforms, including measures to strengthen the LRA, the Office of the Auditor General (OAG) and the Public Accounts Committee (PAC) of Parliament. 120 432. The process of decentralisation in Lesotho is still at an embryonic stage. Local authorities are set up mainly to facilitate effective service delivery. However, they still do not have powers to collect revenue. In fact, the Local Government Act and regulations clearly give them the authority to collect revenue from local sources through, for example, taxation, user fees and charges. However, the MoFDP is currently the only institution that has the legal authority to collect revenue. There is, therefore, a need for legal amendments and harmonisation of the revenue laws and regulations so that the local authorities can exercise their assigned functions to collect revenue. 433. They rely almost exclusively on conditional grants from the MoLG, which, in turn, receives unconditional grants from the MoFDP. The PSIRP has focused on building administrative capacity so that the local authorities can deliver services effectively and efficiently in the context of the poverty reduction and economic growth strategy. Local government elections were held in 2005. They started the process of political decentralisation, ahead of fiscal decentralisation. It was envisaged that, during the five-year period up to 2010, certain processes, including the decentralisation of decision making and allocation of resources to the local authorities, would be completed. Institutional development 434. Public financial management is governed by numerous Acts. They include the constitution of Lesotho (1993), the Lesotho Financial Regulations (1973), the Finance Order (1988), the Audit Act (1973) and the PAC Order (1972). Some of these are presently under review to incorporate changes necessitated by public sector reforms. Local governance in Lesotho is guided by three major laws: the constitution, the Local Government Act of 1997, as amended in 2004, and the Local Government Elections Act of 1998, as amended in 2004. The constitution of Lesotho obliges Parliament to establish local authorities as “it deems necessary to enable urban and rural communities to determine their affairs and to develop themselves. Such authorities shall perform such functions as may be conferred by an act of Parliament.” The Local Government Act outlines: the institutional framework for the local government system; the powers and functions of councils and their organs; and their resource base, procedures, rules and regulations. The Local Government Elections Act of 1998, on the other hand, outlines the procedures, rules and regulations for the conduct of local government elections. Fiscal decentralisation 435. The establishment of the Local Government Service Commission (LGSC) in 2005 facilitated the transfer of about 6,549 public servants to work at the district and subdistrict levels under either the district administrator or the district council secretary. Meanwhile, progress has been made by the Fiscal Decentralisation Task Team (FDTT), which comprises staff from the MoFDP and the MoLG, in developing a fiscal decentralisation framework. Although fiscal decentralisation remains limited, budget allocations were approved and local authorities began to use their own accounts for delivering services at the local level after 2006/2007. A district development fund was initially proposed as a mechanism for financing local government capacity, but the status of the fund remains uncertain.