IFMIS Workshop Day 1 Presentations
-
Upload
shaheen-sultana -
Category
Documents
-
view
120 -
download
1
Transcript of IFMIS Workshop Day 1 Presentations
IFMIS in Africa:Some Key Issues
Parminder BrarLead Financial Management Specialist
World [email protected]
World Bank / East Afritac Conference on IFMISMombasa
February 15, 2010
22
1. Background2. Analytics3. Key Issues 4. Next Steps
Overview
33
Background: WB Portfolio, 2009
The World Bank is supporting IFMIS projects across Sub Saharan Africa. Large diversity in clients and solutions.
44
Background: PEFA Ratings
PFM systems are improving.
55
Background: PFM Reform Programs
IFMIS is a core component of almost all PFM Reform Programs in Africa.
66
IFMIS Cross Country Experiences
IFMIS is a core component of almost all PFM Reform Programs in Africa.
77
The initial planning process took 12 months. Platform 1 would take 15-20 months.These four platforms are to be achieved in an estimated timeframe of eight years.
Background: PFM Reform Programs
88
IFMIS implementations raise high expectations.
Sophisticated IT system Budgetary controls Cash Management Improved VFM International Standards of Reporting Transition to Accrual Accounting Audit compliance Program Budgeting Accountable Governance MDGs
Background: PFM Reform Programs
99
When expectations are not met, IFMIS is the target.
Source: Survey of District Treasurar’s in Tanzania on their biggest constraints - 66 responses (August 2009).
Background: PFM Reform Programs
1010
Background: PFM Reform Programs
1111
IFMIS implementation is a complex process.
Background: PFM Reform Programs
1212
Background: PFM Reform Programs
IFMIS implementation is a complex process.
1313
Readiness PFM reform strategy Institutional capacity Countrywide network infrastructure
1
Preparation Legal and institutional frameworks Budget coverage Treasury Single Account (TSA)
2
PFMS Design Definition of system functionality Detailed technical requirements
3
Procurement Large scale ICT systems Technical Assistance and Training
4
System development & integration Full scale testing and rollout Training and change management
Implementation5
Maintenanceand Support
Budget funds Technical capacity System administration Maintenance
7
9 – 18months
9 – 18months
18 – 36months
Resources
Effectiveness
Time
Monitoring & Evaluation
Monitoring mechanisms Project mgmt capacity
6
Maturity Model for IFMIS projects
www.pempal.org/pfmstool
World Bank (2006), Maturity Framework for Treasury / PFM System Development at www.pempal.org
Background: PFM Reform Programs
1414
Integrated PFMS Development : years 0 1 2 3 4 5 6 7 8 9 10
Advisory support for PFM reforms
Assess existing ICT skills and resources
1. Identify PFM reform needs
Assess existing capacity & practices
Assistance in PFM capacity building
Technical Specifications [ ICB docs ]
Develop ICT/e-Gov Strategy (if N/A)
System Design
2. Develop necessary solutions
Develop PFM Reform Strategy (if N/A)
Conceptual Design
3. Project management
Project Management Group (PMG)
Coordination with donors / other projects
Preparation
Assistance in technical capacity building
Coordination with e-Gov / other ICT prj
Administration of Trust Funds (if any)
Procurement of ICT solutions [ ICB ]
System implementation, test, acceptance
Monitoring & Evaluation
Capacity building & Change Management
WarrantyEstablishment of a countrywide network
Implementation
PFMS take off
Approval
FlySolo
Supportand
MaintenanceSource: World Bank, 2007, Presentation by CEM Der, May 2007.
Background: PFM Reform Programs
1515World Bank (2002), “Design and implementation of Financial Management Systems : An African Perspective.”
2002: World Bank study of Ghana, Tanzania, Burkina Faso, Malawi and Uganda showed a mixed picture:
The worst rating for all the countries was on realism of cost estimates for the IFMIS project.
Analytics
1616
Lessons learnt and recommendations:
Focus initially on reforming the existing budget execution process.Adequately assess commitment to PFM reform.Determine functional reform priorities and “think small”.
Design adequate roll out strategy for PFM reform.
Make the right technical choices.
Adequately assess and build capacity.
Conclusion: (i) “Don’t fall in love with IT”
(ii) “Think small”.
World Bank (2002), “Design and implementation of Financial Management Systems : An African Perspective.”
Analytics
1717
2003: A review of 34 IFMIS projects in 27 countries across 6 regions showed that:
An IFMIS project, on average,
– took 7 years to complete• Ranging from 9.1 years for AFR to 5.8 years for LCR
– average Bank-financed cost was $12.3 million*
– component changes in 75 % of projects
Feedback from World Bank staff in 2003 was that only 6% of projects are assessed to be highly likely to be sustainable (self assessed sustainability), 69% were considered to be “likely” to be sustainable, and 25% were unsustainable.
* Excluding $600 million for Russia
Source: World Bank, 2003, Presentation by Bill Dorotinsky, 2003
Analytics
1818
Failure Factors Frequency
1 Lack of commitment 23.33%
2 Ineffective project coordination 23.33%
3 Loose project design 10.00%
4 Institutional/organizational resistance 10.00%
5 Lack of capacity 6.67%
6 Inappropriate choice of technology 6.67%
7 Lack of support by ext. stakeholders 6.67%
8 Overly complex project design 3.33%
9 Lack of proper skills in project team 3.33%
10 Other factors 6.67%
Total 100.00%
Source: World Bank, 2003, Presentation by Bill Dorotinsky, 2003
As per Bank staff major challenges were:
Analytics
1919
2005: IMF study of 5 countries in Africa listed the main constraints:
Lack of clarity in ownership of the system and unclear authority to implement
Failure to clearly specify the basic functionality Failure to spend enough time on the design stage Failure to reengineer processes Failure to undertake parallel reforms required by the FMIS The neglect to “sell” the system to agencies Overestimating the information to be included in the system Unrealistically short project timetable The required management input is often underestimated Lack of incentives for reform Prerequisites do not exist
Analytics
2020
Analytics
2121
2007: WB and IMF study listed critical success factors:
Analytics
Government commitment and management support Institutional capacity and skills Inter agency coordination Systems and data administration Formal project planning Local Technical Support Management of change
2222
Where should the IFMIS Department be located?
Key Issue 1
2323
What is an appropriate organizational structure for the IFMISDepartment ?
Key Issue 2
2424
Is there need to share good practices in project implementation structure?
Key Issue 3
2525
Have business processes fit the IFMIS or is it the other way around?
Key Issue 4
2626
Has IFMIS really changed work processes?
Key Issue 4
Ten years after the IFMIS, 15 steps are still required for making a payment (MoH study 2008):
1. Following a request from a line department, PMU prepares request for LPO2. Director / Department head signs off on request for LPO3. Permanent Secretary signs off on request for LPO (if amount exceeds LC 1
million)4. Accounts Department enters the purchase into the (manual) vote book5. Request for LPO is sent to the Chief Internal Auditor (CIA) for ‘examination’6. Request is sent to the ‘machine room’ and entered into the IFMS7. The LPO is generated8. LPO is sent to PMU for signatures9. LPO is sent to CIA (examination) for signature10. LPO is sent to Chief Accountant for signature11. PMU delivers the LPO to the supplier12. Upon delivery of goods or services, a delivery notice and invoice are submitted to
PMU13. The invoice with supporting documentation is passed on to Chief Accountant14. The payment request is entered into the IFMS by the machine room15. The check is printed by the Treasury (Accountant General) and provided to the
supplies by PMU
2727
Are there plans for incorporating the budget module into the IFMIS?
Key Issue 5
2828
Has the prolifaration of systems abated?
Key Issue 6
2929
Has the IFMIS resulted in reduced reporting requirements?
Key Issue 7
3030
How well has the IFMIS impacted the CoA?
Key Issue 8
3131
Is there a roadmap for strengthening core functionality?
Key Issue 9
3232
Do bespoke solutions need greater consideration in the region?
Key Issue 10
3333
Is the Local Government IFMIS implementation receiving the attention it deserves?
Key Issue 11
3434
Is there a hardware replacement plan in place? Are we on the same page regarding the causes for degradation of hardware performance?
Key Issue 12
3535
Is adequate attention being paid to revenue automation?
Key Issue 13
Vote Ministry/Department Retention %ge
28 Public Security and Safety 60 29 Home Affairs & Prison Services 60 34 Foreign Affairs 100 37 PMO - Government Printer 70 41 Justice - Adm Gen 85 46 Educational & Vocational Training 100 48 Lands 67 49 Water 70 51 Home Affairs 33 52 Health 100 58 Energy & Minerals 25 64 Commercial Court 50 96 Natural Resources Various 93 Immigration Services 52 94 Information, Culture & Sports 90 98 Infrastructure -Gvt Stores 85 98 Infrastructure –TAA 100 98 Infrastructure – Policy & Planning 50 99 Livestock Development 75
3636
Are funds flowing smoothly with adequate accountability?
Key Issue 14
3737
Is there an effective HR Sustainability Strategy in place?
Key Issue 15
3838
Is the training strategy adequate and effective?
Key Issue 16
3939
Is the vendor managing you or are you managing the vendor?
Key Issue 17
4040
Is the change management process working?
Key Issue 18
4141
Were connectivity expectations realistic?
Key Issue 19
4242
Is there need to keep a focus on manual accounting systems?
Key Issue 20
4343
Summary
There is no doubt that there have been major improvements in IFMIS implementation over the last five years. These include high end COTS solutions (e.g. Uganda) as well as mid sized systems (e.g. Tanzania). Bespoke systems (e.g. Ethiopia and Kenya) have had a positive impact.
The most effective implementations have been where there has been a good match between ICT solution demands and local capacity.
Innovative examples in training and HR approaches need to be shared widely within the region. There are good examples of in house consultants supporting IFMIS implementation.
Leadership at the political and executive level will remain the key to successful IFMIS implementation.
4444
Thank You
4545
““GFMIS and Chart of AccountsConcepts and Strategies: Getting the
accounting structure right before going full steam ahead””
East AFRITAC (IMF) and World BankAfrica Regional Workshop on
Integrated Financial Management SystemsFebruary 15-17, 2010
Serena Hotel, Mombasa, Kenya
Presented by
Winston P O ColeSr. Financial Management SpecialistWorld Bank, Nigeria Country Office
4646
Topics
1. Context and concepts2. Drivers3. CoA framework4. Strategies for design and
implementation 5. Conclusion
4747
Context A sound PFM system supports the
achievement of:
fiscal discipline;
strategic and efficient allocation and use of funds;
efficient service delivery with value for money; and
probity in the use of public funds.The ACCCOUNTING STRUCTURE provides a systematic means of recording, reporting and analyzing of budget and financial transactions to provide timely and relevant information for effective decision making and accountability.
4848
Coding Concepts Elements
‘Side Tables’for non-core issues
•‘Common’ classification for budget and account•Same size of codes within segment•Unique codes per description•Flexibility for expansion
4949
CoA driversCountry legal framework
– Reporting requirements– Business process– Budget control level– Scope: General Government
Accounting structure– IPSAS (cash basis)–Accrual accounting
Government Finance Statistics (GFS)Public Expenditure and Financial
Accountability (PEFA)– PI-5 Classification of the budget– PI-6 Comprehensiveness of information included in
budget documentation: 9 elements
5050
Legal FrameworkGhana FAR, 2004 Revenue and Expenditure According to the Estimates 170. (1):
“Revenue and expenditure estimates … arranged according to the Government of Ghana Budget Classification or Chart of Accounts … approved by the Minister.”
Classification of Public Accounts 187: “… The CAG shall prepare the public accounts which shall be classified and arranged in accordance with the Government of Ghana Budget Classification or Chart of Accounts”.
Sierra Leone GBAA, 2005•Structure of appropriations 25. (1): “The expenditure classification … shall constitute the structure for appropriation by Parliament, the spending limits, accounting and reporting”.•Classification of public accounts 52(1): “…… public accounts shall be classified and arranged in the same form as the budget approved by Parliament”. IPSAS 24•Annual statement of public accounts 57 (5): “The annual statement of public accounts shall include– (a) details of revenues and expenditures according to the appropriation structure, and …..”
5151
How can CoA support purpose of Financial Statements? IPSAS 1 (a) Providing information about the sources,
allocation and uses of financial resources;
(b) Providing information about how the entityfinanced its activities and met its cash requirements;
(c) Providing information that is useful in evaluating the entity’s ability to finance its activities and to meet its liabilities and commitments;
(d) Providing information about the financial condition of the entity and changes in it; and
5252
CoA enables presentation of Financial StatementsA complete set of financial statements includes
the following components:
(a) Statement of financial position;
(b) Statement of financial performance;
(c) Statement of changes in net assets/equity;
(d) Cash flow statement; and
(e) Accounting policies and notes to the financial statements.
Ghana FAR, 2004: Basis of Accounts 186. The Public Accounts and other government accounts shall generally be prepared on Accrual basis except that the specific basis and procedures for preparing the accounts shall be determined by the Controller andAccountant-General.
5353
CHART OF ACCOUNTS (COA)
WhoAuthority WhatWherePurpose
Program/Project
FundOrganization ObjectLocation
This is the foundation of any accounting system
In defining the CoA structure the following questions are asked to determine the attributes of the transactions.
5454
Authority: Organization Segment
GFS: General GovernmentCentral Govt.State Govt.Local Govt.
IPSAS 6: 26-36Controlling Entity
Organization Type (1)
•Ministry•Parastatal•Commission•Agency
ORGMDA s
(2)
SUB-ORG Division / Departments (5)
Sector (1)
SUB-SUB-ORG Section / Cost Center
(8)
Sub-Sector (2)
Sub-Sub-Sub Org Unit(10)
GFS Function 1(3)
GFS Function 2(4)
GFS Function 3(5)
5555
Organisation Segment Example
5656
Fund Table(Consolidated, Departmental, Councils, Donors)
Who? - Fund Segment
Fund Source Table (CF,CF-MDA1, WB1-Local, WB1-Foreign, Council 1)
Source Type (CF, Grant, Loan, Councils) Donor Table
Source group (CF, WB1 (Local+Frgn), Councils)
General Government (Consolidated & Councils, Donors)
All Funds(Consolidated, Councils, Donors)
Donor TypeBilateral, Multilaterals
OrLoans. Grants
GFS: General GovernmentIPSAS 6:Controlling EntityPI-7: Extent of unreported government operationsPI-8 Transparency of Inter-Governmental Fiscal RelationsD-2 Financial information provided by donors for budgeting and reporting on project and program aid
5757
Fund code example
TSA: Ledger Bank Accounts
5858
Project (NA, Projects, WB1,
EU1 etc. )
Purpose: Program / Project Segment: Planning & Strategic Allocation
Component
PRS interventions/Sub-Component
Activities
Project Type
GFS Function 1(3)
GFS Function 2(4)
GFS Function 3(5)
PRS Pillars
PRS Objectives
UN-COFOG
Donor PracticesD-1&2
Activity Group(3)
MDGs (1)
Goals(2)
Priority (1) High
MediumLow
InterventionGroup
(3)
Targets (2)
Indicator (5)
Other systemsEMIS / HMISMilestones / KPIs / Outputs
5959
UN classification of Functions of Government (UN-COFOG)
Derived from organisation or activity
701 General public services702 Defense703 Public order and safety704 Economic affairs705 Environmental protection706 Housing and community
amenities707 Health708 Recreation, culture, and
religion
6060
709 Education– 7091 - Pre-primary and primary education– 7092 - Secondary education– 7093 - Postsecondary non-tertiary education– 7094 - Tertiary education– 7095 - Education not definable by level– 7096 - Subsidiary services to education– 7097 - R&D Education– 7098 - Education n.e.c.
7091 Education: Pre-primary and primary education– 70911 - Pre-primary education
70912 P i d ti
PI-5 Classification of the budget - The budget formulation and execution is based on administrative, economic and sub-functional classification, using GFS/COFOG
Sub-
func
tion
s
6161
Program/Project example
MDAs based on their mandates would draw from MTSS to prepare strategic plans from which activities will be costed for budget preparation, execution and reporting.
6262
What? - Object Segment: economic classification
Sub-Category Table
Category Table
Account Type Table
Main Category Table
GFS L2
GFS L3Item Group (2)
-IT, Sales Tax, -Personnel, Other Rec.- Capital
Object Sub -Type(Revenue, Recurrent,
Capital, Development) (2)
Object Type(Revenue, Recurrent,
Development) (1)
GFS L1
GFS L4
GFS L5
Object Group
Object Code
PI-6 Comprehensiveness of information included in budget documentationAccrual vs. Cash
GFS economic classification
IPSAS :19 Components of Financial Statements
6363
Revenue object code example
6464
Expenditure object code example
6565
Element Code GFS L2
Element Description
00 NOT APPLICABLE
XX Balance Sheet
11 Taxes
12 Social contributions
13 Grants received
14 Other revenue
21 Compensation of employees
22 Use of goods and services
23 Consumption of fixed capital
24 Interest
25 Subsidies
26 Grants paid
27 Social benefits
28 Other expense
CoA elements120101 Personal income tax210101 Basic Salary
6666
Use of country systems
6767
State/ Province
Where? - Location Segment
LGA/Districts
Chiefdoms
Wards/ Parish
Federal (for aggregation)
Level of decentralizationLink with statistics geo codesPolitical accountability
Geo-political Zones
6868
Location code exampleLocations
Province District
Chiefdom Ward
Southern Province 3 30 3000 30000
Pujehun District 3 34 3400 34000
Barri 3 34 3401 34010
Barri I 3 34 3401 34011
Barri II 3 34 3401 34012
Barri III 3 34 3401 34013
Gallinas Perri 3 34 3402 34020
Gallinas Perri I 3 34 3402 34021
Gallinas Perri II 3 34 3402 34022
Gallinas Perri III 3 34 3402 34023
6969
Strategies for design and implementationDesignRequirements (SOUR)
Realistic timetable
Inter-ministerial working group
Consult– Within Government
– Legislature: PFM Law
– Donors
– Non-state actors
Sensitize key stakeholders
Test reports and controls
Implementation• Training• Map old to new codes:
budget book / PVs• Configuration▫ Default frequently used
CoA for users▫ User privileges
• Review reports & controls• 3rd party report writer• Prepare CoA manual• Responsibility for updates
7070
ConclusionInvolve all stakeholders
Identify critical budgeting, accounting, controls, reporting and M&E requirements
Legal framework and Accounting Standards
Use common classification system
Sensitization and training
Clarity in procedures to maintain the CoA“Get the accounting structure right before going full steam ahead”
7171
THANK YOU!
7272
Development and Management Life Cycle
Key Success Factors
Gert van der LindeAFTFM, World Bank
72
737373
7474
Change Management
74
7575
HR & Capacity Building
75
7676
Application Solution
76
7777
Infrastructure
77
7878
Project Management
78
7979
Other matters
79
8080
Post Implementation Support
80
8181
What are key challenges?
81
8282
Will an IFMIS alone improve PFM?
82
838383
8484Ali Hashim, AFE/IMF - World Bank 84
Ali HashimConsultant - Treasury
Systems Mombassa, Kenya
February 2010
3/4/2010
8585
Part I: Basic IFMIS Concepts
Part II: Technological requirements
Part III: Implementation Experience
Part IV: Lessons Learned
Part V: Implementation in Low capacity settingsAli Hashim, AFE/IMF - World Bank 853/4/2010
8686
Introduction– Why- IFMIS?
Scope- GFM Systems Landscape– Core and Non- Core elements
– Core Functionality- what does an IFMIS do?
Policy Framework- pre-requisites for implementation
Activities involved in Systems implementation
Indicative Implementation scheduleAli Hashim, AFE/IMF - World Bank 863/4/2010
8787
The IMF and the World Bank have been involved in a number of initiatives to modernize the Policies, Institutional Structures and Systems required to manage public finances in member Countries
Automation of Government Financial Management (GFM) Systems is one of the elements of the Reform program
Ali Hashim, AFE/IMF - World Bank 873/4/2010
8888
These systems enable:– Better Fiscal control:
• Full integration of budget and budget execution data allows greater financial control by ensuring that expenditures are in accordance with budget appropriations, commitments and cash allocations
• Close monitoring of outstanding bills, cash in Government bank accounts, arrears and fiscal deficits
– Better cash management• By bringing all government accounts under the
control of Treasury and consolidation in a Treasury Single Account (TSA),
• By reducing idle balances in Government Accounts Ali Hashim, AFE/IMF - World Bank 883/4/2010
8989
– Provision of timely and accurate reporting for Economic management
– Assistance in preparation of financial statements and financial reports
– Improved quality of baseline data for budget preparation
Ali Hashim, AFE/IMF - World Bank 893/4/2010
9090
Large transaction volumes generated at multiple sites across the country– Large number of spending units distributed across the
country whose budgets need to be prepared and monitored
– Large number of expenditure transactions from SUs distributed across the country which need to be approved/posted
– Large number of tax and import duty/ excise tax collections again distributed across the country
– Large number of foreign domestic loans/grants/t- bill issues
– Large numbers of Employees who need to be paid– Large number of programs and projects country wide
which need to be monitored
A prescribed set of rules that govern transaction processing– Budget appropriations control regulationsAli Hashim, AFE/IMF - World Bank 903/4/2010
9191
Efficient handling of large transaction volumes
Automation of many controls and procedures
Integration of transaction classification and posting with transaction processing
Gathering and reporting timely and accurate information required for decision making and accountability from a network of sites across the country
Without some degree of automation it Ali Hashim, AFE/IMF - World Bank 913/4/2010
9292
The main functional processes involved in Government Financial Management are:– Macro Economic Forecasting– Budget Preparation – Budget Execution, Accounting and Fiscal
Reporting– Cash Management– Position, Payroll and Benefits management– Pensions Management for Govt. Retirees– Debt Management– Revenue Administration (Customs and Tax)– Auditing
Each if these processes require specializedAli Hashim, AFE/IMF - World Bank 923/4/2010
9393Ali Hashim, AFE/IMF - World Bank 933/4/2010
9494
Budget Execution– Budget Management
• Budget Apportionment, Budget Allotment,• Budget Releases, Budget Transfers
– Commitment Management – Recording all commitments relating to intended government expenditures
– Payment Management- Processing all government expenditures relating to:• Procurement of goods and services• Salary and Pension Payments• Debt servicing payments
– Receipts Management - Recording revenues and other receipts
Accounting (posting all transactions as they occur)
Cash ManagementAli Hashim, AFE/IMF - World Bank 943/4/2010
9595
Macro Economic Forecasting
Budget Preparation
– Calculation of program and project costs; Compilation of budget proposals from Spending agencies; Printing Budget Documents
HR-Payroll Management – Position management, Employee records, Calculation of Spending Unit Payrolls, Employee entitlements
Pensions Management – Calculation of i i l
Ali Hashim, AFE/IMF - World Bank 953/4/2010
9696
Debt Management - Calculation of debt servicing liability
Revenue Administration –Assessment of Customs Duties and Taxes
Auditing – Use IFMIS data bases for auditing
Ali Hashim, AFE/IMF - World Bank 963/4/2010
9797
– Systems Record• Initial budgets, budget revisions, budget releases• Commitments• Purchase orders, Contract details• Receipt of goods and services• Vendor Invoices
– Authorize payments after checking for controls– Give payment instructions to Bank– Record revenues and other receipts– Reconcile with bank records– Enable monitoring of balances in Government
accounts– Enable posting of all transactions, enforcement
of controls, accounting and comprehensive reporting
Ensure that these functions are performed by th i d t ff l
Ali Hashim, AFE/IMF - World Bank 973/4/2010
9898Ali Hashim, AFE/IMF - World Bank 98
MOFMOF
TSA Bank
TSA Bank
Vendors EmployeesPensioners
Vendors EmployeesPensioners
Tax PayersTax Payers
LineMinistries
LineMinistries
MOFMOF
MOF/Line Ministries
MOF/Line Ministries
MOF/Line Ministries
MOF/Line Ministries
Line MinistriesSUs
Line MinistriesSUs
Line MinistriesSUs
Line MinistriesSUs
TreasuryTreasury
TreasuryTreasury
TREASURY
SYSTEM
Payments
ReceiptsBalances in Accounts
Enter s Approved Budget Apportionments
Enter Budget Allotments: Detailed Budget for Spending Units
Enter Budget Releases/ Warrants
Enter Authorized Budget transfers supplementary Allocations
Produce Budget Execution - Fiscal Reports-BERs
Enter Direct Commitments Contracts /Purchase Orders
Enter Vendor Invoices /Paymentrequests, Payroll transactions
Reviews/enters payment requestsreleases for payment, Schedules payments
Monitors receipts. Performs Bankreconciliation. Cash management
List of BankTransactions
3/4/2010
9999Ali Hashim, AFE/IMF - World Bank 993/4/2010
100100Ali Hashim, AFE/IMF - World Bank 1003/4/2010
101101Ali Hashim, AFE/IMF - World Bank 1013/4/2010
102102
1. Development of a Policy framework and Institutional Reforms– Developing/improving the Legal and
Institutional framework that underpins the function and defines the roles and responsibilities of the entities involved
2. Designing and setting up information systems that could support the functional processes associated with the function– Development of an overall information
architecture for fiscal management– Definition/Review of the business processes
and information flows and their information requirements for specific functions
– Designing information systems to support the functional processes for that function
Ali Hashim, AFE/IMF - World Bank 1023/4/2010
103103
A budget management law for management of public funds and property provides the legal basis for Treasury Systems
– Specifies the roles and responsibilities of the Treasury, the MOF and Line Agencies
– Specifies the authorities and responsibilities for:• Receipt and custody of public funds
• Public expenditure management control processesAli Hashim, AFE/IMF - World Bank 1033/4/2010
104104
The Implementation of Core Treasury Systems require Institutional arrangements for banking Government funds and processing payment transactions– Consolidation of bank accounts in a
Treasury Single Account (TSA) held at the central bank
– Setting up a Treasury organization with a network of offices located country wide. (or locating Treasury staff with SUs)
– Re-engineering payment processes and routing all payment transactions through the Treasury/ out posted Treasury staff
– Re-engineering all receipt processes to di tl d it d i
Ali Hashim, AFE/IMF - World Bank 1043/4/2010
105105Ali Hashim, AFE/IMF - World Bank 105
Central Treasury
ProvincialTreasury Unit
ProvincialTreasury unit
District TreasuryUnit
District Treasuryunit
District TreasuryUnit
TREASURY ORGANIZATION STRUCTURE I
SpendingUnit
Regional Branchof Central Bank
TSA
Central BankHead office
TSA
3/4/2010
106106Ali Hashim, AFE/IMF - World Bank 106
Central Treasury
Parent LineMinistry
Treasury unit
TREASURY ORGANIZATION STRUCTURE IISpending Units send their transactions to the Line Ministry which forwards them to the
Treasury
SpendingUnit
Branch ofCentral Bank/Fiscal Agent
whereTSA is held
Central BankHead office
TSA
SpendingUnit
3/4/2010
107107Ali Hashim, AFE/IMF - World Bank 107
MOF/ Treasury
Parent LineMinistry
TREASURY ORGANIZATION STRUCTURE IIILine Ministries/Spending Units send their Transactions to the TSA Bank Directly and
only provide periodic reports to Treasury /MOF on expenditures
SpendingUnit
Central BankHead office
TSA
SpendingUnit
Central BankBranch/ FiscalAgent whereTSA is held
3/4/2010
108108
Adoption of a budget classification system consistent with the IMF’s GFS–Design of a chart of accounts
embodying this classification–Budget classification structure would
need, as a minimum, segments for function, organization and economic classification
–The function and economic classification structures need to be
Ali Hashim, AFE/IMF - World Bank 1083/4/2010
109109
Budget Execution– Budget Management
• Budget Apportionment,• Budget Allotment,• Budget Releases,• Budget Transfers
– Commitment Management– Payments management- Processing all
government expenditures relating to:• Procurement of goods and services• Salary and Pensions Payments ( Government
Pensioners)• Debt servicing
– Receipts Management - Recording revenues and receipts
Accounting (posting all transactions as they occur)
Ali Hashim, AFE/IMF - World Bank 1093/4/2010
110110
Application Software – to support functional processes;
Hardware- Servers located at various processing centersWork stations, peripheral hardware
Middle ware- Operating systems, DBMSs, Application development tools, systems management tools
Telecommunications Infra structure– WAN-Links between various Treasury offices via
telecommunications network- public switched network, leased lines, dial up lines;
– LANs- connections between work stations at a particular site
– Network management systemsAli Hashim, AFE/IMF - World Bank 1103/4/2010
111111
Develop and obtain agreement on Policy Framework– Draft and obtain approval of a
comprehensive budget management law / decree for management of public funds
– Adopt a budget classification system and Chart of Accounts consistent with the IMF’s GFS
– Set up institutional arrangements for banking Government funds and processing payment transactionsAli Hashim, AFE/IMF - World Bank 1113/4/2010
112112
Identify a Project Sponsor – Minister of Finance/Permanent Secretary/Controller General of Accounts
Select a Project Manager- Senior official from FUNCTIONAL SIDE with stature within bureaucracy and adequate financial and administrative powers
Set up a steering committee- representatives of all major stake holders- MOF, Treasury, Budget, Central Bank, Line Ministries, Revenue collection agencies to provide policy guidance
Set up a Core team/ working group from the same agencies but with more detailed involvement in resolution of design and implementation issues. Team members: – Need to have in-depth knowledge of their functional areas– Will ensure that new system fulfills functional requirements – Assist in the design of new functional processes, and – Serve as change agents during systems implementation
Set up a Project Secretariat - Specialist staff with experienceAli Hashim, AFE/IMF - World Bank 1123/4/2010
113113
Develop a functional systems design– functional processes, documents, information
flows, COA specification, detailed code structures, operating procedures, manuals
Develop application software specifications-features required – mandatory and desirable
Develop the overall technology architecture and specify hardware and networking requirements
Develop procurement documents for application-software, hardware, telecommunications and implementation services
Develop criteria for evaluation of bidsAli Hashim, AFE/IMF - World Bank 1133/4/2010
114114
– Select contractor or contractors for • Application Software
• Hardware/ telecommunications/networking
• Implementation services
– Set up test site, user acceptance testing arrangements, develop test scripts
– Parameterize/ Customize application S/W
– Test Application S/W for required functionality
– Adjust and finalizeAli Hashim, AFE/IMF - World Bank 1143/4/2010
115115
– Pilot implementation (6-12 months)• Install hardware/networks for pilot sites• Install application software for pilot sites • Train end user and technical staff• Set up end user help line• Institute change management procedures • Migrate data as required• Implement systems at pilot sites• Review and adjust
– Systems Rollout (24-36 months)• Replicate systems across all sitesAli Hashim, AFE/IMF - World Bank 1153/4/2010
116116
Legal and Institutional Framework
Budget Classification, Chart of Accounts etc. Functional Process Design
Conceptual Systems Design and Technical Architecture 6-12 months
Procedures and Manuals
Systems Procurement 6-12 months
Gap Analysis, S/W Parameterization /Customization/, Testing 6-12 months
Change Management & End User Training
Pilot Systems Implementation 6-12 months
Systems Roll out 24 Ali Hashim, AFE/IMF - World Bank 1163/4/2010
117117Ali Hashim, AFE/IMF - World Bank 117
Policy and Design Consultancies– Legal and policy framework (Budget law, institutional arrangements,
CoA, accounting policies)– Functional design (functional processes, information flows,
documents, procedures)– Technical Design and Architecture (S/W, H/W and Communications
Specifications)– Project management support
Application software, hardware, and implementation services– Servers, workstations, printers, office and systems software– Networking (LAN and WAN)– Information security– Application software and tools (+ DBMS, application development
tools) etc.– Site preparation– Implementation services (parameterization/ customization,
implementation) Training
– End User training in the day to day use of systems and trouble shooting
– Technical training for technical staff in the use and maintenance of specific tools used
– Management level training in the use of the systems 3/4/2010
118118
–Hardware Maintenance / Replacement
–Application Software and DBMS/ Tools License fees (15-20% of installed software per annum)
– Telecommunications Costs
–Stationary, Utilities, Office Premises
–Staff Costs
– On Going TrainingAli Hashim, AFE/IMF - World Bank 1183/4/2010
119119
–Systems topology- Centralized and Distributed Technology Architectures
– Systems deployment options: Treasury based or Spending unit based systems deployment
– Application Software Options: Commercial Off the shelf (COTS) vs. Custom developed / bespoke application software
Ali Hashim, AFE/IMF - World Bank 1193/4/2010
120120
Centralized Architecture: The Application software runs on a central server and Treasury/MOF offices connect to this server in an online mode to process their transactions
Distributed Architecture: Copies of the software run on multiple servers across the network. Work stations at a site connect to the local/ designated server to process transactionsAli Hashim, AFE/IMF - World Bank 1203/4/2010
121121Ali Hashim, AFE/IMF - World Bank 121
Central TreasuryCentral Treasury
Remote Treasury
Office
Remote Treasury
Office
RemoteTreasury
Office
RemoteTreasury
Office
TSA BankTSA Bank
InternetAccess
Direct Access
Treasury System
SpendingUnit
SpendingUnit
MOF/BudgetAdministrators
SpendingMinistry
HQ
3/4/2010
122122Ali Hashim, AFE/IMF - World Bank 122
Central TreasuryCentral Treasury
Regional Treasury OfficeRegional Treasury Office
District Treasury Office
District Treasury Office
TSA BankTSA Bank
Treasury System
Regional Budget
AdministratorsSpending
Unit
SpendingUnit
MOF/BudgetAdministrators
SpendingMinistry
HQ
RegionalBranch
of TSA Bank
RegionalBranch
of TSA BankTreasury System
Treasury System
Local Bank
3/4/2010
123123
Easier to maintain and operate- All changes to software are managed centrally
Less intensive capacity requirements for technical staff
Better synchronization of data bases- Single repository of most data
Leads to uniformity of systems Requires a good country wide WAN to enable
connections from remote offices However use of centralized web based systems via
a satellite network has proved difficult to implement – multiple passes across the network for processing a single transaction have often led to un-acceptably high response times
Ali Hashim, AFE/IMF - World Bank 1233/4/2010
124124
Normally used when the telecommunications infra structure in the country is not well developed and it is not possible to connect all Treasury offices in an online mode to the central server.
Most distributed deployments are converting to a centralized deployment as the telecommunications networks improve
Web based technologies have simplified the technological requirements at the remote site
Sometimes political economy issues, such as sensitivity to access of sub national data by the center require that the servers are located under the physical control of the sub-national entity, However, this is only a political excuse- data access in a Ali Hashim, AFE/IMF - World Bank 1243/4/2010
125125Ali Hashim, AFE/IMF - World Bank 1253/4/2010
126126Ali Hashim, AFE/IMF - World Bank 1263/4/2010
127127
Several packages are now available on the market that can support most of the functionality requirements of a Treasury system after parameterization
Examples are SAP, Oracle Financials, FreeBalance, Epicor, Navision, Agresso,Technology-1 etc.
Some Packages may require development of specific modules to fulfill all functionality requirements
Most of these packages are based on accounting systems developed for the Ali Hashim, AFE/IMF - World Bank 1273/4/2010
128128
– Embeds best practice business processes and Internationally Accepted Accounting Standards• The better known ERP packages offer full function
functionality
• Includes modules that can record and process all transactions related to the Budget Compilation
and Budget Execution Processes. Namely;» Initial Budgets, Budget Revisions/ Transfers,
Commitments, Purchase orders, Goods Receiving Reports, Invoices, Payments; Tax and non tax Receipts; Journal vouchers, Interfaces with Banking systems, etc.
C ff i ti th f C h t A lAli Hashim, AFE/IMF - World Bank 1283/4/2010
129129
COTS packages offer facilities toParameterize the software to country specific requirements
– Configure Charts of Accounts
– Configure business process work flows
– Configure controls
– Cash/ Accrual basis of accounting
– Tools to accommodate front end processing and report writing
Customization involves changing the Ali Hashim, AFE/IMF - World Bank 1293/4/2010
130130
–Offers Built in controls and audit trails; (e.g. ensures the integrity of vendor file, personnel file etc.)
–Offers good security features
–All modules work against a common data base ensuring data sharing and data integrity
–Rich end user features
–Good documentation,
–Technical support
–Software updatesAli Hashim, AFE/IMF - World Bank 1303/4/2010
131131
• Only better known packages have transitioned to and incorporated public sector requirements related to budget control, budget releases, etc. (e.g. SAP, Oracle Financials, Free Balance)
• Will only incorporate standard core functions• Ancillary front end features that support various
administrative/procedural requirements (such as those supporting pre-audit) will need to be programmed separately using tools available with the package
• Cost of package and recurrent license fees may be considerable
• Recent World Bank Procurement experience has shown that only a few vendors have the required international support capability and respond to World Bank RFPs
•• In view of limited responses from a limited set of In view of limited responses from a limited set of vendors to World Bank RFPs for Treasury Software vendors to World Bank RFPs for Treasury Software inin--spite of the existence of several packages that spite of the existence of several packages that
ld t ti ll ti f i t it bld t ti ll ti f i t it bAli Hashim, AFE/IMF - World Bank 1313/4/2010
132132
will provide a better fit with requirements in the short term;
– this may not always be good; it allows replicating old business processes
implementation can be done more incrementally with only a subset of core features being implemented initially
– This would be the low cost option for those countries which can only afford a subset of features to start with
– It is these types of cases where it is found that bespoke software is a cheaper/ more practical option
– However, even this requires availability of software development expertise in local market
– Can be used as a means of firming up requirements
often used as a first step of a two stepAli Hashim, AFE/IMF - World Bank 1323/4/2010
133133
– Be spoke Software first used to implement core Treasury functionality in;• Kazakhstan• Russia• Ukraine• Hungary• Turkey
– Replaced by COTS Software (Oracle Financials) in Kazakhstan
– Being replaced by COTS Software (Oracle Financials) in Russia
– New Project in Ukraine envisages COTS Software
Ali Hashim, AFE/IMF - World Bank 1333/4/2010
134134
Installed in:– Pakistan– Mongolia
Being installed in:– Azerbaijan– Uganda– Vietnam– Maldives
Being selected for – Cambodia– IndonesiaAli Hashim, AFE/IMF - World Bank 1343/4/2010
135135
Compare Like with Like Building in all COTS features
(functionality, controls and integration) in a custom developed package:
• will require extensive software development• can be very costly and time consuming• without extensive technical and project
management expertise, can be very risky
You get what you pay for
Ali Hashim, AFE/IMF - World Bank 1353/4/2010
136136
First Look for a COTS Solution
– It is costly- COTS Software and parameterization costs are a major component of costs
– In view of limited responses from a limited set of vendors to World Bank RFPs for Treasury Software in-spite of the existence of several packages that could potentially satisfy requirements it may be necessary to explore other ways of procuring this software
In a situation where there is good software development expertise available locally, Bespoke software could offer a medium term option
• However, even here, these countries eventually move to COTS Software
Ali Hashim, AFE/IMF - World Bank 1363/4/2010
137137Ali Hashim, AFE/IMF - World Bank 1373/4/2010
138138
– Treasury Reform:• Has been easier at green field sites, such as
countries of the Former Soviet Union, as compared to those requiring systems repair and modernization
– Government commitment and support of the MOF is critical• Can be achieved better if projects are framed
as public expenditure management (PEM) systems reform initiatives rather than just accounting systems reform
Ali Hashim, AFE/IMF - World Bank 1383/4/2010
139139
In transition economies Treasury projects have required setting up institutional structures and accompanying systems, ab-initio, as these countries moved from centrally planned to market economies
MOF periodically distributed money to spending agency bank accounts – Spending units directly processed payments
against these accounts– This resulted in a situation in which:
• MOF could not exercise control to ensure that expenditures are in accordance with budget appropriations
• The MOF did not receive timely information on Ali Hashim, AFE/IMF - World Bank 1393/4/2010
140140
In other countries these projects have involved building on and repairing existing financial management arrangements and systems- plugging the leaks– Legal and Institutional structures do exist
but are in need of repair since they are frequently bypassed• Erosion of controls (e.g. appropriation
control)• Blurring of the roles and responsibilities of
participants (SU- Treasury)• Multiplication of bank accounts outside the
control of the Treasury – e.g. personal ledger accounts
Ali Hashim, AFE/IMF - World Bank 1403/4/2010
141141Ali Hashim, AFE/IMF - World Bank 141
Name and Country Number of main Sites
Approx. Cost
US % million
status Remarks
Europe and Central Asia
Ukraine Treasury Systems Project (TS)
700 26.9 (16.5+10.4)
Completed
7.0 yrs
Custom S/W Follow on project ongoing plans for COTS software
Kazakhstan Treasury Modernization Project (TS)
250 17.7(15.7+2.0) Completed
8.9 yrs
Oracle Financials
Hungary Public Finance Management Project (TS)
20 10.4(7.3+3.1) Completed
7.1 yrs
Custom S/W
Turkey PFMP (TS) 1500 15.9(15.9 + 0.0) Completed
8.5 yrs
Custom S/W
Albania (TS) 35 9.0(8.5+0.5) Completed
6.8 yrs
Oracle Financials
Russia Treasury Development Project ( TS)
2200 613(231.0+382.)
Ongoing started 2002
Oracle Financials
Moldova PFMP (IFMS) 35 15.3(8.5+6.8) Ongoing started 2005
Selected SAP
Azerbaijan (TS) 90 13.4(9.5+3.9) Ongoing started 2004
SAP
Kyrgyz Republic (TS) 65 10.2(6.7+3.5) Ongoing started 2005
Selected Free balance
Tajikistan (IFMS) 75 10.0(5.0+5.0) Under Preparation
COTS planned
Team: Ali Hashim (1995-2004); Dominique de Roquefeul (2000-2004); Cem Dener (2004-todate)
Some Recently Financed IFMIS / Treasury Projects- I
3/4/2010
142142Ali Hashim, AFE/IMF - World Bank 142
South Asia No of main
Sites
Approx. Cost US $ mil.
Status Remarks
Pakistan- PIFRA I and II project for the improvement of financial reporting and accounting ( Lee/ Ceesay / Hashim)
150 35.0 Ongoing-PIFRA-I started 1996
SAP- All major sites implemented (120)
Maldives ( Manoj Jain, Hashim/Points) 100 7.5 Ongoing started 2005
SAP- Pilot under implementation
Afghanistan (Paul Sisk /(Points) 25 10 Ongoing started 2004
Free Balance - Central sites operational
East Asia
Indonesia GFMRAP Kristiansen /Siva/Ramachandran
262 30 Ongoing started 2005
Selected Oracle Financials
Vietnam
Nguyen. Points
5100 53 Ongoing started 2002
Oracle Financials – Pilot under implementation
Mongolia
Mohib / Points
150 10 Completed
8 yrs
Free Balance
Some Recently Financed IFMIS/ Treasury Projects- Ii
3/4/2010
143143
Ready availability of financial information for economic management– Up to date and comprehensive fiscal reporting for MOF– Regular budget execution reports for spending units
Increased efficiencies in bill tracking and payment processing (vendor bills/civil service payrolls/retiree pensions)
Better cash management. Reduction in idle balances/borrowing requirements
Better management of Government programs and delivery of government services; Better management of Capital Projects
Increased accountability and transparency– Rigorous application of appropriation controls– Ready availability of financial information to public– Efficiencies in auditing- less time required for transaction
audits giving more time for performance audits– Earlier production of certified annual accounts and
placement before legislature Reliance on Country Systems by Donor and/or Rating
agencies Ali Hashim, AFE/IMF - World Bank 1433/4/2010
144144
Completed Projects have taken 7-10 years to finish (from Board approval to completion). Many ongoing projects are expected to take similar times for completion
Obtaining consensus on and implementing the policy reforms has been a major factor contributing to long implementation times (Specially at Green field sites)
Systems procurement using Bank procedures has also contributed to long Ali Hashim, AFE/IMF - World Bank 1443/4/2010
145145Ali Hashim, AFE/IMF - World Bank 1453/4/2010
146146
The diagram plots the contracted cost of H/W, S/W, Implementation services, WAN/LAN networking and training against number of COTS user licenses acquired (used as a surrogate for end users) for 10 World Bank financed IFMIS projects.
Can use this data to calculate approximate costs for, say a 1000 User COTS implementation.
Y=0.009x+4.22;– if x = 1000, y= US $ 13.22 million (+/-)
20%
Spending unit based implementationsAli Hashim, AFE/IMF - World Bank 1463/4/2010
147147
Initial Projects focused on the implementation of Core Treasury Reform and Functionality
As new institutional structures and reform measures have stabilized newer projects have a wider scope and systems features to support:–Budget Preparation –Human Resource Management–Debt Management Ali Hashim, AFE/IMF - World Bank 1473/4/2010
148148
– In the 90s Treasury processes were still in transition. The major COTS packages had not transitioned to the Public sector. There was a need to develop core functionality so that the reform could start yielding results.
– Many countries therefore started out with the implementation of interim custom developed systems. These were used as a means of firming up requirements, - a first step of a two step transitionAli Hashim, AFE/IMF - World Bank 1483/4/2010
149149
Telecommunications infra -structure was not well developed in the early nineties
Interim systems were first implemented on a distributed architecture
Migrated to centralized architecture as telecommunications infra-structure improved
All new systems are being implemented on a centralized architecture
Ali Hashim, AFE/IMF - World Bank 1493/4/2010
150150Ali Hashim, AFE/IMF - World Bank 150
Open Source Software
The increasing availability of open source software has opened up a another set of possibilities
Open source software widely used for middleware- operating systems, application development tools- Linux, Java etc.
Has not been investigated in detail for Treasury systems use – this is an area that needs to be further investigated
3/4/2010
151151Ali Hashim, AFE/IMF - World Bank 1513/4/2010
152152
.
3/4/2010 Ali Hashim, AFE/IMF - World Bank 152
Hierarchy of Requirements
3/4/2010
Political will to implement sound PFM policies and procedures and support within government (the MOF and others) for reform measures Realistic Budget Formulation Institutional arrangements to implement Fiscal
Control Control of Treasury over all Government Financial
Resources - Consolidation of Bank Accounts in a TSA Routing of Transactions through a Treasury office/ Treasury
staff HR Capacity within implementing agencies to
implement refom measures and associated systemsAppropriate Technology to support transaction
processing and data managementApplication Software which reflects functional processes Technology Platform to implement Software (H/W, Networking,
Middleware)
153153
Strong Government and MOF Commitment have been a key factor for the success of Reform Projects
– Can be achieved better if projects are framed as public expenditure management (PEM) systems reform initiatives rather than just accounting systems reform
– Senior level policy makers in MOF and donor organizations relate to this better
– Linkages can then be established between project and requirements under policy based l di
Ali Hashim, AFE/IMF - World Bank 1533/4/2010
154154
Project Design should be driven by Functional rather than Technical Issues – Focus Reform priorities on reforming the
budget execution processes setting up the institutions and associated systems and procedures
Systems should be designed along functional and not organizational lines– Define the contours of the system
clearly to avoid duplicative investments
Ali Hashim, AFE/IMF - World Bank 1543/4/2010
155155
Ali Hashim, AFE/IMF - World Bank 155
Ali Hashim, World Bank, Washington D.C. 155
Requirements: A good quality telecommunications network
(minimum bandwidth 128kbs) Expertise in technical areas such as application
software (ERP systems), hardware,networking Availability in house or from the local private sector.
Adequate Pay and remuneration in Government for technical staff
3/4/2010
156156
– Technical capacity has not been a major constraint in ECA But it is so in countries of Africa and Asia
• Relatively good quality telecommunications
• Expertise in the technical areas is relatively easily available from the local private sector.
• However, there was a dearth of expertise in the Functional areas.
• Pay and remuneration in Government for Ali Hashim, AFE/IMF - World Bank 1563/4/2010
157157
Lack of career prospects for technical IT staff within Government has been a major area of concern for sustainability of such projects
This could be remedied within the context of an overall civil service reform effort - this is however, a long term measure
Other solutions: –Hire specialist IT staff on contract at
private sector salariesAli Hashim, AFE/IMF - World Bank 1573/4/2010
158158Ali Hashim, AFE/IMF - World Bank 158158
CATER TO PRESENT REQUIREMENTS BUT PLAN FOR THE FUTURE
In most countries the telecommunications network has improved significantly over the last few years and further improvements are planned over the next few years.
DO NOT BE UNDULY CONSTRAINED BY THE PRESENT
3/4/2010
159159
– Project Manager – Senior official from FUNCTIONAL SIDE with stature within bureaucracy, adequate financial and administrative powers. • This has been the case in many successful projects
– Core Team –• Group of trained professionals from core functions, who can act
as change agents.• Representatives of major stake holders need to be represented on
the team to manage the interface with their agencies.
– Project Secretariat - should have specialist staff with experience in the installation of large scaleIT systems and IT procurementAli Hashim, AFE/IMF - World Bank 1593/4/2010
160160
Large numbers - can appear overwhelming. – However, most Governments have training
institutions which could be used to impart training.
Program needs to be matched to requirements. – Most staff need to know only specific features
of the system
Should be coordinated closely with implementation plans– focused to specific requirements of a given
site– should be imparted just before site
implementation;Ali Hashim, AFE/IMF - World Bank 1603/4/2010
161161
Need to overcome opposition from vested interests who perceive the reform measures as a threat – advantages of new system need to be
recognized by MOF management and opposition resisted
– perception of the system being a threat has to be removed
Lack of incentives for change in a civil service setting– Bureaucracies are normally risk averse– Give examples where this has been done Ali Hashim, AFE/IMF - World Bank 1613/4/2010
162162
– The whole process of setting up the legal and institutional framework, systems design, procurement and implementation can easily take 8-10 years
– Sustaining management support over long periods has been a problem. Linkage to IMF program and/ or SAL operations has often been used to reinforce commitment
– Some times interim technical solutions have been implemented to support the reforms followed by full function systems. This has proved useful.Ali Hashim, AFE/IMF - World Bank 1623/4/2010
163163
This has posed problems in many countries. Two types of issues:– Sub - national levels of Government normally like
to be able to control payments without reference to a functionary of the center.
– Low capacity for systems implementation at the sub-national level
The first set of issues are mainly seen in the context of the relationships of the national government with the second tier – provincial governments.– The solution to this problem has to be found in
the context of the local political economy and the relationships between the central and sub-national governments
3/4/2010 Ali Hashim, AFE/IMF - World Bank 163
164164
Use of the Central System and Central Government Treasury offices for payment processing can alleviate capacity constraints at Sub-national level. – However, care should be taken to ensure
that this system use is provided as a service rather than an attempt to control local government budget execution by the center.
Local government moneys should not b i l d ith t l
3/4/2010 Ali Hashim, AFE/IMF - World Bank 164
165165
If the central government wants to extend its control to provincial level payments then it should have some financial leverage and control over provincial finances; e.g. it should be funding a major portion of the LG budget.
3/4/2010 Ali Hashim, AFE/IMF - World Bank 165
166166
Two types of solutions– Use of same system across multiple levels
of government
– Use of common standards, CoA and data exchange protocols and different systems from those used at the national level.• The advantages in using a simpler solution at
the lower levels of government will need to be balanced against the attendant issues that come up with the use of multiple packages, –especially in low capacity environments3/4/2010 Ali Hashim, AFE/IMF - World Bank 166
167167
Russia: The regional ( oblast) treasuries are required to use the central system for payment processing but control is exercised by LGs. Moneys are banked in the central bank
Ukraine and Kazakhstan: Central and Regional Governments use the central treasury system. Moneys are banked in the Central Bank.
Pakistan: Central and Provincial governments are required to use the same system. Moneys banked at the 3/4/2010 Ali Hashim, AFE/IMF - World Bank 167
168168Ali Hashim, AFE/IMF - World Bank 168
Characteristics– Basic institutions, systems and
procedures do exist but in need of repair.
– Small numbers of qualified staff in functional and technical areas –especially in government.
– Under- developed telecommunications infra structure – low bandwidth
– Low capacity to sustain expensive projectsM ltiple donors / de elopment partners
3/4/2010
169169Ali Hashim, AFE/IMF - World Bank 169
Emphasis on policy reform issues is still paramount. Some of the institutions and structures for budget execution may need to be set up afresh or repaired to remove aberrations that may have crept in over time.
If deficiencies in the basic legal and institutional framework are not repaired investments in systems may not yield desired results.
A more incremental approach may be called for while designing both the policy framework and systems
• – keep it simple - Implement the basics first –Allen Schick
– Even in several major countries the reform started with implementation of software for
3/4/2010
170170
Systems should be designed along functional and not organizational lines– Define the contours of the system
clearly to avoid duplicative investments -resist disparate efforts to set up multiple systems along organizational lines
Failures of Systems implementation initiatives are more often than not due to a combination of failures of relationships between participating institutions and technical reasons.– Diagnose causes of systems failures
objectively- whether they are technical or i tit ti l d t k i t di l
Ali Hashim, AFE/IMF - World Bank 1703/4/2010
171171Ali Hashim, AFE/IMF - World Bank 171
Look for simpler off the shelf packages Several are available on the market; Free-
Balance, Agresso, Navision, Technology 1 In the past many of these vendors have not
responded to major ICB notices Try a LIB notice However, make sure that selected vendor
has or is willing to establish required support capability in country or within easy access
Could start with a basic bespoke system that could be used to firm up requirements
Note- Several island economies in the3/4/2010
172172Ali Hashim, AFE/IMF - World Bank 172
Centralized architecture still the architecture of choice to the extent it is possible - but could start with a distributed architecture
Lower bandwidth required for small bespoke systems
CATER TO PRESENT REQUIREMENTS BUT PLAN FOR THE FUTURE
– In most countries the telecommunications network has improved significantly over the last few years and further improvements are planned over the next few years
3/4/2010
173173Ali Hashim, AFE/IMF - World Bank 173
Normally a major part of the transactions in terms of volume and amounts of money are at the center with a smaller number of transactions at other sites Set up a central system for the bulk of the
transactions and locate it at the centerOff-line processing arrangements for remote
sites Set up imprest accounts for remote sites.Transactions from remote stations will be
entered at the time of re-coupement of imprestImprest accounts could be managed
3/4/2010
174174
Training Program needs to be matched to requirements. – Numbers of technically trained staff is smaller
for a centralized architecture setting – A core team in required at the center for software maintenance
– Train a group of power users to act as change agents/ experts.
– Note - most staff need to know only specific features of the system
– More expertise is often available in the private sector- Hire specialist IT staff on contract at private sector salaries
– Hire international experts to work along side local t h t t th t t f f
Ali Hashim, AFE/IMF - World Bank 1743/4/2010
175175
Political economy and institutional issues are more difficult to resolve than technical issues
Setting up PFM information systems is a necessary pre-requisite, even essential, for improving Governance, but not sufficient
Ali Hashim, AFE/IMF - World Bank 1753/4/2010
176176Ali Hashim, AFE/IMF - World Bank 176
Thank you
3/4/2010
177177
PUBLIC FINANCIAL MANAGEMENT SYSTEMS PUBLIC FINANCIAL MANAGEMENT SYSTEMS –– KENYAKENYA
FEBRUARY 15thFEBRUARY 15th--1717thth 20102010SERENA HOTELSERENA HOTEL
MOMBASA KENYAMOMBASA KENYA
178178
CoverageCoverage BackgroundBackground
ExperiencesExperiences
Adequacy and accuracy of data for Adequacy and accuracy of data for financial reportingfinancial reporting
Challenges of the current financial Challenges of the current financial reportingreporting
Adequacy of the control systemAdequacy of the control system
Use of GFMIS to audit transactionsUse of GFMIS to audit transactions
179179
(a) Historical Background(a) Historical Background Started in 1997 with reviews and Started in 1997 with reviews and understandingunderstanding of of
problems with finance and accounting in problems with finance and accounting in GOKGOK
Actual Implementation/Initial roll out of IFMIS Actual Implementation/Initial roll out of IFMIS stated in year 2004/05stated in year 2004/05
Implementation planned in phases (1, 2, 3 & 4)Implementation planned in phases (1, 2, 3 & 4)
Initial support of approx. USD 4.74M provided by Initial support of approx. USD 4.74M provided by development partners (DFID, SIDA,WB)development partners (DFID, SIDA,WB)
A Project Management Unit under AGD initially A Project Management Unit under AGD initially responsible for the implementationresponsible for the implementation
180180
Operational ModulesOperational Modules
Hyperion
A/P
A/R
Assets
CashMgmt
PSB
G/L
P/O
Grants
HRMS
Projects
= Operational Modules
Retail
Tutor
Financial
AnalyzerManufacturing
181181
b) Experiences:b) Experiences: Has taken long for users buy in (fear/change/ Has taken long for users buy in (fear/change/
transparency)transparency)
Offers good control for management of financial Offers good control for management of financial resourcesresources
Legacy systems trusted by users more Legacy systems trusted by users more –– leading to leading to incomplete transactions in IFMISincomplete transactions in IFMIS
Initial Consultants found it difficult to customize some Initial Consultants found it difficult to customize some of the reportsof the reports
182182
Experiences:Experiences: Challenge in the IFMIS operations even after Challenge in the IFMIS operations even after
training due to lack of bespoke manuals training due to lack of bespoke manuals ––only generic manuals availableonly generic manuals available
Roll out initially hampered by inadequate Roll out initially hampered by inadequate infrastructure infrastructure –– this has been addressesthis has been addresses
IFMIS provides the necessary transparency IFMIS provides the necessary transparency –– role based, responsibilities, functions, role based, responsibilities, functions, segregation of dutiessegregation of duties
183183
c)c) ReportingReporting
IFMIS provides adequate and accurate IFMIS provides adequate and accurate reporting base on:reporting base on:--
-- Complete transactionsComplete transactions
-- Complete dataComplete data
-- Appropriate skillsAppropriate skills
184184
Perceived notion that IFMIS = AccountsPerceived notion that IFMIS = Accounts Lack of ownership of respective modules to drive the Lack of ownership of respective modules to drive the
implementation implementation –– Getting buy inGetting buy in Lack of a large pool of well trained users in the Lack of a large pool of well trained users in the
Ministries/DepartmentsMinistries/Departments Few trained officers in the Business and Technical Few trained officers in the Business and Technical
Teams supporting IFMISTeams supporting IFMIS Retention of trained staff Retention of trained staff –– business and technicalbusiness and technical Inadequate detailed training (Apps and DB)Inadequate detailed training (Apps and DB) Lack of adequate ICT infrastructure Lack of adequate ICT infrastructure Resistance to change Resistance to change -- Change ManagementChange Management
d)d) ChallengesChallenges
185185
e)e) Adequacy of the IFMIS SystemAdequacy of the IFMIS System
TransparencyTransparency
AccountabilityAccountability
SecuritySecurity
Timely and quality reportsTimely and quality reports
LogsLogs
186186
f)f) AuditingAuditing
Produced the first accounts through IFMIS Produced the first accounts through IFMIS for 2008/09for 2008/09-- Previously IFMIS was not rolled to all Previously IFMIS was not rolled to all
MinistriesMinistries
-- Resistance to change Resistance to change –– use of legacy use of legacy systemssystems
District data uploaded using desktop District data uploaded using desktop interfaceinterface
187187
f)f) Other ConcernsOther Concerns
Technical expertiseTechnical expertise
Licensing regimeLicensing regime
Resource availabilityResource availability
Retention of trained staffRetention of trained staff
188188
WAY FORWARDWAY FORWARD Implementation of other modules Implementation of other modules –– Budget, Budget,
A/R, Assets, CMA/R, Assets, CM
Integration with Pensions, CSIntegration with Pensions, CS--DRMS, IPPDDRMS, IPPD
Roll out to the districtsRoll out to the districts
189189
END OF PRESENTATIONEND OF PRESENTATION
THANK YOU ALLTHANK YOU ALL