P U B L I C S E R V I C E S FINANCIAL MANAGEMENT INFORMATION SYSTEMS: ESSENTIAL TOOLS FOR...

P U B L I C S E R V I C E S

FINANCIAL MANAGEMENT INFORMATION SYSTEMS: ESSENTIAL TOOLS FOR GOVERNMENTS EVERYWHERE

PRESENTED BY

MICHAEL VLAISAVLJEVICHMANAGING DIRECTOR - BARENTS GROUP

TO THE

INTERNATIONAL CONSORTIUM OF GOVERNMENTAL FINANCIAL MANAGEMENT

APRIL 2, 2003


MICHAEL VLAISAVLJEVICHMANAGING DIRECTOR

BARENTS GROUP

1676 International Drive, Suite 7275McLean, Virginia 22102

E-mail: [email protected]: www.bearingpoint.com

Phone: 703.747.3234 Fax: 703.747.3813


FMIS

Technology enables reform

Critical tool for proper expenditure control

Processes all transactions

Records and accounts revenues and expenditures

Essential for transparency and accountability


FMIS PACKAGES ARE FEASIBLE NOW

Packages have been tested and implemented in countries at all levels of development

Tailored to the processes of the government sector

Project budgets should be carefully matched to project scope and size

Capable client project management is a key to success


KAZAKHSTAN TREASURY MODERNIZATION PROJECT


PROJECT FUNDED BY WORLD BANK

To assist the government in strengthening the budget execution system by:

Supporting the establishment of computerized treasury system Training of personnel

Overall aim is to enhance the capacity of the government for: Effective use of cash resources Monitoring budget execution Production of timely and accurate financial information


PHASED APPROACH

BearingPoint was selected to assist the government of Kazakhstan to manage the Project

Designed the Project for implementation through Phased Approach

Phase 1 - Development of a functional design for the Treasury system

Phase 2 - Development of computerized Treasury system and

testing at pilot sites

Phase 3 - Replication of the system throughout the country


PROJECT DESIGN

Treasury Ledger – Focal point of the government financial management

Commitment Accounting – Essential tool for expenditure control

Accounts Payable – Mechanism for paying government expenditures in

coordination with Commitment System

Revenue Management – Captures all sources of revenues for

consolidation

Payroll – Regional system for paying government employees

Cash Management – System for reconciliation of Treasury Single

Account and managing cash resources

Asset Management – System to register all government assets in broad

categories


PHASE 1

Prepared a functional design for the new Treasury system and developed related procedures and manuals

Assisted the government in establishing the new budget classification system based on IMR GFS classifications

Established Standard Chart of Accounts

Assisted the government to upgrade the in-house technical capacity

Trained Treasury personnel on the new Treasury system and procedures

Developed hardware and software specifications for the technology platform required to set up the Treasury information system

Developed hardware and software specifications for the technology platform required to set up the Treasury information system

Assisted the government in the procurement of the required HW and SW • Preparation of RFP• Tendering• Evaluation of Proposals and selection of the most preferred bidder• Contracting


PHASE 2: BEARINGPOINT MANAGED

HP/ORACLE Implemented: Treasury Ledger Commitment Accounting Accounts Payable Revenue Management Cash Management Asset Management

Using the standard features of ORACLE Financials

No customization of functionality; Developed few custom reports

The government decided to put Payroll implementation on hold


IMPLEMENTATION

Developed detailed functional specifications for individual modules of the Treasury system

Performed as technical advisor to the government of Kazakhstan on hardware, software, training and project management areas

Provided technical advice to ORACLE team in mapping the Kazakhstan Treasury requirements with the features of ORACLE applications

Assisted in the development of training program and materials

Performed as medium between the contractor and the government of Kazakhstan in dealing with the day-to-day matters relating to the project

Assisted in pilot-testing the system at Central Treasury, 2 ministries, 2 oblast treasury offices and 20 rayon treasury offices


PHASE 3: SYSTEM REPLICATION THROUGHOUTTHE COUNTRY

The involvement of BearingPoint completed after successful testing of the system at pilot sites

The government of Kazakhstan, HW Supplier Hewlett Packard and SW Supplier ORACLE performed the system roll-out to the remaining oblasts and ministries


GENERAL REMARKS ABOUT THE PROJECT

The first Treasury Reform project in the former USSR that successfully implemented a government accounting system using off-the-shelf package

The first project of its kind in the region that systematically implemented Treasury Single Account in conjunction with a treasury system


NATION BUILDING: RAPID PUBLIC SECTOR FINANCIAL SYSTEMS

IMPLEMENTATION IN WAR TORN KOSOVO


THE MANDATE: SECURITY COUNCIL RESOLUTION 1244

Establish in Kosovo an interim Civilian Administration with: Legislative and Executive powers Administration of the Judiciary

Promote the establishment of substantial autonomy and self-government


THE CHALLENGE FOR FINANCIAL MANAGEMENT

Build a Financial Management process and system from nothing No laws or regulations No people or infrastructure No banking system

Protect the integrity of the revenue raising and expenditure process Issue of donor confidence


GOOD GOVERNANCE

Clarity of roles and responsibilities of levels of government and public entities

Open decision processes particularly for budget preparation, execution, and reporting

Public availability of information

Independent assurances of integrity through external audit

Source: IMF Code of Good Practices on Fiscal Transparency


CENTRAL FISCAL AUTHORITY

Manage the Kosovo Consolidated Budget (KCB) consisting of:

General government Municipalities Public enterprises

Formulate overall fiscal strategy based on sustainability

Develop revenue and expenditure policies

Develop revenue raising programs

Determine procurement framework

Conduct internal audit

Manage the Kosovo Consolidated Fund

Responsible for financial reporting


CENTRAL FISCAL AUTHORITY ORGANIZATIONAL CHART

KosovarCo-Head

InternationalCo-Head

Macroeconomicand Budget Policy

Unit

Interim Head

Internal Audit Unit

Treasury

Interim Head

TreasuryOperations

Accounting andFinancial Reporting

RegionalOperations

Budget Office

Interim Head

Tax Administration

Interim Head

Customs Service

Interim Director-General

Public ProcurementRegulatory Body

Interim Head

Cash Managementand

Control

GeneralGovernment

Health and SocialWelfare

Public Safety

Transport-Economic

Education

Budget Co-ordination and

Operations

Operations

Programs

InformationManagement

ProcurementInstructions and

Documents

Publication

Monitoring andMediation

TechnicalAssistance and

Training

Director ofCustoms

AssistantDirector

AssistantDirector

Corporate ServicesGroup

Services andSupport

I nformatics, Standardsand Communications

Interim Head

Development

Policy andStandards


TREASURY OPERATIONS

Expenditure and revenue controls

Banking arrangements Banking and payment authority of Kosovo (BPK) Commerzbank – Frankfurt Micro Enterprise Bank – Pristina

Instruct agencies Funds management Accounting for expenditures and revenues


IT SYSTEM DEVELOPMENT AND SUPPORT

Services andSupport

Informatics, Standardsand Communications

Interim Head

Development

Policy andStandards

Key Issues

•Develop System to meetKosovo requirements

•Simple Maintenance


IT SYSTEM DEVELOPMENT AND SUPPORT

Accounting application specifications Meet sound internal expenditure control procedures Provide management reporting for accountability Satisfy international reporting requirements under GFS

Complex mix relating to donations for budget funding and reconstruction project financing

Expandable to cover requirements of lower tiers of government

FreeBalance system implemented


AFGHANISTAN GOVERNMENT TREASURY SYSTEM


FINANCIAL MANAGEMENT AGENT

PROJECT LAUNCHED AUGUST 22, 2002

To immediately develop a centralized expenditure recording, payment processing and reporting system for budget expenditures

A full computerized accounting system for expenditures and revenues and financial reporting for the government


RAPID RESULTS

Reviewed processes

Developed chart of accounts

Redesigned forms

Determined reporting requirements

Computerized the current manual system tracking using the facilities of FreeBalance accounting package

Commenced live operations October 23, 2002


FUNCTIONS OF THE SYSTEM

Check expenditure data for payment

Print checks

Update treasury ledger

Maintain banking information

Maintain complete expenditure data of central agencies

Maintain payroll expenditure data of provinces


STANDARD CHART OF ACCOUNTS

Source of funds General budget Designated grants

Organization

Location

Economic classification


REPORTING

Expenditure reports of central agencies General budget Donor grant

Reports by source of funding

Reports by ministry/organization

Reports by location

Reports by economic classification

Reports by individual payments


TRAINING AND LOCALIZATION EFFORTS

Basic computer skills training

FreeBalance package training Applications System administration Technical

On-going support from software vendor

Daily operations performed by local staff


PLAN FISCAL YEAR 1382 (DARI CALENDAR)

Budget management

New chart of accounts for enhanced reporting – GFS compliant

Complete revenue and expenditure information

Explore possibilities for system extension to provinces

Provincial budget execution information

System interface in Dari

Reorganization of treasury bank accounts

Suitable payroll system


HOW BARENTS GROUP OPERATES

Leading provider of financial management services in countries in transition

400 professionals based in more than 65 countries around the world

Extensive experience in systems implementation around the world

Emphasis on knowledge transfer and collaboration with government clients as partners

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