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Integrated Financial Management Information Systems (IFMIS)

Chitundu N MwangoAccountant General

Ministry of Finance and National PlanningLusaka, Zambia

Telephone 260 (1) 251471Email: {cnmwango@zamtel.zm}

Presentation of Zambian IFMIS

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• The Government has been implementing the Public Service Reform Programme (PSRP) from 1993. The aim of the PSRP is to improve the quality, efficiency

and effectiveness of Public Service delivery. • In 1999 a concern arose as to whether the

measures taken under the PSRP framework had resulted in improved performance. It was acknowledged then that these measures had not

led to tangible improvements in the delivery of public services.

• Therefore, Public Service Capacity Building Project (PSCAP) was designed to support the implementation of the Public Service Reform Programme. PSCAP is financed by the World Bank and managed at

Cabinet Office One of the PSCAP component was the “Financial

Management, Accountability and Transparency” IFMIS is a project within the “Financial Management,

Accountability and Transparency” component

Background

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• In 2000 a local consulting firm was engaged for 6 months and produced the IFMIS roadmap

• In 2001 a local short term consultant was recruited to initiate the implementation of IFMIS Assisted in recruiting Project Manager, Manager IT and

Manager Accounting. Other Managers (Budget, Audit, Debt, Training)

identified by roadmap were not recruited due to lack of funds

Initiated the process of engaging a consulting firm to analyse and design IFMIS

• Government seconded one principal accountant and three principal analysts to the Project team but did not stay because of lack of incentives

Background

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IFMIS Design

• In 2002 Government issued a tender for a long term consultant to analyze and design IFMIS However the tender for the long term consultant was

annulled (cancelled) because of disagreement between the Government and Bank on the procurement process

• An IFMIS advisor was recruited through Bank but was based in Washington and Government terminated the contract

• Government decided to use the local IFMIS Project team to analyze and design IFMIS This saved Government about $1million

• The Project team undertook a comprehensive assessment of user requirements and conducted IFMIS sensitization workshops

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IFMIS Design

• The local team designed the IFMIS chart of accounts which took into consideration the GFS and IPSAS

• Produced the IFMIS assessment report, Requirements Specification, and Chart of Accounts as part of IFMIS design

• Undertook study tours of IFMIS implementation in Tanzania and Uganda

• Initiated a tender for installation and implementation of IFMIS using the World Bank procurement guidelines

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• Zambian IFMIS will be implemented in three phases

• Phase 1 (Pilot Implementation – 8 months)– A total of 3 Ministries and 2 Provinces will be hooked to

the Data Centre (Accountant General). – Interface with Bank of Zambia and Zambia Revenue

Authority for the Treasury Operations.– The pilot sites are:

» Ministry of Finance and National Planning, Lusaka» Ministry of Education, Lusaka.» Ministry of Works and Supply, Lusaka» North-Western Province, Solwezi» Eastern Province, Chipata

• Phase 2 (Rollout Implementation – 20 months)– 41 Ministries, Provinces and Spending Agencies will be

hooked to Data Centre• Phase 3 (Interface Implementation – 6 months)

– Local authorities, parastatals will interface with Data Centre

Implementation Plan

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IFMISIFMIS

OTHERMINISTRIES/ COST CENTERS

IFMISIFMIS

MINISTRY OF FINANCE

Integrated Financial Management Information System (IFMIS)

Other Government Information Systems

Human Resource Management

Cash/ DebtManagement

Accounts PayablePhysical Resource Management

Revenue ManagementAccountsReceivable

Tax Collection and Management

Asset Management

Inventory Management

Project Accounting

Personnel Payroll

Government Business EnterprisesGovernment Business EnterprisesInformation SystemsInformation Systems

ManufacturingCompanies

OtherEnterprises

Financial Institutions

Financial Management Information

(Consolidated Reporting)

BudgetControl

FinancialManagement Information

Budget Preparation

BudgetPreparation

LEGEND

System Interfaces/Full Integration with IFMISIFMIS Module Full Integration

IFMIS On-line Access

Purchasing Purchasing

General Ledger and

Budget Control

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Status on IFMIS tender• Prepared two bidding documents (pre-

qualification and IFMIS main bid)• Pre-qualification bid documents were issued

in Jul 2003 and (19) applicants were received.

• Initially 4 firms were pre-qualified but later increased to 7 firms and main bid documents were issued to 7 firm in Dec 2004

• Only 3 bids were received and after evaluation undertook post-qualification assessment of the lowest evaluated bidder in Jun 2004

• Pre-contract negotiation held in Aug/Sep 2004 and requested for no objection from the World Bank to sign contract

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• Developed the Activity Based Budgeting (ABB) software and MTEF in 2003 and implemented in 2004Parts of the IFMIS chart of accounts adopted in

the ABB and FMS• Upgraded the FMS and commitment

control system using the local team (the system was appreciated by IMF and IDA)

• Implemented the Payroll Management and Establishment Control (PMEC) system using SAP to efficiently manage and control public service payroll

• Currently piloting CAATS in two ministries

Progress/Achievements – Systems and Infrastructure

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• Developed and implemented a Static Arrears database in June 2003 (saved $90,000)

• Developed and implemented an Asset register for moveable assets in line ministries which will be an input to the IFMIS assets module

• Currently upgrading the LAN at MOFNP compatible to IFMIS

• Currently completing the preparation of the five (5) IFMIS pilot sites

Progress/Achievements – Systems and Infrastructure

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• 400 Accountants trained in FMS and CCS• 50+ Procurement Officers trained in Commitment

Control System • 12 Persons trained in Prince2 project

management• 120+ internal auditors and Auditor General staff

trained in Computer Aided Audit Techniques (CAATs)

• Sensitized members of Parliament (Public Accounts Committee and Estimates Committee), Permanent Secretaries, Directors in Ministries, accountants and auditors in IFMIS

• Salary officers in all line ministries trained in PMEC systems

• Developed an in-service syllabus (including IFMIS) in Government accounts for accountants, auditors and non-accounting staff

Progress/Achievements – Training & Change mgt

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• Revised the Finance Act (currently being debated by parliament)

• Constituted the PEMFAR steering committee to provide policy guidance to the IFMIS project (with representation from Zambia National Tender Board, Auditor General, Bank of Zambia, Revenue Authority, Clerk of National Assembly)

• Formed six (6) IFMIS implementation working groups to facilitate stakeholder involvement in IFMIS implementation and ensure sustainability after the project ends

• Internet Connection to commercial banks to download the bank statements

Progress/Achievements – Other initiatives

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• Improved cash monitoring through internet connection to the banks

• Bank reconciliation on time due interface with banks

• Timely production of financial reports (the 2003 financial report is being printed)

• Production of monthly expenditure returns by Ministries, Provinces and Spending Agencies within 15 days

• Eliminate ghost workers and other irregularities by linking (matching) establishment to the payroll

Benefits of interim measures

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• In 2003 Government and the World Bank completed the Public Expenditure Management and Financial Accountability Review (PEMFAR) which is a diagnostics tool

• Comprehensive Integrated ReformFocus on inter-linkages ensures appropriate

sequencing and timingEntire public expenditure management

procedure chains reformed• Table on next slide summarises the 12

components identified within the Government Strategy Document.

Way Forward - PEMFA Programme

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Way Forward - PEMFA Programme1 Accounting and IFMIS implementation(MFNP, OAG)

Goal: To improve public expenditure management through an integrated and automated financial management system in order to ensure efficient and effective utilisation of public resources.

2 Improved Fiscal Policy and Economic Planning (MFNP, Planning)

Goal: To ensure macro-economic stability and attain a policy based planning and budgetary process capable of facilitating the effective mobilization and allocation of resources in a systematic, effective, efficient and predictable manner.

3 Reformed Budget Preparation (MFNP, Budget)

Goal: To establish a credible budgeting process and a transparent and clear presentation of the budget document.

4 Improved budget execution (MFNP, OAG, Budget)

Goal: To implement the budget in a more efficient and predictable fashion and reduce variance between budget and actual spending.

5 Improved Debt Management (MFNP, Investment and Debt)

Goal: To manage Zambia’s debt, both Domestic and External to sustainable levels and effectively manage Government Investments.

6 Improved Internal Audit (MFNP,Internal Audit)

Goal: To strengthen internal controls throughout the public sector for improved public expenditure management and financial accountability.

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Way Forward - PEMFA Programme7 Better External

Finance Coordination (MFNP, ETC)

Goal: Improve overall budgetary planning and coordination of external financing by integrating donor flows into budget.

8 Consistent Legal Framework for PEM (MFNP and MOLA)

Goal: To have a consistent and harmonised legal framework ton support transparency and accountability in the Public Sector

9 Strengthened External Audit (Auditor General)

Goal: Enhance external auditing function for improved accountability and transparency in the utilization of public resources.

10 Enhancing Parliamentary Oversight (Parliament Clerk)

Goal: To develop the capacity of the Parliament to play its oversight role in public resources management in order to promote accountability, transparency and a culture of democratic governance,

11 Accountancy Training and Regulation (ZICA)

Goal: To strengthen the accountancy profession and to provide effective regulatory services in order to promote high professional and ethical standards

12 Public Procurement Reform

Goal: To promote and institutionalise a transparent, accountable and efficient public procurement system in order to improve expenditure management

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• The IFMIS procurement procedures are too long, for example it has taken about 20 months to procure the IFMIS system

• Delays in obtaining no objections and approvals from stakeholders

• Pressure from strong stakeholders causes delays and selection of suppliers who may not deliver, eg increasing the pre-qualified firms

• Conflict between procurement procedures and standard Information Systems development procedures For example, procurement procedure did not allow all

pre-qualified firms to demonstrate their solution to Government before making final selection

Challenges/Lesson Learnt –Procurement issues

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• IFMIS as a HIPC Benchmark helped to sensitizes stakeholders on importance of IFMIS and secured political will

• Puts pressure on Governments to rush the implementation of IFMIS

Challenges/Lesson Learnt – HIPC Benchmark

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• Shortage of equipment and lack of connectivity (LAN) delayed the pace of implementing the retooled FMS and CCS

• IFMIS costs are huge (US$24million) and difficult to find partners who are willing to finance

• Financing arrangement of IFMIS project through third party delayed implementation

• Justification of IFMIS in view of competing social needs such as education, health and development projects

• Continued support by cooperating partners is not easy to maintain

Challenges/Lesson Learnt – Financing issues

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• User resistance and other important stakeholders not participating

• Change management issues• Power and politics as to who is the

IFMIS Champion• Retention of core team to implement

the IFMIS and the issue of incentives for civil servants

Challenges/Lesson Learnt – Human issues

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Conclusion• Although the IFMIS main contract has not

yet been signed with the Supplier due to lengthy procurement procedures, Government has made a number of significant achievement in public financial management and preparing for full implementation of IFMIS

• Experience acquired from development and implementation of ABB, FMS and CCS as well as study tours will help Government in the implementation of IFMIS

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Conclusion

• Thank You

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Development of FMSFEATURES/COMPONENTS

OLD FMS NEW FMS V1

NEW FMS V2

Year of Implementation 1995 2002 2004

Software COBOL MS-Access MS-Access

Budget Management Funding Management Commitment and Arrears

Excel

Expenditure Management centralized

centralized

Automation of the printing of the Payment Voucher

Activity Based Budget Peer to peer network

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Development of FMS – Major Reports

Type of Report OLD FMS

NEW FMS V1

NEW FMS V2

1 Listing by Document type

centralized

decentralized

decentralized

2 Monthly Expenditure Returns

centralized

decentralized

decentralized

3 Statement C (financial statement)

Annual only

monthly/ annually

4 Vote Book