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.


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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


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).


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1111

IFMIS implementation is a complex process.


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IFMIS implementation is a complex process.

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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


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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.


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

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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

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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

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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

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Where should the IFMIS Department be located?

Key Issue 1

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What is an appropriate organizational structure for the IFMISDepartment ?

Key Issue 2

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Is there need to share good practices in project implementation structure?

Key Issue 3

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Have business processes fit the IFMIS or is it the other way around?

Key Issue 4

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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

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Are there plans for incorporating the budget module into the IFMIS?

Key Issue 5

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Has the prolifaration of systems abated?

Key Issue 6

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Has the IFMIS resulted in reduced reporting requirements?

Key Issue 7

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How well has the IFMIS impacted the CoA?

Key Issue 8

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Is there a roadmap for strengthening core functionality?

Key Issue 9

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Do bespoke solutions need greater consideration in the region?

Key Issue 10

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Is the Local Government IFMIS implementation receiving the attention it deserves?

Key Issue 11

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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

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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

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Are funds flowing smoothly with adequate accountability?

Key Issue 14

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Is there an effective HR Sustainability Strategy in place?

Key Issue 15

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Is the training strategy adequate and effective?

Key Issue 16

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Is the vendor managing you or are you managing the vendor?

Key Issue 17

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Is the change management process working?

Key Issue 18

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Were connectivity expectations realistic?

Key Issue 19

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Is there need to keep a focus on manual accounting systems?

Key Issue 20

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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.

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Thank You

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““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

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Topics

1. Context and concepts2. Drivers3. CoA framework4. Strategies for design and

implementation 5. Conclusion

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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.

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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

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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

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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 …..”

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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

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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.

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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.

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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)

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Organisation Segment Example

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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

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Fund code example

TSA: Ledger Bank Accounts

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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

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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

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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

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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.

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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

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Revenue object code example

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Expenditure object code example

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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

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State/ Province

Where? - Location Segment

LGA/Districts

Chiefdoms

Wards/ Parish

Federal (for aggregation)

Level of decentralizationLink with statistics geo codesPolitical accountability

Geo-political Zones

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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

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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

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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”

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THANK YOU!

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Development and Management Life Cycle

Key Success Factors

Gert van der LindeAFTFM, World Bank

72

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Change Management

74

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HR & Capacity Building

75

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Application Solution

76

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Infrastructure

77

7878

Project Management

78

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Other matters

79

8080

Post Implementation Support

80

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What are key challenges?

81

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Will an IFMIS alone improve PFM?

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8484Ali Hashim, AFE/IMF - World Bank 84

Ali HashimConsultant - Treasury

Systems Mombassa, Kenya

February 2010

3/4/2010

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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

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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

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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

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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

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– 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


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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

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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

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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

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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

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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


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Debt Management - Calculation of debt servicing liability

Revenue Administration –Assessment of Customs Duties and Taxes

Auditing – Use IFMIS data bases for auditing


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– 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



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




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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


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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

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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



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


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


TSA

SpendingUnit

3/4/2010


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


TSA

SpendingUnit

Central BankBranch/ FiscalAgent whereTSA is held

3/4/2010

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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


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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)


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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

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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

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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

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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

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– 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

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– 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


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


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


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


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


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



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


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


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



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


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



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


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


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



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


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


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


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


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


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


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.


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


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


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



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


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


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


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



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