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IFMIS in Africa: Some Key Issues

Parminder Brar Lead Financial Management Specialist World Bank pbrar@worldbank.org

World Bank / East Afritac Conference on IFMIS Mombasa February 15, 2010

Overview
1. 2. 3. 4.

Background Analytics Key Issues Next Steps

Background: WB Portfolio, 2009

The World Bank is supporting IFMIS projects across Sub Saharan Africa. Large diversity in clients and solutions.

Background: PEFA Ratings

PFM systems are improving.

Background: PFM Reform Programs

IFMIS is a core component of almost all PFM Reform Programs in Africa.

IFMIS Cross Country Experiences

IFMIS is a core component of almost all PFM Reform Programs in Africa.

Background: PFM Reform Programs

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. 7

Background: PFM Reform Programs

IFMIS implementations raise high expectations.


Sophisticated IT system Budgetary controls Cash Management Improved VFM International Standards of Reporting Transition to Accrual Accounting Audit compliance Program Budgeting Accountable Governance MDGs

Background: PFM Reform Programs

When expectations are not met, IFMIS is the target.

Source: Survey of District Treasurars in Tanzania on their biggest constraints - 66 responses (August 2009).

Background: PFM Reform Programs

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Background: PFM Reform Programs

IFMIS implementation is a complex process.

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Background: PFM Reform Programs

IFMIS implementation is a complex process.

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Background: PFM Reform Programs


Effectiveness

Implementation
System development & integration Full scale testing and rollout Training and change management

Maintenance and Support


Budget funds Technical capacity System administration Maintenance

Procurement
Large scale ICT systems Technical Assistance and Training

18 36 months

Time

PFMS Design
Definition of system functionality Detailed technical requirements

9 18 months Monitoring & Evaluation


Monitoring mechanisms Project mgmt capacity

Preparation
Legal and institutional frameworks Budget coverage Treasury Single Account (TSA)

2
9 18 months

Readiness
PFM reform strategy Institutional capacity Countrywide network infrastructure

Maturity Model for IFMIS projects


www.pempal.org/pfmstool

Resources
World Bank (2006), Maturity Framework for Treasury / PFM System Development at www.pempal.org

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Background: PFM Reform Programs


Integrated PFMS Development : years 1. Identify PFM reform needs Assess existing capacity & practices Develop PFM Reform Strategy (if N/A) Advisory support for PFM reforms Conceptual Design Coordination with donors / other projects Assistance in PFM capacity building 2. Develop necessary solutions Assess existing ICT skills and resources Develop ICT/e-Gov Strategy (if N/A) System Design Technical Specifications [ ICB docs ] Coordination with e-Gov / other ICT prj Assistance in technical capacity building 3. Project management Project Management Group (PMG) Administration of Trust Funds (if any) Procurement of ICT solutions [ ICB ] Establishment of a countrywide network System implementation, test, acceptance Monitoring & Evaluation Capacity building & Change Management Approval Implementation PFMS take off
Warranty

10

Preparation

Fly Solo
Support and Maintenance 14

Source: World Bank, 2007, Presentation by CEM Der, May 2007.

Analytics

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.
World Bank (2002), Design and implementation of Financial Management Systems : An African Perspective.

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Analytics
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) Dont fall in love with IT (ii) Think small.

World Bank (2002), Design and implementation of Financial Management Systems : An African Perspective.

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Analytics
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
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Source: World Bank, 2003, Presentation by Bill Dorotinsky, 2003

Analytics

As per Bank staff major challenges were:


Failure Factors Lack of commitment Ineffective project coordination Loose project design Institutional/organizational resistance Lack of capacity Inappropriate choice of technology Lack of support by ext. stakeholders Overly complex project design Lack of proper skills in project team Other factors Total Frequency 23.33% 23.33% 10.00% 10.00% 6.67% 6.67% 6.67% 3.33% 3.33% 6.67% 100.00%

1 2 3 4 5 6 7 8 9 10

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Source: World Bank, 2003, Presentation by Bill Dorotinsky, 2003

Analytics

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

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Analytics

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Analytics

2007: WB and IMF study listed critical success factors:


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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Key Issue 1

Where should the IFMIS Department be located?

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Key Issue 2

What is an appropriate organizational structure for the IFMIS Department ?

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Key Issue 3

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

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Key Issue 4

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

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Key Issue 4

Has IFMIS really changed work processes?


Ten years after the IFMIS, 15 steps are still required for making a payment (MoH study 2008):
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Following a request from a line department, PMU prepares request for LPO Director / Department head signs off on request for LPO Permanent Secretary signs off on request for LPO (if amount exceeds LC 1 million) Accounts Department enters the purchase into the (manual) vote book Request for LPO is sent to the Chief Internal Auditor (CIA) for examination Request is sent to the machine room and entered into the IFMS The LPO is generated LPO is sent to PMU for signatures LPO is sent to CIA (examination) for signature LPO is sent to Chief Accountant for signature PMU delivers the LPO to the supplier Upon delivery of goods or services, a delivery notice and invoice are submitted to PMU The invoice with supporting documentation is passed on to Chief Accountant The payment request is entered into the IFMS by the machine room The check is printed by the Treasury (Accountant General) and provided to the supplies by PMU 26

Key Issue 5

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

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Key Issue 6

Has the prolifaration of systems abated?

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Key Issue 7

Has the IFMIS resulted in reduced reporting requirements?

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Key Issue 8

How well has the IFMIS impacted the CoA?

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Key Issue 9

Is there a roadmap for strengthening core functionality?

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Key Issue 10

Do bespoke solutions need greater consideration in the region?

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Key Issue 11

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

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Key Issue 12

Is there a hardware replacement plan in place? Are we on the same page regarding the causes for degradation of hardware performance?

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Key Issue 13

Is adequate attention being paid to revenue automation?


Vote 28 29 34 37 41 46 48 49 51 52 58 64 96 93 94 98 98 98 99 Ministry/Department Public Security and Safety Home Affairs & Prison Services Foreign Affairs PMO - Government Printer Justice - Adm Gen Educational & Vocational Training Lands Water Home Affairs Health Energy & Minerals Commercial Court Natural Resources Immigration Services Information, Culture & Sports Infrastructure -Gvt Stores Infrastructure TAA Infrastructure Polic y & Planning Livestock Development Retention %ge 60 60 100 70 85 100 67 70 33 100 25 50 Various 52 90 85 100 50 75

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Key Issue 14

Are funds flowing smoothly with adequate accountability?

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Key Issue 15

Is there an effective HR Sustainability Strategy in place?

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Key Issue 16

Is the training strategy adequate and effective?

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Key Issue 17

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

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Key Issue 18

Is the change management process working?

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Key Issue 19

Were connectivity expectations realistic?

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Key Issue 20

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

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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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East AFRITAC (IMF) and World Bank Africa Regional Workshop on Integrated Financial Management Systems February 15-17, 2010 Serena Hotel, Mombasa, Kenya

GFMIS and Chart of Accounts Concepts and Strategies: Getting the accounting structure right before going full steam ahead
Presented by

Winston P O Cole
Sr. Financial Management Specialist World Bank, Nigeria Country Office

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Topics
1. 2. 3. 4. 5.

Context and concepts Drivers CoA framework Strategies for design and implementation 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 The ACCCOUNTING STRUCTURE provides a systematic means of probity in the use analyzing of budget and financial recording, reporting and of public funds.
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transactions to provide timely and relevant information for effective decision making and accountability.

Coding Concepts
Common classification for budget and account Same size of codes within segment Unique codes per description Flexibility for expansion

Elements
Side Tables for non-core issues
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CoA drivers
Country 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 49 budget documentation: 9 elements

Legal Framework
Ghana 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 Sierra Leone GBAA, 2005 accordance with the Government of Ghana Budget Classification or Structure of appropriations 25. (1): The expenditure classification shall Chart of Accounts. 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) (b)

Providing information about the sources, allocation and uses of financial resources; Providing information about how the entity financed its activities and met its cash requirements; Providing information that is useful in evaluating the entitys ability to finance its activities and to meet its liabilities and commitments; Providing information about the financial condition of the entity and changes in it; and

(c)

(d)

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CoA enables presentation of Financial Statements


A 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 Ghana FAR, 2004:policies Accounts 186.to the financial (e) Accounting Basis of and notes The Public Accounts and other government accounts shall generally be prepared on statements.
Accrual basis except that the specific basis and procedures for preparing the accounts shall be determined by the Controller and Accountant-General.

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CHART OF ACCOUNTS (COA)


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.

Authority

Who

Purpose

Where

What

Organization

Fund

Program/ Project

Location

Object

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Authority: Organization Segment


GFS: General Government Central Govt. State Govt. Local Govt.
Sector (1) ORG MDA s (2) SUB-ORG Division / Departments (5)

IPSAS 6: 26-36 Controlling Entity


Organization Type (1)
Ministry Parastatal Commission Agency

Sub-Sector (2)

GFS Function 1 (3)

SUB-SUB-ORG Section / Cost Center (8) Sub-Sub-Sub Org Unit (10)

GFS Function 2 (4)

GFS Function 3 (5)

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Organisation Segment Example

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Who? - Fund Segment GFS: General Government IPSAS 6:Controlling Entity PI-7: Extent of unreported government operations PI-8 Transparency of InterGovernmental Fiscal Relations D-2 Financial information provided by donors for budgeting and reporting on project and program aid
Source Type (CF, Grant, Loan, Councils)

All Funds
(Consolidated, Councils, Donors)

General Government
(Consolidated & Councils, Donors)

Donor Type
Bilateral, Multilaterals Or Loans. Grants

Fund Table
(Consolidated, Departmental, Councils, Donors)

Donor Table

Source group (CF, WB1 (Local+Frgn), Councils)

Fund Source Table


(CF,CF-MDA1, WB1-Local, WB1-Foreign, Council 1)

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Fund code example


TSA: Ledger Bank Accounts

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Purpose: Program / Project Segment: Planning & Strategic Allocation


Donor Practices D-1&2
MDGs (1) Targets (2) Indicator (5) Goals (2) Priority (1)
High Medium Low

PRS Pillars

Project Type

UN-COFOG
GFS Function 1 (3)

PRS Objectives

Project
(NA, Projects, WB1, EU1 etc. )

Component

GFS Function 2 (4)

Intervention Group (3) Activity Group (3)

PRS interventions/ Sub-Component GFS Function 3 (5)

Activities

Other systems EMIS / HMIS Milestones / KPIs / Outputs

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UN classification of Functions of Government (UN-COFOG)


Derived from organisation or activity
701 702 703 704 705 706 707 708

amenities

General public services Defense Public order and safety Economic affairs Environmental protection Housing and community Health Recreation, culture, and
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religion

PI-5 Classification of the budget - The budget formulation and execution is based on administrative, economic and sub-functional classification, using GFS/COFOG

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.

Sub-functions

7091

Education: Pre-primary and primary education


70911 - Pre-primary education 70912 P i d ti
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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. 61

What? - Object Segment: economic classification


Account Type Table Main Category Table GFS L1

GFS economic classification IPSAS :19 Components of Financial Statements PI-6 Comprehensiveness of information included in budget documentation Accrual vs. Cash

Category Table

GFS L2

Sub-Category Table

GFS L3

Item Group (2)


-IT, Sales Tax, -Personnel, Other Rec. - Capital

Object Type
(Revenue, Recurrent, Development) (1)

GFS L4

Object Sub -Type Object Group


(Revenue, Recurrent, Capital, Development) (2)

GFS L5

Object Code

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Revenue object code example

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Expenditure object code example

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Element Code GFS L2 00 XX 11 12 13 14 21 22 23 24 25 26 27 28

Element Description NOT APPLICABLE Balance Sheet Taxes Social contributions Grants received Other revenue Compensation of employees Use of goods and services Consumption of fixed capital Interest Subsidies Grants paid Social benefits Other expense

CoA elements 120101 Personal income tax 210101 Basic Salary

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Use of country systems

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Where? - Location Segment


Level of decentralization Link with statistics geo codes Political accountability
Federal

(for aggregation)

Geo-political Zones

State/ Province LGA/Districts Chiefdoms

Wards/ Parish
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Location code example


Locations Southern Province Pujehun District Barri Barri I Barri II Barri III Gallinas Perri Gallinas Perri I Gallinas Perri II Gallinas Perri III Provinc e 3 3 3 3 3 3 3 3 3 3 District 30 34 34 34 34 34 34 34 34 34

Chiefdo m 3000 3400 3401 3401 3401 3401 3402 3402 3402 3402

Ward 30000 34000 34010 34011 34012 34013 34020 34021 34022 34023
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Strategies for design and implementation Design


Requirements

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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(SOUR) Realistic timetable Inter-ministerial working group Consult


Within Government Legislature: PFM Law Donors Non-state actors
Sensitize Test

key stakeholders reports and controls

Conclusion
Involve

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 the accounting structure right Get procedures to maintain the CoA

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 Linde AFTFM, World Bank
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73 73

Change Management

74 74

HR & Capacity Building

75 75

Application Solution

76 76

Infrastructure

77 77

Project Management

78 78

Other matters

79 79

Post Implementation Support

80 80

What are key challenges?

81 81

Will an IFMIS alone improve PFM?

82 82

83 83

Ali Hashim Consultant - Treasury Systems Mombassa, Kenya February 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 settings
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Introduction
Why- IFMIS?

Scope- GFM Systems Landscape


Core and Non- Core elements

Core Functionality- what does an IFMIS do?



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Policy Framework- pre-requisites for implementation Activities involved in Systems implementation Ali Hashim, AFE/IMF - World Bank Indicative Implementation schedule

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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

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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), 88 Ali Hashim, AFE/IMF - World Bank 88 By reducing idle balances in Government Accounts

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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 Ali Hashim, AFE/IMF - World Bank Budget appropriations control regulations

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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
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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

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Each if these processes require specialized

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Budget Execution Budget Management

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

Budget Apportionment, Budget Allotment, Budget Releases, Budget Transfers

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Receipts Management - Recording revenues and other receipts Accounting (posting all transactions as they 94 occur) Ali Hashim, AFE/IMF - World Bank 94 Cash Management

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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 BankCalculation of Ali Hashim, AFE/IMF - World i il

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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

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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 97 Ensure Ali Hashim, AFE/IMFfunctions are performed by 97 that these - World Bank th i d t ff l

MOF MOF
Line Line Ministries Ministries

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

MOF MOF
MOF/ MOF/ Line Ministries Line Ministries MOF/ MOF/ Line Ministries Line Ministries Line Ministries Line Ministries SUs SUs Line Ministries Line Ministries SUs SUs

T R E A S U R Y S Y S T E M

Vendors Vendors Employees Employees Pensioners Pensioners

List of Bank Transactions

Payments TSA TSA Bank Bank Receipts

Balances in Accounts

Enter Vendor Invoices /Payment requests, Payroll transactions

Tax Payers Tax Payers

Treasury Treasury

Reviews/enters payment requests releases for payment, Schedules payments

Treasury Treasury
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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 Ali information systems to support 102 102 Designing Hashim, AFE/IMF - World Bank the functional processes for that function

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 Ali Hashim, processes AFE/IMF - World Bank

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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 Ali Hashim, AFE/IMF - World Bank 104 Re-engineering all receipt processes to 104 di tl d it d i

TREASURY ORGANIZATION STRUCTURE I

Central Treasury

Central Bank Head office TSA

Provincial Treasury Unit

Provincial Treasury unit

Regional Branch of Central Bank TSA

Spending Unit

District Treasury Unit

District Treasury unit

District Treasury Unit

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TREASURY ORGANIZATION STRUCTURE II


Spending Units send their transactions to the Line Ministry which forwards them to the Treasury

Central Treasury

Central Bank Head office TSA

Parent Line Ministry

Treasury unit

Branch of Central Bank/ Fiscal Agent where TSA is held

Spending Unit

Spending Unit

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TREASURY ORGANIZATION STRUCTURE III


Line Ministries/Spending Units send their Transactions to the TSA Bank Directly and only provide periodic reports to Treasury /MOF on expenditures

MOF/ Treasury

Parent Line Ministry

Central Bank Head office TSA

Spending Unit

Spending Unit

Central Bank Branch/ Fiscal Agent where TSA is held

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Adoption of a budget classification system consistent with the IMFs GFS Design of a chart of accounts embodying this classification Budget classification structure would need, as a minimum, segments for function, organization and economic classification The function and economic classification structures need to be
Ali Hashim, AFE/IMF - World Bank 108 108

Budget Execution Budget Management


Commitment Management Payments management- Processing all government expenditures relating to:

Budget Apportionment, Budget Allotment, Budget Releases, Budget Transfers

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Receipts Management - Recording revenues and receipts Ali (posting World Bank 109 Accounting Hashim, AFE/IMF - all transactions as they 109 occur)

Procurement of goods and services Salary and Pensions Payments ( Government Pensioners) Debt servicing

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Application Software to support functional processes; Hardware- Servers located at various processing centers Work 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 110 Ali Hashim, AFE/IMF - World Bank 110 Network management systems

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 IMFs GFS Set up institutional arrangements for banking Government funds and 111 Ali Hashim, AFE/IMF - World transactions 111 processing payment Bank

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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 112 Ali Hashim, AFE/IMF - World Bank 112 Set up a Project Secretariat - Specialist staff with experience

Develop a functional systems design


functional processes, documents, information flows, COA specification, detailed code structures, operating procedures, manuals

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Develop application software specificationsfeatures 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 113 Ali Hashim, AFE/IMF - World Bank 113 Develop criteria for evaluation of bids

Select contractor or contractors for


Application Software Hardware/ telecommunications/networking Implementation services

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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 finalize Bank 114 Ali Hashim, AFE/IMF - World 114

Pilot implementation (6-12 months)



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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
115 115

Systems Rollout (24-36 months)


Ali Hashim, AFE/IMF - World Replicate systems Bank across all sites

Legal and Institutional Framework Budget Classification, Chart of Accounts etc. Functional Process Design Conceptual Systems Design and Technical Architecture Procedures and Manuals Systems Procurement 6-12 months 6-12 6-12 months

Gap Analysis, S/W Parameterization /Customization/, Testing months Change Management & End User Training

Pilot Systems Implementation 12 months


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Systems Roll out

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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 117
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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 Training
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118 118

Systems topology- Centralized


and Distributed Technology Architectures Systems deployment options: Treasury based or Spending unit based systems deployment Application Software Options: Commercial Off the shelf (COTS) vs. Custom developed / bespoke application software
Ali Hashim, AFE/IMF - World Bank 119 119

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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 transactions

Ali Hashim, AFE/IMF - World Bank 120 120

MOF/Budget Administrators Spending Ministry HQ

Central Treasury Central Treasury


Treasury System

TSA Bank TSA Bank

Direct Access Internet Access

Spending Unit

Remote Remote Treasury Treasury Office Office

Remote Remote Treasury Treasury Office Office

Spending Unit

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Ali Hashim, AFE/IMF - World Bank

121 121

MOF/Budget Administrators Spending Ministry HQ

Central Treasury Central Treasury


Treasury System

TSA Bank TSA Bank

Regional Budget Administrators Spending Unit

Regional Treasury Office Regional Treasury Office Treasury System

Regional Regional Branch Branch of TSA Bank of TSA Bank

Spending Unit

District Treasury District Treasury Office Office Treasury System

Local Bank

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Ali Hashim, AFE/IMF - World Bank

122 122

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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 Hashim, AFE/IMF - World Bank have often led to123 single transaction Ali 123 un-acceptably high response times

3/4/2010

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, Ali Hashim, AFE/IMF - World Bank 124 this is only a political excuse- data access in a 124

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Ali Hashim, AFE/IMF - World Bank

125 125

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Ali Hashim, AFE/IMF - World Bank

126 126

3/4/2010

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 127 Ali 127 accounting Hashim, AFE/IMF - World Bank systems developed for the

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. 128 Ali Hashim, AFE/IMF - World Bank 128

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ff

ti

th f

ht A

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COTS packages offer facilities to Parameterize 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 129 Ali Hashim, involves 129 CustomizationAFE/IMF - World Bank changing the

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 updates
3/4/2010 Ali Hashim, AFE/IMF - World Bank 130 130

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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 vendors to World Bank RFPs for Treasury Software 131 Ali the AFE/IMF - World of in-spite ofHashim,existence Bankseveral packages that131 inld t ti ll ti f i t it b

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

3/4/2010

often used as a first step of a two step

Ali Hashim, AFE/IMF - World Bank

132 132

Be spoke Software first used to implement core Treasury functionality in;


Kazakhstan Russia Ukraine Hungary Turkey

3/4/2010

Replaced by COTS Software (Oracle Financials) in Kazakhstan Being replaced by COTS Software (Oracle Financials) in Russia New Project in Ukraine envisages COTS 133 133 Ali Hashim, AFE/IMF - World Bank Software

Installed in:
Pakistan Mongolia

Being installed in:


Azerbaijan Uganda Vietnam Maldives

3/4/2010

Being selected for


Cambodia Ali Indonesia Hashim, AFE/IMF - World Bank
134 134

Compare Like with Like Building in all COTS features (functionality, controls and integration) in a custom developed package:
will require extensive software development can be very costly and time consuming without extensive technical and project management expertise, can be very risky

You get what you pay for


Ali Hashim, AFE/IMF - World Bank 135 135

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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, Ali Hashim, AFE/IMF - World Bank even here, these countries eventually move to COTS 136 136 Software

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Ali Hashim, AFE/IMF - World Bank

137 137

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 138 Ali Hashim, AFE/IMF - World Bank 138 accounting systems reform

3/4/2010

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 Ali The MOF Hashim, AFE/IMF - World Bank did not receive timely information on

3/4/2010

139 139

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 controlAliof the Treasury e.g. personal 140 Hashim, AFE/IMF - World Bank 140 ledger accounts

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Some Recently Financed IFMIS / Treasury Projects- I


Name and Country Number of main Sites Approx. Cost US % million status Remarks

Europe and Central Asia


Ukraine Treasury Systems Project (TS) Kazakhstan Treasury Modernization Project (TS) 700 26.9 (16.5+10.4) 17.7(15.7+2.0) 10.4(7.3+3.1) Completed 7.0 yrs Custom S/W Follow on project ongoing plans for COTS software Oracle Financials

Completed 8.9 yrs Completed Custom S/W 7.1 yrs Turkey PFMP (TS) 1500 15.9(15.9 + 0.0) Completed Custom S/W 8.5 yrs Albania (TS) 35 9.0(8.5+0.5) Completed Oracle Financials 6.8 yrs Russia Treasury Development Project 2200 613(231.0+382. Ongoing Oracle Financials ( TS) ) started 2002 Moldova PFMP (IFMS) 35 15.3(8.5+6.8) Ongoing Selected SAP started 2005 Azerbaijan (TS) 90 13.4(9.5+3.9) Ongoing SAP started 2004 Kyrgyz Republic (TS) 65 10.2(6.7+3.5) Ongoing Selected Free started 2005 balance Tajikistan (IFMS) 75 10.0(5.0+5.0) Under COTS planned Preparation 141 3/4/2010 Ali Hashim, AFE/IMF - World Bank 141 Team: Ali Hashim (1995-2004); Dominique de Roquefeul (2000-2004); Cem Dener (2004-todate) Hungary Public Finance Management Project (TS) 20

250

Some Recently Financed IFMIS/ Treasury Projects- Ii


South Asia
Pakistan- PIFRA I and II project for the improvement of financial reporting and accounting ( Lee/ Ceesay / Hashim) Maldives ( Manoj Jain, Hashim/Points)

No of main Sites
150

Remarks Appro Status x. Cost US $ mil. 35.0 Ongoing- SAP- All major sites
PIFRA-I started 1996 Ongoing started 2005 Ongoing started 2004 implemented (120)

100

7.5

SAP- Pilot under implementation Free Balance - Central sites operational

Afghanistan (Paul Sisk /(Points)

25

10

East Asia
Indonesia GFMRAP Kristiansen /Siva/Ramachandran Vietnam Nguyen. Points Mongolia Mohib / Points
3/4/2010

262

30

5100

53

150

10

Ongoing started 2005 Ongoing started 2002 Complet ed 8 yrs

Selected Oracle Financials Oracle Financials Pilot under implementation Free Balance

Ali Hashim, AFE/IMF - World Bank

142 142

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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 143 agencies Ali Hashim, AFE/IMF - World Bank 143

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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 Ali 144 procedures Hashim, AFE/IMF - World Bank has also contributed to long 144

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Ali Hashim, AFE/IMF - World Bank

145 145

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%

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Spending unit based implementations

Ali Hashim, AFE/IMF - World Bank

146 146

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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 147 147

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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 148 Ali Hashim, two World Bank 148 first step of a AFE/IMF - step transition

3/4/2010

Telecommunications infra structure was not well developed in the early nineties Interim systems were first implemented on a distributed architecture Migrated to centralized architecture as telecommunications infra-structure improved All new systems are being implemented on a centralized architecture

Ali Hashim, AFE/IMF - World Bank 149 149

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 Ali Hashim, AFE/IMF - World Bank 150 150

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151 151

Hierarchy of Requirements
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 systems
Appropriate

Technology to support transaction processing and data management


Application Software which reflects functional processes Technology Platform to implement Software (H/W, Networking, Middleware)
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152 152

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 153 project and requirements under policy based Ali Hashim, AFE/IMF - World Bank 153 l di

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Project Design should be driven by Functional rather than Technical Issues Focus Reform priorities on reforming the budget execution processes setting up the institutions and associated systems and procedures Systems should be designed along functional and not organizational lines Define the contours of the system clearly to avoid duplicative investments
Ali Hashim, AFE/IMF - World Bank 154 154

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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

Ali Hashim, World Bank, Washington 3/4/2010 D.C. Ali Hashim, AFE/IMF - World Bank 155 155 155

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.
3/4/2010 Ali Hashim, AFE/IMF - World in Pay and remunerationBank Government for 156 156

3/4/2010

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 salaries

Ali Hashim, AFE/IMF - World Bank 157 157

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

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158 158 158

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.

3/4/2010

Project Secretariat - should have specialist staff with experience in the installation of large scale 159 Ali 159 IT systems Hashim, AFE/IMF - World Bank and IT procurement

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 Ali Hashim, AFE/IMF just Bank imparted - World before site implementation;

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160 160

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 Ali Hashim, AFE/IMF - World Give examples where Bank has been done this
161 161

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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. 162 Ali Hashim, AFE/IMF - World Bank 162 This has proved useful.

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 163 relationships between the central and subAli Hashim, AFE/IMF - World Bank 163 national governments

3/4/2010

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.

3/4/2010

Local government moneys should not b i l d ith t l


Ali Hashim, AFE/IMF - World Bank

164 164

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.

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165 165

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, 166 especially in low capacity environments Ali Hashim, AFE/IMF - World Bank 166

3/4/2010

3/4/2010

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

Ali Hashim, AFE/IMF - World Bank 167 167

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 projects Hashim, AFE/IMF - World Bank 168 Ali 168 M 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.

3/4/2010

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 Bank Ali Hashim, AFE/IMF - World countries the reform169 169 started with implementation of software for

3/4/2010

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 170 Ali Hashim, AFE/IMF - World Bank 170 objectively- whether they are technical or i tit ti l dt k i t di l

3/4/2010

Look for simpler off the shelf packages Several are available on the market; FreeBalance, 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 171 Ali Hashim, AFE/IMF - World Bank 171 Note- Several island economies in the

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

3/4/2010

In most countries the telecommunications network has improved significantly over the last few years AFE/IMF -further improvements are and World Bank 172 Ali Hashim, 172 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 center Off-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 imprest Ali Hashim, AFE/IMF - World Bank 173 173 Imprest accounts could be managed

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 174 Ali Hashim, AFE/IMF - World Bank 174 Hire international experts to work along side local t h t t th t t f f

3/4/2010

Political economy and institutional issues are more difficult to resolve than technical issues Setting up PFM information systems is a necessary pre-requisite, even essential, for improving Governance, but not sufficient
Ali Hashim, AFE/IMF - World Bank 175 175

3/4/2010

Thank you

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176 176

PUBLIC FINANCIAL MANAGEMENT SYSTEMS KENYA

FEBRUARY 15th-17th 2010 15thSERENA HOTEL MOMBASA KENYA

177

Coverage
Background Experiences Adequacy and accuracy of data for

financial reporting Challenges of the current financial reporting Adequacy of the control system Use of GFMIS to audit transactions
178

(a) Historical Background


Started in 1997 with reviews and understanding of problems with finance and accounting in GOK Actual Implementation/Initial roll out of IFMIS stated in year 2004/05 Implementation planned in phases (1, 2, 3 & 4) Initial support of approx. USD 4.74M provided by development partners (DFID, SIDA,WB) A Project Management Unit under AGD initially responsible for the implementation
179

Operational Modules
P/O Assets Retail G/L Grants
Hyperion Manufacturing

PSB A/P

HRMS

Projects

Cash Mgmt

A/R Tutor
Financial

Analyzer

= Operational Modules

180

b) Experiences:

Has taken long for users buy in (fear/change/ transparency) Offers good control for management of financial resources Legacy systems trusted by users more leading to incomplete transactions in IFMIS Initial Consultants found it difficult to customize some of the reports

181

Experiences:
Challenge

in the IFMIS operations even after training due to lack of bespoke manuals only generic manuals available Roll out initially hampered by inadequate infrastructure this has been addresses IFMIS provides the necessary transparency role based, responsibilities, functions, segregation of duties

182

c)

Reporting

IFMIS provides adequate and accurate

reporting base on:on:- Complete transactions - Complete data - Appropriate skills

183

d)

Challenges

Perceived notion that IFMIS = Accounts Lack of ownership of respective modules to drive the implementation Getting buy in Lack of a large pool of well trained users in the Ministries/Departments Few trained officers in the Business and Technical Teams supporting IFMIS Retention of trained staff business and technical Inadequate detailed training (Apps and DB) Lack of adequate ICT infrastructure Resistance to change - Change Management
184

e)

Adequacy of the IFMIS System

Transparency Accountability Security Timely and quality reports Logs

185

f)

Auditing
for 2008/09
- Previously IFMIS was not rolled to all Ministries - Resistance to change use of legacy systems

Produced the first accounts through IFMIS

District data uploaded using

desktop

interface

186

f)

Other Concerns

Technical expertise Licensing regime Resource availability Retention of trained staff

187

WAY FORWARD
Implementation of

other modules Budget, A/R, Assets, CM Integration with Pensions, CS-DRMS, IPPD CS Roll out to the districts

188

END OF PRESENTATION

THANK YOU ALL

189