IFMIS Systems International Experience in Africa Asia

IFMIS Systems International Experience in Africa & Asia Peter Murphy, M. Sc, CPFA World Bank Sr PSM/PFM Specialist, Cambodia Country Office P Murphy, Washington, FM Conference, March 2008 1

IFMIS Systems – Key Dimensions Budget Formulation Budget Execution Resource Management Accounting & Financial Reporting Auditing and Oversight • Institutional Development • Green Field Sites Easier • High, Mid and Low Range Systems • Long Term • Capacity Development • Commitment • Management Culture • Leadership • Management, Application and ICT and Contractor Capacity Building • Policy/Design Consultancy • Business Process Re. Engineering • Software/Licensing • ICT /WAN Infrastructure • Organizational Reform • Capacity Building • Recurrent Public Financial Managemen t • PFM Drivers-Recognition of Need for Change; • Willingness to Change. Ownership & Commitment; • Capacity- PFM/ICT/CM • Transition Management • Project Management • Change Management Strategy • Quality Assurance Preconditions Lessons IFMIS Capital & Recurrent Costs P Murphy, Washington, FM Conference, March 2008 PFM Structures Implement a-tion Conceptual Framework. Standards& Principles Capacity Roles & Responsibilities Budget Classification/Co. A • Business Processes • Bank Accounts • Legal Framework • • • Preconditions • Conceptual Design & Specification (Detailed or Summary) • Centralized/Core Periphery • Procurement (Evolutionary) • Gap Analysis/Design/Testing • Sequencing – Pilots , Budget Cycle, Matching to Capacity • Rollout/ Acceptance 2

Fiscal Management System Real Sector Medium Term Fiscal Framework Macro Economic Model Bo. P Sector Monetary Sector Periodic Fiscal Table Data IFMS General Ledger IFMIS Budget Module MTEF & Budget Data Warehouse/ Toolset Fiscal Policy Analysis Revenue, Expenditure & Financing Transactions Accounts Receivable Accounts Payable Tax Interface Payroll Interface Debt Interface Bank Reconciliation P Murphy, Washington, FM Conference, March 2008 GFS Economic Classification 3 3

IFMIS - ICT Technology Single User PC or Portable Server less LAN One PC acts as server Server based LAN DB and Apps on One server Server based LAN DB and Apps on Separate servers WAN Server based LAN + WAN DB and Apps on Separate servers 4

Why Transition to an IFMIS Project Systems (Lower Fiduciary Risk) PIUs/Project Management Consultants Salary Supps. Dependency Project Specific FM Systems Procurement Rules, IPA, Banking, Reporting, Audit Off Budget Non Integration Unique Classification Complex Programme Financing and Fund Flow Arrangement s Lower Order PFM Developmental Outcomes P Murphy, Washington, FM Conference, March 2008 Government Systems (Higher Fiduciary Risk) Ownership/ SWAP Government Structures Civil Servants Cap Building Sustainability On Budget Unitary Integrated Budget Government Classification Government Systems including IFMIS, GFS, IPSAS, TSA , Audit etc Pooled Funding Government Execution Higher Order PFM Developmental Outcomes 5

PRE IFMS Situation - Cambodia Issues Fragmente d Recurrent & Capital Budget Parallel Systems/Ru les Multiple Project Implement ation Units (100’s) 1500+ Bank Accounts Significant DP Financing Parallel Man Extensive TA Fragmented Multiple DP Fid/Project Units P Murphy, Washington, FM Conference, March 2008 - Budget, NT, etc - Dept Inv Cop • Post Conflict • Relatively Weak Capacity • Perceived High Fiduciary Risk • Pressure for Coordinated DP Support and Swaps • High Anti Corruption Profile • Good Governance Frameworks • IPA • Evolving PFM Reform Program • IFMIS 6

PFM Reform - Change Drivers SWAP/ Project (TTL) PFM Reform (TTL) Fiduciary Risk (Legal, FM & Procurement Specialists) P Murphy, Washington, FM Conference, March 2008 7

IFMIS Implementation (DP Financing Perspective) • Ensure understand PFM /IFMIS Objectives and relevance to Project Fiduciary/Procurement Risk Analysis • Connect/Integrate Project Fiduciary Risk Analysis with IFMIS Implementation Objectives • Capacity – Eliminate PIUs build Mo. F/Sector/LM/Sub National PFM Units • Integrate Project Budget with MTEF/Annual Budget. • Adopt IFMIS standards – IPSAS, Budget Classification, Co. A • Adopt IFMIS PFM Processes, ICT & Communication Architecture • If possible adopt IFMIS Package and support development of procurement, internal control, accounting, reporting and banking arrangements. • Develop Transition Approach /Path Project Activities • Phase implementation as per project requirements Get involved with IFMIS implementation. P Murphy, Washington, FM Conference, March 2008 8

Connecting with IFMS - MTEF/Budget Modules Macro Model Ministry Management Information System Objectives Activities Go. L IFMIS General Ledger MTFF MDALG Activity Plans & Costing Sector & Ministry Objectives Outputs Targets & Progress Resources Co. A Financial - Actual -Commitments P Murphy, Washington, FM Conference, March 2008 Budget Framework Papers Budget Policy Analysis Mo. FDP Challenge & Policy Discussions MTEF Ceilings Budget Module Tax Revenue, Debt Budgets Detailed MDALG Estimates Consolidated Budget MDALG Revision Budget Presentations 9

Connecting with IFMS - GL, Budget Execution and Financial Reporting Requisition Purchase Order Module Commitment/ Cash Management Module Co. A FM Budget Module Bank Accounts Payable Module Accounts Receivable Module P Murphy, Washington, FM Conference, March 2008 Interfaces HR/Payroll Cash Book/TSA /EFT Module General Ledger Module General Journals Interfaces Public Debt Tax etc MTFF Data Summary Budget Reports Detailed Budget Reports Statutory Financial Reports 10

IFMIS Capacity Development – Creating a Learning Organization Rollout Implementation Pilot Implementation Design, Testing & Setup Preparation & Acquisition P Murphy, Washington, FM Conference, March 2008 1. Create a Learning Organization (Mo. F, Sector, LM, Agency, LG, Project. 2. View whole process as a Learning opportunity. 3. Require Client, Consultants, Contractors to Engage at each stage of the process. 4. Build trust not Confrontation 11

IFMS Staffing & Skills -Required Roles & Responsibilities End Users Primary • Manage & Operate Business Processes • Data entry • Validation • Authorization • Analysis • Reporting • Use System Outputs • Planning • Analysis • Decision Making • Reporting Secondary • Internal/External Audit External • Public , DPs PAC, EFC etc Defined Users Application Managers Process Owners • Manage users & permissions • Ensure availability for appropriate use • Manage central functions – setup, chart of accounts, report customization • Ensure reliability • Problem resolution • Routine Maintenance • Upgrades / updates • Security • Ensure systematic expansion • Ensure functionality of interfaces to external systems Financial Systems Unit(s) P Murphy, Washington, FM Conference, March 2008 ICT Facilities Management • Mange Architecture • Ensure availability for appropriate use • Ensure reliability • Technical Problem resolution • Routine Maintenance • Upgrades / updates • Security • Data backups • Ensure systematic expansion • Ensure functionality of interfaces to external systems Data Centre/ICT Personnel/Contractors 12

Sustainability - Transition Management (Illustration) Project In-house Organisation Steering Group (Stakeholders) Acc. Gen/Budget Project/Contract Management Group Training Group Acc. Gen Dept Application Group Post Project In-house Organisation (Acc. Gen/ICT) Acc. Gen/Budget Dept Sections Application Support Unit ICT Group LM/Agency/LG Units MDA Units P Murphy, Washington, FM Conference, March 2008 ICT Support 13

IFMIS Classification & Analysis Model Dimension Descriptions IFMIS Digits MMIS Sector Go. L Adjusted COFOG Co. A xx xx Sector Objective Ministry Strategic Sector Objectives Map yy Go. L Institutional Units Co. A x xx Objectives Map yy Programmes, Medium Term Ministry Objectives Groups of Activities/Projects Co. A xxx Outputs Goods and Services Map yy Administrative Divisions, Cost Centres Co. A xx xx Activities Cost Centre Activities contributing to Outputs Co. A xxx Economic/ Account Financing Chapter, Sub Chapter, Item Sub Item Co. A x x xx xx Donor, Fin Agreement Co. A xx xxx Regions Region, District Co. A xx x P Murphy, Washington, FM Conference, March 2008 14

IFMIS – WAN Architecture Mo. F/ Treasury Min of Finance Public Debt Treasury Auditor General Tax Civil Service Central Bank Ministries Depts. Projects/ Agencies. Sub National P Murphy, Washington, FM Conference, March 2008 Servers 15 15

IFMIS – Implementing a Project/Programme • • • Use • Independen • t Instance • DP Project Funds Flow IFMIS FM/Procurement Processes Project ICT Project Bank Accounts Project Execution Journal Reporting Interface • • Connect to • Central • IFMIS • System DP Project Funds Flow IFMIS Processes & ICT Separate Project Bank Account Project /Govt Execution Journal /Reporting Interface Full use of Central IFMS System • • • Integrated MTEF/Budget Funds Flow/CM through Treasury IFMIS Processes & ICT Banking/TSA Govt Execution Govt Consolidated Reporting P Murphy, Washington, FM Conference, March 2008 1. Project Man Functionality 2. Software Licenses 3. Design/Setup 4. ICT Architecture 5. Controls 6. Manuals 7. Reporting 8. Training 9. Auditing 10. Support 11. Costs 16

Consolidated Fund & Fund Allocation Short Term Financing Tax/Domestic Recurrent Revenue Grants Recurrent Account P Murphy, Washington, FM Conference, March 2008 Develop Loans Development Account Recurrent & Capital Funds Recurrent Funds Line Ministries/ Sub National Develop Grants Projects Agency 17

Institutions on IFMS Central Bank Agencies Local Authorities Treasury Tax Agency Ministries Projects Regional Sub. Treasuries Central Bank or Commercial Banks P Murphy, Washington, FM Conference, March 2008 18

Cash Accounts - Expenditure Actual bank accounts at Central Bank Consolidated Fund A/C Recurrent Fund A/C Treasury Cash A/C MOE Cash A/C PIU Cash A/C P Murphy, Washington, FM Conference, March 2008 19 Development Fund A/C Treasury DF A/C MOE DF A/C Treasury Ministry of Education PIU DF A/C 19

Auditor - In and Out Document Review - Workflow Review - User Activity Review - Analysis of on-line Data - Procedures / Legal - Security Review - Access Control - Workflow Control - Security Administration P Murphy, Washington, FM Conference, March 2008 20

The e. Intelligence data flow • • e transactional database Extract Scrub Transform Aggregate • • • Data Warehouse Load subset Aggregate Reporting • Ad-hoc analysis • OLAP Reporting OLAP Cubes Business Explorer & other OLAP Clients Financials Distribution Projects P Murphy, Washington, FM Conference, March 2008 21

Key Benefits 22

Functionality PFM All aspects of FM Efficiency & Improved Internal Control Supports pooled funding by enabling improved accounting & accountability Facilitates Standardization of procedures / services where appropriate Permits diversity of approach where necessary Supports authorized external agency access Improved audit ability P Murphy, Washington, FM Conference, March 2008 Organizational Improved communication Improved coordination between Ministries, Donors, Councils, Agencies. Projects On-line Learning Possibilities High availability Rapid dissemination of systems / information Consistency Data Warehousing & mining 23

Decentralized Management Supports decentralized management and accountability Project budget formulation Project procurement, disbursements, revenue collection, accounting etc. Project reporting and accountability Supports improved project transparency Can support project security / management of own data P Murphy, Washington, FM Conference, March 2008 Contd… Supports local, regional and project central support mechanisms Enables downloading of data for lproject processing Constraints overcome Need for high level of non core local support Potential problems of infrastructure upgrade Data corruption and storage problems Disaster Recovery problems 24

Sustainability Technical Small core technical support team Standardized infrastructure Easy upgrade / growth of core system (space, processing ability, technology changes) Uninterrupted upgrades P Murphy, Washington, FM Conference, March 2008 Financial Reduced capital investment Terminals & printers only at sites Low license costs Lower Running Costs Economies of scale Low maintenance costs 25

Tanzania - Post IFMIS - Experience Stated in 1995 by July 1998 - all MDAs (50+)in DAR were on the IFMS base package (in less than 3 years) using GOT wireless based networks, citrix server, thin clients , SQL Database and a Mid Range IFMIS Package. Gov’t chart of accounts on GFS compliant basis, mapping can further enhance Real-time budget allocation, disbursement, commitment control, budget & financial reporting. TSA implemented. Dramatic improvement in PEFA scores. 2001/2002 all Regional Sub treasuries on stand alone IFMS Extensive Agencies and Projects implemented. (Accrual and Cash) Multiple DPs. Budget module/Active planner rolled out to MDAs 2002/2003 all regional MDAs on IFMS duly networked to the Sub treasury D-Base 50+ Local Authorities implemented and many more under implementation. TRA implemented in 60+ sites with full accrual. 2000 + trained sinception Fully sustained locally since 2000. Introduction of data warehouse for Budget/Macro Analysis Now migrating to other countries Gambia, Malawi, Lesotho. In Malawi – Tanzania Accountant General Dept is acting as Consultant and is providing capacity building opportunities. P Murphy, Washington, FM Conference, March 2008 26

Questions? P Murphy, Washington, FM Conference, March 2008 27