An Introduction to the Digital Budget and Accounting Systemworkspace.unpan.org/sites/Internet/Documents/UNPAN90161.pdf · the Digital Budget and Accounting System ... Public Investment

An Introduction to the Digital Budget and Accounting System

Integrated National Fiscal Information System

Sang Rock Bae

Ministry of Strategy and Finance

Republic of Korea

Introduction to the dBrain 2 2013-07-02 / SeungHoon Lee

Table of Contents

I. OVERVIEW: FMIS & dBRAIN

II. History of dBrain

III. Components and Features

IV. Evaluation


What is FMIS(Financial Management Information System)?

Overview: FMIS & dBRAIN

Definition of FMIS by World Bank

• A set of automation solutions that enable governments to plan, execute, and monitor the budget by assisting in the

prioritization, execution, and reporting of expenditures, as well as the custodianship and reporting of revenues.

Core FMIS

• A combination of budget and treasury systems aiming at

– Budget planning and formulation

– Medium-term frameworks

– Program-based budgeting

– Key functions of treasury FMIS

Treasury FMIS

• A system that supports key budget execution functions such as

– Budget authorization and releases

– Commitment of funds

– Payment/receipts management

– Accounting and reporting

WB

Reference

Model

Integrated FMIS

• An integration of FMIS and other public finance management systems

– That share the same central database to record and report financial transactions

– That offers reliable consolidated results for decision support, performance

monitoring, and web publishing


What is FMIS?

FMIS: F = B + T (+ O)

Treasury System

(Budget Execution)

Policy Development and Review

Budget Preparation

Public Investments

Asset / Inventory Mgmt

Procurement/ Purchasing

Mgmt of Budget Authorizations

Commitment of Funds

Payments and Receipts Mgmt

Cash Management

Debt and Aid Management

Fiscal Reports & Budget Review

Audit and Evaluation

Payroll Calcs HR Mgmt

Publishing Web Portal

Tax and Customs

B

O

O

T



dBrain exceeds core FMIS with preparatory reform of related institution and integration of and connection to other systems


B

(Budget)

T

(Treasury)

F

(FMIS)

P (Preparatory)

O (Others)

Digital Budget and Accounting System (DBAS-“dBrain”) - IFMIS

• Integrated Fiscal Management Information System (IFMIS) in Korea that was designed to manage overall national

fiscal cycle systemically

dBrain’s merits in comparison to the reference model

• Gone through budget and accounting reform prior to system development

– Implementing program budgeting

– Adopting double entry bookkeeping and

accrual- basis accounting

• Integration of other systems

– Asset and inventory management system

– Credit and debt management system

• Connection to other systems

– External systems such as E-procurement, Tax

and Customs system

– Settlement systems of Bank of Korea and Korea

Financial Telecommunications and Clearings

Institute


Classification Function DBAS unit systems

B

Budget Preparation Budget Management

Public Investment Project Management (Investment plan)

Budget Management (National Fiscal Management Plan)

T

Mgmt of Budget Authorizations Budget Management (Allocation)

Commitment of Funds Payment and EFT(Electronic Funds Transfer)

Payments and Receipts

Management

Revenue and EBPP(Electronic Bill Presentment and Payment) system

/ Payment Management

Cash Management Fund Management

Fiscal reports and Budget Review Accounting / Settlement Management

Project Management / Statistics Analysis System

O

Procurement &Purchasing Linking System (with e-Procurement system)

Tax & Customs Linking System (with Tax&Customs system)

Asset/ Inventory Management Asset / Inventory Management

Payroll Calculation &

HR management Linking System

Debt & Aid management Credit&Debt Management

Audit & Evaluation Linking System (with e-Audit system)

Web Publishing Home page

Comparison: WB reference model and dBrain



Table of Contents

I. Overview: FMIS

II. HISTORY OF dBRAIN


IV. Evaluation


Central and local government had designed and run their own public finance management systems, leaving room for improvements

History of dBrain

NaFIS

• National Finance Information System

implemented in 2002 by MOFE1)

– Treasury system focused on revenue,

expenditure and accounting

settlements management

FIMsys

• Fiscal Information Management

System implemented in 2000 by MPB2)

– Budget system focused on budget

request, formulation

Local gov.

finance system

• Implemented from mid-2000s

without linked to central gov. system

– Covers both treasury and budget

system

• NaFIS is loaded with double entry bookkeeping and

accrual-basis accounting but had never been used

• FIMsys is based on line-item budgeting rather than

program budgeting

• Local government’s financial management systems

are developed separately from central government’s

1) Ministry of Finance and Economy

2) Ministry of Planning and Budgeting

• Without overhaul of NaFIS and other related

systems, it was almost impossible to reflect reforms

in budget and accounting systems such as program

budgeting

• Integration of fragmented public financial

management system was crucial to process

meaningful fiscal information

Public finance mgmt systems before dBrain

Areas for Improvement

Main Characteristics


With full support of then-president, development of dBrain kicked off in 2004, and went through BSP, BPR/ISP, system development consecutively

BSP, BPR/ISP

History of dBrain

Brief history of dBrain development

• Establishment of integrated fiscal

information system was set as National

Agenda

• Launched joint study project named

“Path toward successful introduction of

program budgeting in Korea” with WB

• For establishment of integrated fiscal

information system, consecutively drew

up

2004~2005

•Developed the

system with

$60Mn

•Conducted test

operation

2006

• Launched the

system

2007

• On average, 58,000 users

make 300,000 transactions

worth $5.8 Bn a day

2011

Details

BSP (Business Strategy Planning)

• With analysis of policy environments, demonstrates the object and major

strategy of fiscal innovation

BPR (Business Process Reengineering)

• Optimize and streamline the existing procedure in accordance with information

system to maximize the effect of adopting new system

ISP (Information Strategy Planning)

• Computerization of given work process


Even difficulties in adopting new system couldn’t deter Korea from introducing new paradigm of fiscal management

History of dBrain

Three major obstacles Solutions

Opposition

• Local governments and the Ministry of Education were against the idea of disclosing and integrating their financial information

–Concerns over possible undermining of their autonomy

Resistance

• Users of newly adopted financial information system were reluctant to adapt themselves to new system

– In the early 2000’s, they’ve already gone through the process when Korean government first introduced NaFIS and FIMSys

• Strict internal control process built in dBrain made users even harder to become familiar with the system

Allowed them to maintain their own system with

requirement of submission of financial information

Provided effective user education throughout the

years

Placed dBrain under control of MPB while let

employer of MOFE to take charge of certain parts1)

Competition

• Two ministries competed fiercely to take control of the dBrain

–As NaFIS(ran by MOFE) and FIMsys(ran by MPB) were main pillars of former financial information systems, both ministry wanted to take charge

1) The competition eventually waned when those two ministries merged into one in 2008


Table of Contents

I. Overview: FMIS


III. COMPONENTS AND FEATURES

IV. Evaluation


System Integration: dBrain has 10 modules including Project Mgmt, Budget, Accounting in one system

Components and Features

Project Mgmt

• Project Information Mgmt

Revenue

• Revenue Mgmt • Integrated

Notification • Credit

Fiscal Analysis

• OLAP • EIS • GFS

Expenditure

• Expenditure • Tax mgmt

Cash Mgmt

• Cash flow planning • Loan • Fund Mgmt • Cash Balance • Debt

Property

• National Property • Goods • Procurement

Mgmt

Accounting/ Settlement

• Budget Settlement • Financial

Settlement • Auto Journalizing

Administration

• User Account Mgmt

Budget

• Mid-term planning • Formulation • Execution • Public investment • Preliminary

feasibility test

Performance Mgmt

• Performance Mgmt

dBrain


Connection to external systems enables dBrain to see public finance at a glance


Housing Fund

Pension Fund

Credit guarantee Fund

Employment Insurance

Agencies with independent systems

Ministry of Defense

Defense Financial Information System

Ministry of Knowledge Economy

Management Information System

Bulk collection Agencies

Bank of Korea

Financial Network

Ntl. Property

Korea Asset Mgmt. Corporation

G2B

Public procurement

E-Inspection

Board of Audit and Inspection

Financial Telecommunications &

Clearings

Ntl. Tax Service

Customs Service

Police Agency

Local Gov. system

Local Gov. Finance

Local Gov. Education Korea Forest Service

Central Financial Information System


Main characteristics of dBrain: a full-scale integration, adoption of Project Management System, and a complete computerization of fiscal process

• Reflecting their purposes, all government activities are aligned into 700 programs

–Hierarchical structure of budget prevents overlapping and waste

• Information such as budget execution and procurement status are gathered in a project basis

–Managers at each ranks can simply log in and check every project they are dealing with

Project Management System

A mounted private secretary

for decision makers

• EBPP2) computerized all the steps of government revenue from notification to final payment

– Even fines are reflected in the database of dBrain at the very moment a police imposes it

• EFT3) transfers money directly to a vendor’s bank account for any government expenditure

– Public employees need not to deal with case

A complete computerization

A silver bullet for rooting out

corruption


• Users are free from repetitive

input of the same or related

information

–Once entered, budget data are traceable throughout entire budget process from formulation to execution

– The system automatically keeps ledgers for goods, national properties, settlement, etc.1)

• No need for manual input of

information , ensuring accuracy

of information in dBrain

A full-scale integration

Unprecedented convenience

with exceptional accuracy

1) For instance, if done accordingly, an officer in charge of acquisition of goods or services doesn’t have to keep ledgers independently, as the auto journalizing function will systemically manage it

2) Electronic Bill Presentment and Payment

3) Electronic Funds Transfer


dBrain is integrated with and connected to many different systems, enabling Single Sign On (SSO) and One Stop Service (OSS)

What is the difference between integration and connection?

• System integration: Incorporation of various functions into a single system or user interface, which can be described

as a composition of many sub-systems

• System connection: While leaving two or more different systems as independent entities, allow them to share,

exchange or connect financial information to enhance efficiency of fiscal activities

SSO

• A security solution that makes single log-on to the information system capable of dealing with diverse responsibilities

–Helping users minimize the number of user accounts

– Provide user-friendly environment

–Reduce security risks and cost of managing several identification solutions

OSS

• Any data or information generated from financial transactions in one information system should be shared throughout the whole system

–Once budget has been executed for acquiring goods, ledgers for goods management is kept automatically

– Ensure data congruency and user convenience

Enhanced

Efficiency and

Convenience



EBPP system enhances convenience and transparency of payments

Work flow of national tax collection

1 Notice information

National Tax Service

dBrain Payer

Commercial Banks

Bank of Korea

1 Notice

1 Notice information

2 Payment 3 Cash (batch/daily)

3 Payment Results

4 Payment Results

(batch/daily)

5 Payment Results

• EBPP(Electronic Bill Presentment and Payment) allows payers to choose among various means of payment including:

– E-banking, ATM(Automated Teller Machine), etc

– It automatically transfers money from commercial banks to the treasury account, eliminating potential threat of fraud



Requests payment

Request Transfer

Transfers/ Withdrawals

approval of expense

Request Transfer

Transfer result

• EFT : Electronic Funds Transfer

Transfer result

Transfer result

(SMS message)

Transfer result

EFT system enables users to transfer government funds to private company’s account electronically.

Work flow of national tax collection



New functions of dBrain: Performance management system and central control system

Performance Management System

• Performance management : One of the four national fiscal schemes in 2003

– In 2011, the function of performance management was developed. –Reflecting the three axis of performance management: “Performance evaluation”, “Self-evaluation”, “In-dept evaluation”

• A central control system was established aiming to conveniently monitor all the system errors.

– “Infra central control system” , “Connection control system” , “Log management system”

Central Control System

To build public trust, to offer more efficient services, and to have more secure future plan for IT operation




Main screen

Details

Increase in the number of transfer cases

between the BOK and the KFTC (difference)

Status of server, network and DB by group

The number of users connected to dBrain

in real time and call duration

Result of batch work and backup

Errors of external systems

connected to dBrain

Monitor the overall status of system operation, such as server, network and DB,

as well as main indexes




Connection control system

Details

Monitor the infrastructure that is connected to dBrain as well as detect any errors incurred in the external infrastructure promptly

Status of the external system linked to dBrain

Status of server of the systems linked to dBrain

Status of the systems of the BOK and the KFTC




Log management system

Check out prospective system load by looking at the number of log events in the past and at present



Table of Contents

I. Overview: FMIS



IV. EVALUATION


Evaluation

dBrain has been initiated by government and developed, operated by private corp., indicating that it’s a triumph of a concerted effort

Successful development

and operation of dBrain

Development

Gov’

Private SIs

• Initiated the system

• Invested $60Mn

• Created a whole new system in 16 months

Operation

Gov’

Private SMs

• Overall management

• Decision making for significant incidents

• System operation

• Daily upgrade and user support

# of users # of transactions Overall size of

transactions # of inquiry calls

# of questions

posted online

58,302 300,000 / day $ 5.8Bn / day 1,257 / day 101 / day


Evaluation

An index for service quality

Numbers of System disorder

User Satisfaction rate1) (%)

Now, six years into operation, dBrain has entered into a stabilized phase, and will strive for further reforms

Further reforms

• dBrain was designed in modular structure to

strengthen its expandability

• Through call centre and online bulletin boards

users’ opinions are accepted, resulting in 73 monthly upgrades on average

2008 2009 2010

52.6

55.9

62.4

2011

64.5

2007 2008 2009 2010 2011

17

11 10

3 1

1) The rate is marked on a scale of 1~7, and can be converted to 64.5 out of 100, indicating users were “quite satisfied”


dBrain has been upgraded gradually with a complete maintenance plan.

Cost • Development: 60billion Korean won (55million US dollar)

Staff involved • Development: A total of 300

• Maintenance (present) : 110 (operation and maintenance) + 30 (help desk)

Outsourcing • Korean IT companies (Samsung and LG, etc.)

• Maintenance and operation: 12billion Korean won / year (11million US dollar)

Service Level • Incl. system error, defect, security and user satisfaction


Some Difficulties in Adopting from Other Systems What will work, what will not?

Many countries face difficulties in adopting, e.g., OECD best practices. Several factors seem to be relevant:

• Different type of budget or accounting system may be in order.

The needs are different, and therefore the nature of budget and accounting systems needs to be tailored to the particular situation of each country

• Different type of political system affects decision-making

• Different type of legal culture affects both decision-making and implementation

26


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