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Peter Murphy of World Bank presentation at ICGFM 2007 Winter Conference on capacity development for government financial management systems
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P Murphy, Washington, IFMIS Conference, Nov 2007 1
IFMIS Systems -Capacity Development
Peter Murphy, B.Sc (Hons), M.Sc, CPFA
P Murphy, IFMS Conference, Nov 2007 2
MacroEconomicPlanning &
Policy AnalysisSectoral
Planning &Policy Analysis
BudgetFormulation &
Cash FlowForecasting
Revenue Policy,Mobilisation,Collection &Financing
Funds Release,ProcurementAuthorisation,
Control,Disbursementt
ReceiptsPayments,Payroll &
Accounting
BudgetMonitoring/
ManagementAccounting
BudgetReview &Revision
Final Accounts &Public Sector
Accounts
ExternalAuditing
PerformanceReview
Evaluation &ResultsAnalysis
What are the key challenges in development of Public Financial Management ?
PFM Cycle
Challenges
Limited Macro Modelling.
Limited Revenue Forecasting and Management
Unrealistic ,inadequately Poverty/ Policy/Performance MTEF & Budgets
Weak Stakeholder Participation
Inadequate Analytical Frameworks for Resource Allocation/Control/Management
High Levels of Centralised Control
Inadequate Commitment and Cash Control/TSA/Reconciliation
Corruption & Fraud.
Limited Transparency - Monthly and annual Public Accounts
Weak Internal & External Audit
ICT Based Systems
3
PFM
Improved OversightSystems
-Parliament, PAC, External Audit
Macro Policy Analysis & Advice,Capacity Building,Interfaces
- Macro Units
Rev Policy Analysis& Advice,Capacity Building,Systems, Structures-Rev Agencies, -AidMU, Debt Man
MTEF, Sector Strategies, Bud Policy Analysis & AdviceBudgeting Systems- Bud Div, LM, LGs
ProcurementReform, Payroll/Personnel Reform, Asset/LiabilityManagement, Internal Audit Systems etc-MOF, LM., LGs, PS/HR
Typical Ongoing PFM Reforms
Capacity/Systems/SkillsCash & Bank ManagementCommitment ControlManagement ReportingPoverty TrackingAccounting StandardsAccounting SystemsFinancial Reporting- AGD, MDA’s, LGs
Approval, Oversight &
Accountability
AggregateControl
ResourceMobilisation
ResourceAllocation
ResourceManagement
Financial Control, Management & Reporting
- Strategy/Policy- Skills Transfer- Systems/Technology- Structural Change- Management Development - Limited HRM
Formal
- Culture- Politics/Power- Leadership
Informal
Need for alignment with Environmental (PETS) Forces e.g. : -- Political: Democratic Transition Process & Policy Debate- Social: Civil Society Pressure Groups, Participation.- Economic: Poverty Reduction, Efficiency, Effectiveness- Rapid Technical Change- International Standards etc
4
Typical IFMIS System Components
PurchaseOrder
Budget/PlanningTools
CashManagement
TenderManagement
RequisitionManager
AccountsPayable
CommitmentControl Accounts
Receivable
Imprests/Loans
Claims on DonorsExpense
Order
Revenues
HRM/SalariesSystem
CashControl General
LedgerGL Journals
CashManager
BankReconciliation Reporting
Asset Manger
Inventory EquipmentManager
CS DRMS
CoA
Macro/REFF Systems
P Murphy, Washington, IFMS Conference, November 2007
P Murphy, Washington, IFMS Conference, November 2007 5
Conceptual FrameworkPolitical(Turbulent someIncreased demand
for Accountability)
Economic(Demand for Improved PEM & Financial Management)
Social (Participation/transparency/Service Delivery)
Technical(New ICT technology, deregulation)
Change Dimensions
Public Financial ManagementTask Environment
Outputs
Accountability
Transparency
Economy
Efficiency
Effectiveness
Service Delivery
Implementation Strategies
New ICT(IFMIS)
New Processes & Procedures
Transition Management
New Structures, Skills & Attitudes
New Legislation & Improved
PFM IFMIS SoftwareImplementation
Inputs
Software
ICT (IT/WAN)
Training/Workshops
Legislation
Consultancy
-Change Man
-Budget/ Financial Man
-Training
P Murphy, Washington, IFMS Conference, November 2007 6
Capacity Development Context
Recognition & Willingness– Task Environment Demands
7P Murphy, Washington, IFMS Conference, November 2007
P Murphy, Washington, IFMS Conference, November 2007 8
Recognition & Willingness - Forces for Change
Weaken
Strengthen
Recognition/Willingness - Vision, Gap Analysis & Design
P Murphy, Washington, IFMS Conference, November 2007 9
Feasibilityy Study – Fiscal Management Processes, Organisational Issues, ICT Architecture, & Financial Implications
P Murphy, Washington, IFMS Conference, November 200710
Treasury/Acc Gen (Regulation)
Ministry of Finance (Policy)
Line Ministry Accounting
Officers (Execution)
Budget
Plan/Budget
Other
Chief Acc
Procure-ment Int Aud
Ex Audit
CashMan
Fin Rep
Fin Man
Payroll
Liabilities/Assets
Budget Managers
.
Other External
Consensus Desirable – Possible – A few willing to go where no man has been before? - Evolution versus revolution!
P Murphy, Washington, IFMS Conference, November 2007 11
Capacity Development Dimensions
Client/Consultant/Contractor Mix
P Murphy, Washington, IFMS Conference, November 2007 12
P Murphy, Washington, IFMS Conference, November 2007 13
P Murphy, Washington, IFMS Conference, November 2007 14
Accounts Ledgers
Cash Book
Requisitions Procurement
Budgeting & Releases
Payments Public Debt& Tax HR/Payroll
General Journals
Summary Budget Reports
Detailed Budget Reports
Statutory Financial Reports
• Often Centralized.• Lack of Integration.• Inefficient (Duplicate Data Entry & Functionality)• Managed Independently• Different Analytical Basis (Classification/ Valuation)• Inconsistent & Incomplete Reporting• Lack of Integrity, Timeliness, Comprehensiveness Mechanize the
Horse and Cart?
P Murphy, Washington, IFMS Conference, November 2007 15
Budget Module
GoL IFMIS General Ledger
Ministry Management InformationSystem
Sector & Ministry ObjectivesOutputsTargets & Progress
CoAFinancial- Actual-Commitments
MDALG Budget Framework Papers
MoFDPMacroModel
MTFF
MTEF Ceilings
Detailed MDALG Estimates
MoFDPChallenge & Policy Discussions
MDALGRevision
Activity Plans &Costing
Budget Policy Analysis
Consolidated Budget
BudgetPresentations
Tax Revenue,Debt Budgets
P Murphy, Washington, IFMS Conference, November 2007 16
General Ledger Module
Cash Book/TSAModule
Accounts ReceivableModule
AccountsPayableModule
Budget Module
RequisitionPurchase OrderModule
Commitment/Cash ManagementModule
InterfacesPublic DebtTax etc
InterfacesHR/Payroll
General Journals
MTFFData
Summary Budget Reports
Detailed Budget Reports
Statutory Financial Reports
P Murphy, Washington, IFMS Conference, November 2007 17
Budget Module
Supports MTEF Dialogue including MDA Strategic Budgeting Dialogue & Scenario. Analysis, Enable multi-year budget preparation, at MOF & MDA level.Make available in-year Budget Execution information.Stores values for estimate calculation etcFacilities forecasting of baseline Cash Flow.Budget Analysis, Consolidation, Presentation and Authorisation.Budget Release & Variation. Supplementary Budgets
Users (Transactional Users/Analysts//Information Users)
Managers (Decision Making)
Support (In-house)
MoF Macro Unit Users -MTFF/MTEF MoF Budget Officers (Sector/Frame)MoF Finance Officers (Debt/Investment)MoF (Revenue Policy Unit)MoF External FinanceLM Budget/Planning OfficersLM PS/Accounting Officer/Dept Heads
Public/DPs/Investors/Creditors etc
Macro/MTEF ManagersBudget DirectorSenior Budget/Macro Analysts
Budget ApplicationSupport Group-Classification-Access/Training-Budget Constraints-Principles/StandardsDirector Budget Techniques(ICT Support Group)
P Murphy, Washington, IFMS Conference, November 2007 18
General Ledger
Facilitates Framework for System:• Organisation parameters, Accounting Concepts • Chart of Accounts/Classification • Capture Budgets and non-financial data, Bank account details, Fiscal years • Journals and postings (from source systems)• Database for all transactions, Financial Reporting, Audit Trail
Users (Transactional Users/Analysts/Authorisation/Reports)
Managers (Decision Making/ Information Users)
Support (In-house)
MDALG PS/Accounting Officers/Dept Heads. MDALG Accountants/Internal Auditors.AccGen FR Users – Consolidation & Financial ReportingAccGen Users - (Aid Accounting, Payroll, CF Revenue, Financing etc)MoF users
Chief AccountantsChief Internal AuditorsDirector (FR Unit)AAG (FR)
AccGen ApplicationSupport Group-CoA/Data Integrity-Concepts/Training-Controls/Reporting -Principles/StandardsDirector FSU(ICT Support Group)
P Murphy, Washington, IFMS Conference, November 2007 19
End UsersPrimary• Manage & Operate
Business Processes• Data entry• Validation• Authorization• Analysis• Reporting
• Use System Outputs• Planning• Analysis• Decision Making• Reporting
Secondary• Internal/External AuditExternal• Public , DPs PAC, EFC
etc
Application ManagersProcess 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
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
Defined Users Financial Systems Unit(s)
Data Centre/ICTPersonnel/Contractors
P Murphy, Washington, IFMS Conference, November 2007 20
• In-house Configuration (Application Support, ICT Unit, Training Unit)
• Partially Outsource ( Consultants/Advisors, Contract ICT Maintenance, Training Aspects)
• Substantially Outsource ( Management, Communications, ICT Provider, Enterprise Application Provider)
P Murphy, Washington, IFMS Conference, November 2007 21
P Murphy, Washington, IFMS Conference, November 2007 22
Preparation & Acquisition
Design, Testing & Setup
Pilot Implementation
Rollout Implementation
1. Create a Learning Organization2. View whole process as a Learning opportunity.3. Require Client, Consultants, Contractors to Engage at each stage of the process.
P Murphy, Washington, IFMS Conference, November 2007 23
P Murphy, Washington, IFMS Conference, November 2007 24
Application (20-100’s)Mangers/Champions/Local Consultants• Concepts – In depth• Module Operation• 1st Line ICT Support• Training Skills• Consultant Skills
Key Users (50-100’s)• PFM Concepts• Module Concepts• Module Operation• Ist Line ICT
Users (1000’s) – Need to know
Local Consultants/Trainers (20-50)• Concepts – In depth• Module Operation• Training Skills• Training Material Development
Specialists (100’s)• Audit• Central Function
ICT (10-100’s)•Data/DR Centre•WAN•LAN•Communications•Database
P Murphy, Washington, IFMS Conference, November 2007 25
P Murphy, Washington, IFMS Conference, November 2007 26
P Murphy, Washington, IFMS Conference, November 2007 27
ó Stated in 1995 in an atmosphere of systemic collapse 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.
ó Gov’t chart of accounts on GFS compliant basis, mapping can further enhance ó Real-time time budget allocation, disbursement, commitment control, budget & financial
reporting. TSA implemented. Dramatic improvement in PEFA scores.ó 2001/2002 all Regional Sub treasuries on stand alone IFMSó Extensive Agencies and Projects implemented. (Accrual and Cash) Multiple DPs.ó Budget module/Active planner rolled out to MDAsó 2002/2003 all regional MDAs on IFMS duly networked to the Sub treasury D-Baseó 50+ Local Authorities implemented and many more under implementation.ó TRA implemented in 60+ sites with full accrual.ó 2000 + trained since inceptionó Fully sustained locally since 2000.ó Introduction of data warehouse for Budget/Macro Analysisó Now migrating to other countries Gambia, Malawi, Lesotho.ó In Malawi – Tanzania Accountant General Dept is acting as Consultant and is providing
capacity building opportunities.
Tanzania Experience
P Murphy, Washington, IFMS Conference, November 2007 28
IFMS Management Team
Application Capacity Development ICT Architecture
Dept Heads, Project Component Managers, Consultants & Contractors, Other LMs/Departments
PFM Steering Committee
Contract Management
Audit/Controls
P Murphy, Washington, IFMS Conference, November 2007 29
Project Management Mechanism Expectation
Reality Result
Steering Group – Strategic Direction, Co-ordination Approval & Problem Resolution.
Meets only infrequently, ineffective, appears to make little impact.
Lack of strategic direction undermines commitment, coordination and project management authority.
Quarterly Internal Stakeholders – Reporting, Planning & Coordination.
Poorly attended, lack of engagement by some Dept Heads.
Lack of detailed integrated planning, follow-up and accountability.
Weekly Project Management Meetings – Follow-up & Problem Solving.
Weak stakeholder involvement outside AccGen/IT & Contractors Weak Follow-up.
No awareness/commitment from some stakeholders. Low levels of accountability. Limited problem solving authority.
Project Manager /FMIS Consultant. Day to day management
Located under AccGen responsibility not matched by authority
Difficulty in securing engagement and resolving problems.
Support Groups –Application, ICT, Training
Inadequate Participation, Inadequately Resourced
Limited Capacity Developed, Solution Inadequate, Capacity Development Weak.
P Murphy, Washington, IFMS Conference, November 2007 30
P Murphy, Washington, IFMS Conference, November 2007 31
Steering Group (Stakeholders)
TrainingGroup
Application Group
Project/ContractManagement Group
ICTGroup
AccGen/Budget
LM/Agency/LGUnits
Application Support
Unit
AccGen DeptICT
Support
Project In-house OrganisationPost Project In-house Organisation (AccGen/ICT)
AccGen/Budget Dept
Sections
MDAUnits ICT
4. Transition Management (Illustration)
P Murphy, Washington, IFMS Conference, November 2007 32
• Effective Management/Leadership/Team Building/Engagement
• Appropriate market related pay (Application Support, ICT Support, Key Users) and Career Opportunities
• Create Structures (Agency for ICT Staff), adopt more flexible forms of Employment (Contracts), Contract out Functions (Non Core).
• Provide extensive Education and Training Opportunities. Expect losses, keep training. (Labor Market saturation will occur)
• Enhanced Salary Schemes (Performance, Market, Reform Based)
P Murphy, Washington, IFMS Conference, November 2007 33
P Murphy, Washington, IFMS Conference, November 2007 34
Activity Investment RecurrentFeasibility Study Consultants, Client Participation Workshops, Study Tours &
ConferencesSupport Capcity Medium Term Advisors
Local Contract StaffClient Groups – Support Groups, Capacity Development
Procurement ConsultantsClient Participation
Workshops, Training, Specialists (Legal)
Design, Configuration, Testing, Setup, Training
Contractor - Application/ICT Infrastructure/Training /Site Works; DP Specialists, Quality Control, Client Participation
Training of Trainers, Workshops, Training, Data Collection and Verification, Motivational Elements
Pilot Implementation( Problem Resolution,
Acceptance) – Core Functions
Contractor, Client ParticipationQA, Other consultant/specialists
Licensing Running CostsWAN Costs
Rollout Training, Infrastructure Expansion, Functionality Expansion, Upgrades
Training, Licensing Running Costs,WAN CostsMaintenance & Renewal