Capacity Development Public Financial Management
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Capacity Development Public Financial Management

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Peter Murphy of World Bank presentation at ICGFM 2007 Winter Conference on capacity development for government financial management systems

Peter Murphy of World Bank presentation at ICGFM 2007 Winter Conference on capacity development for government financial management systems

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  • 1. IFMIS Systems - Capacity Development Peter Murphy, B.Sc (Hons), M.Sc, CPFA P Murphy, Washington, IFMIS Conference, Nov 2007 1
  • 2. What are the key challenges in development of Public Financial Management ? Challenges Limited Macro Modelling. Macro Economic Limited Revenue Forecasting and Planning & Evaluation & Sectoral Policy Analysis Results Planning & Management Analysis Policy Analysis Unrealistic ,inadequately Poverty/ Budget Performance Formulation & Policy/Performance MTEF & Review Cash Flow Budgets Forecasting PFM Cycle Revenue Policy, Weak Stakeholder Participation External Mobilisation, Auditing Collection & Inadequate Analytical Frameworks Financing for Resource Funds Release, Final Accounts & Procurement Allocation/Control/Management Public Sector Authorisation, Accounts Control, High Levels of Centralised Control Disbursementt Inadequate Commitment and Cash Receipts Budget Budget Payments, Control/TSA/Reconciliation Monitoring/ Review & Payroll & Management Revision Accounting Accounting Corruption & Fraud. Limited Transparency - Monthly and annual Public Accounts ICT Based Systems Weak Internal & External Audit P Murphy, IFMS Conference, Nov 2007 2
  • 3. Typical Ongoing PFM Reforms Macro Policy Rev Policy Analysis MTEF, Sector Procurement Improved Analysis & Advice, Strategies, Bud Reform, Payroll/ Oversight & Advice, Capacity Building, Policy Analysis Personnel Systems Capacity Building, Systems, & Advice Reform, Asset/Liability Interfaces Structures Budgeting Management, Internal -Parliament, PAC, -Rev Agencies, Systems Audit Systems etc External Audit - Macro Units -AidMU, Debt Man - Bud Div, LM, LGs -MOF, LM., LGs, PS/HR Approval, Aggregate Resource Resource Resource Oversight & Control Mobilisation Allocation Management Accountability Formal Financial Control, PFM - Strategy/Policy Management - Skills Transfer Informal & Reporting - Systems/Technology - Culture - Structural Change - Politics/Power - Management Development Capacity/Systems/Skills - Leadership - Limited HRM Cash & Bank Management Commitment Control Need for alignment with Environmental (PETS) Forces e.g. : - Management Reporting - Political: Democratic Transition Process & Policy Debate Poverty Tracking - Social: Civil Society Pressure Groups, Participation. Accounting Standards - Economic: Poverty Reduction, Efficiency, Effectiveness Accounting Systems - Rapid Technical Change Financial Reporting - International Standards etc - AGD, MDA’s, LGs 3
  • 4. Typical IFMIS System Components Macro/REFF Systems Inventory Equipment Manager Budget/Planning Asset Tools Manger CoA Tender Management Cash CS DRMS Requisition Management Manager Imprests/ Revenues Loans Purchase Order Claims on Commitment Donors Expense Control Accounts Order Accounts Receivable Payable Cash HRM/Salaries GL Journals General Control System Ledger Bank Cash Reporting Reconciliation Manager P Murphy, Washington, IFMS Conference, November 2007 4
  • 5. Conceptual Framework Political Social (Turbulent some (Participation/tran Change Dimensions Increased demand sparency/Service for Accountability) Delivery) Inputs New Legislation Software Outputs & Improved PFM ICT Accountability (IT/WAN) IFMIS Software Implementation Transparency Implementation Strategies Training/Wor Transition Economy kshops Management Efficiency New Legislation New Processes & Effectiveness ICT(IFMIS) Consultancy Procedures Service New Structures, -Change Man Delivery Skills & Attitudes -Budget/ Financial Man Economic Technical Public Financial Management (Demand for Improved -Training (New ICT technology, PEM & Financial Task Environment deregulation) Management) P Murphy, Washington, IFMS Conference, November 2007 5
  • 6. Capacity Development Context P Murphy, Washington, IFMS Conference, November 2007 6
  • 7. Recognition & Willingness– Task Environment Demands P Murphy, Washington, IFMS Conference, November 2007 7
  • 8. Recognition & Willingness - Forces for Change Strengthen Weaken P Murphy, Washington, IFMS Conference, November 2007 8
  • 9. Recognition/Willingness - Vision, Gap Analysis & Design Feasibilityy Study – Fiscal Management Processes, Organisational Issues, ICT Architecture, & Financial Implications P Murphy, Washington, IFMS Conference, November 2007 9
  • 10. Line Ministry Ministry of Finance Treasury/ Accounting (Policy) Acc Gen (Regulation) Officers (Execution) Budget Budget Other Managers Cash Fin Man . Man Plan/ Chief Budget Acc Ex Audit Fin Rep Payroll Procure- Int Aud ment Liabilities/ Other External Assets Consensus Desirable – Possible – A few willing to go where no man has been before? - Evolution versus revolution! 10 P Murphy, Washington, IFMS Conference, November 2007
  • 11. Capacity Development Dimensions Client/Consultant/Contractor Mix P Murphy, Washington, IFMS Conference, November 2007 11
  • 12. P Murphy, Washington, IFMS Conference, November 2007 12
  • 13. P Murphy, Washington, IFMS Conference, November 2007 13
  • 14. Public Debt Requisitions Procurement Payments HR/Payroll & Tax General Journals Budgeting & Accounts Cash Releases Ledgers Book Summary Detailed Statutory • Often Centralized. Budget Budget Financial • Lack of Integration. Reports Reports Reports • Inefficient (Duplicate Data Entry & Functionality) • Managed Independently • Different Analytical Basis (Classification/ Valuation) • Inconsistent & Incomplete Reporting Mechanize the • Lack of Integrity, Timeliness, Comprehensiveness Horse and Cart? 14 P Murphy, Washington, IFMS Conference, November 2007
  • 15. MDALG Budget Activity Plans Framework Papers MoFDP & MTFF Macro Costing Model MoFDP Challenge & Budget Policy Sector Policy Discussions Analysis Ministry & Ministry Management Objectives Information Outputs MTEF Budget System Targets Ceilings Module & Progress Detailed MDALG MDALG GoL IFMIS Tax Revenue, Revision CoA Estimates Debt Budgets General Financial Ledger - Actual -Commitments Budget Consolidated Presentations Budget P Murphy, Washington, IFMS Conference, November 2007 15
  • 16. Requisition Accounts Accounts Interfaces Interfaces Purchase Order Payable Receivable Public Debt HR/Payroll Module Module Module Tax etc Commitment/ Cash Cash Book/TSA Management Module Module General Ledger Module Budget Module Summary Detailed Statutory General MTFF Budget Budget Financial Journals Data Reports Reports Reports P Murphy, Washington, IFMS Conference, November 2007 16
  • 17. Supports MTEF Dialogue including MDA Strategic Budgeting Dialogue & Scenario. Budget Analysis, Enable multi-year budget preparation, at MOF & MDA level. Module Make available in-year Budget Execution information. Stores values for estimate calculation etc Facilities forecasting of baseline Cash Flow. Budget Analysis, Consolidation, Presentation and Authorisation. Budget Release & Variation. Supplementary Budgets Users (Transactional Managers (Decision Support (In-house) Users/Analysts//Information Users) Making) MoF Macro Unit Users -MTFF/MTEF Macro/MTEF Budget Application Managers MoF Budget Officers (Sector/Frame) Support Group Budget Director MoF Finance Officers (Debt/Investment) -Classification Senior Budget/Macro MoF (Revenue Policy Unit) -Access/Training Analysts MoF External Finance -Budget Constraints LM Budget/Planning Officers -Principles/Standards LM PS/Accounting Officer/Dept Heads Director Budget Techniques (ICT Support Group) Public/DPs/Investors/Creditors etc P Murphy, Washington, IFMS Conference, November 2007 17
  • 18. General Facilitates Framework for System: Ledger • 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 Managers Support (In-house) Users/Analysts/Authorisation/Reports) (Decision Making/ Information Users) MDALG PS/Accounting Officers/Dept Chief Accountants AccGen Application Heads. MDALG Accountants/Internal Chief Internal Support Group Auditors. Auditors -CoA/Data Integrity AccGen FR Users – Consolidation & Director (FR Unit) -Concepts/Training Financial Reporting AAG (FR) -Controls/Reporting AccGen Users - (Aid Accounting, Payroll, -Principles/Standards CF Revenue, Financing etc) Director FSU MoF users (ICT Support Group) P Murphy, Washington, IFMS Conference, November 2007 18
  • 19. Application Managers End Users ICT Facilities Process Owners Primary Management • Manage users & • Manage & Operate • Mange Architecture permissions Business Processes • Ensure availability for • Ensure availability for • Data entry appropriate use appropriate use • Validation • Ensure reliability • Manage central functions – • Authorization • Technical Problem setup, chart of accounts, • Analysis resolution report customization • Reporting • Routine • Ensure reliability • Use System Outputs Maintenance • Problem resolution • Planning • Upgrades / • Routine Maintenance • Analysis updates • Upgrades / updates • Decision Making • Security • Security • Reporting • Data backups • Ensure systematic • Ensure systematic expansion Secondary expansion • Ensure functionality of • Internal/External Audit • Ensure functionality of interfaces to external External interfaces to external systems • Public , DPs PAC, EFC systems etc Defined Users Financial Systems Data Centre/ICT Unit(s) Personnel/Contractors P Murphy, Washington, IFMS Conference, November 2007 19
  • 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 20
  • 21. P Murphy, Washington, IFMS Conference, November 2007 21
  • 22. Rollout Implementation Pilot Implementation Design, Testing & Setup Preparation & 1. Create a Learning Acquisition Organization 2. 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 22
  • 23. P Murphy, Washington, IFMS Conference, November 2007 23
  • 24. Application (20-100’s) Local Consultants/Trainers (20-50) • Concepts – In depth Mangers/Champions/Local • Module Operation Consultants • Concepts – In depth • Training Skills • Module Operation • Training Material Development • 1st Line ICT Support • Training Skills Specialists (100’s) • Consultant Skills • Audit • Central Function Key Users (50-100’s) • PFM Concepts ICT (10-100’s) • Module Concepts •Data/DR Centre • Module Operation •WAN • Ist Line ICT •LAN •Communications •Database Users (1000’s) – Need to know P Murphy, Washington, IFMS Conference, November 2007 24
  • 25. P Murphy, Washington, IFMS Conference, November 2007 25
  • 26. P Murphy, Washington, IFMS Conference, November 2007 26
  • 27. Tanzania Experience — 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. — Gov’t chart of accounts on GFS compliant basis, mapping can further enhance — Real-time 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 since inception — 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, IFMS Conference, November 2007 27
  • 28. PFM Steering Committee IFMS Management Team Contract Audit/Controls Management Application Capacity Development ICT Architecture Dept Heads, Project Component Managers, Consultants & Contractors, Other LMs/Departments P Murphy, Washington, IFMS Conference, November 2007 28
  • 29. Project Management Reality Result Mechanism Expectation Steering Group – Strategic Meets only infrequently, Lack of strategic direction Direction, Co-ordination ineffective, appears to undermines commitment, Approval & Problem make little impact. coordination and project Resolution. management authority. Quarterly Internal Poorly attended, lack of Lack of detailed integrated Stakeholders – Reporting, engagement by some Dept planning, follow-up and Planning & Coordination. Heads. accountability. Weekly Project Management Weak stakeholder No awareness/commitment Meetings – Follow-up & involvement outside from some stakeholders. Low Problem Solving. AccGen/IT & levels of accountability. Limited Contractors Weak problem solving authority. Follow-up. Project Manager /FMIS Located under AccGen Difficulty in securing Consultant. Day to day responsibility not engagement and resolving management matched by authority problems. Support Groups – Inadequate Participation, Limited Capacity Developed, Application, ICT, Training Inadequately Resourced Solution Inadequate, Capacity Development Weak. P Murphy, Washington, IFMS Conference, November 2007 29
  • 30. P Murphy, Washington, IFMS Conference, November 2007 30
  • 31. 4. Transition Management (Illustration) Post Project In-house Organisation Project In-house Organisation (AccGen/ICT) Steering AccGen/Budget Group (Stakeholders) Project/Contract AccGen/Budget Application Management Group Dept Support Sections Unit Application Group ICT Training Group Group LM/Agency/LG Units ICT MDA Support AccGen Dept ICT Units P Murphy, Washington, IFMS Conference, November 2007 31
  • 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 32
  • 33. P Murphy, Washington, IFMS Conference, November 2007 33
  • 34. Activity Investment Recurrent Feasibility Study Consultants, Client Participation Workshops, Study Tours & Conferences Support Capcity Medium Term Advisors Client Groups – Support Local Contract Staff Groups, Capacity Development Procurement Consultants Workshops, Training, Client Participation Specialists (Legal) Design, Configuration, Contractor - Application/ICT Training of Trainers, Testing, Setup, Training Infrastructure/Training /Site Works; Workshops, Training, Data DP Specialists, Quality Control, Collection and Verification, Client Participation Motivational Elements Pilot Implementation Contractor, Licensing ( Problem Resolution, Client Participation Running Costs Acceptance) – Core QA, Other consultant/specialists WAN Costs Functions Rollout Training, Infrastructure Training, Licensing Expansion, Functionality Running Costs, Expansion, Upgrades WAN Costs Maintenance & Renewal P Murphy, Washington, IFMS Conference, November 2007 34