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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

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Capacity Development Public Financial Management

  1. 1. IFMIS Systems - Capacity Development Peter Murphy, B.Sc (Hons), M.Sc, CPFA P Murphy, Washington, IFMIS Conference, Nov 2007 1
  2. 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. 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. 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. 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. 6. Capacity Development Context P Murphy, Washington, IFMS Conference, November 2007 6
  7. 7. Recognition & Willingness– Task Environment Demands P Murphy, Washington, IFMS Conference, November 2007 7
  8. 8. Recognition & Willingness - Forces for Change Strengthen Weaken P Murphy, Washington, IFMS Conference, November 2007 8
  9. 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. 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. 11. Capacity Development Dimensions Client/Consultant/Contractor Mix P Murphy, Washington, IFMS Conference, November 2007 11
  12. 12. P Murphy, Washington, IFMS Conference, November 2007 12
  13. 13. P Murphy, Washington, IFMS Conference, November 2007 13
  14. 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. 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. 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. 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. 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. 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. 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. 21. P Murphy, Washington, IFMS Conference, November 2007 21
  22. 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
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  24. 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
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  26. 26. P Murphy, Washington, IFMS Conference, November 2007 26
  27. 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. 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. 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
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  31. 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. 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. 33. P Murphy, Washington, IFMS Conference, November 2007 33
  34. 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